Exhibit 10.1

EXECUTION VERSION

$75,000,000

1.5 LIEN TERM LOAN CREDIT AGREEMENT

W&T OFFSHORE, INC.,

as the Borrower

and

CORTLAND CAPITAL MARKET SERVICES LLC

as Administrative Agent and 1.5 Lien Collateral Agent

and

VARIOUS FINANCIAL INSTITUTIONS AND OTHER PERSONS FROM TIME TO TIME

PARTIES HERETO,

as Lenders

September 7, 2016


TABLE OF CONTENTS

 

          Page  

ARTICLE I - Definitions and References

     5   

Section 1.1

  

Defined Terms

     5   

Section 1.2

  

Exhibits and Schedules; Additional Definitions

     51   

Section 1.3

  

Amendment of Defined Instruments

     51   

Section 1.4

  

References and Titles

     51   

Section 1.5

  

Calculations and Determinations

     51   

ARTICLE II - The Loans

     52   

Section 2.1

  

Commitments to Make Loans

     52   

Section 2.2

  

Requests for New Loans

     52   

Section 2.3

  

Use of Proceeds

     53   

Section 2.4

  

Optional Prepayments

     53   

Section 2.5

  

Mandatory Prepayments

     55   

Section 2.6

  

Offers to Purchase

     55   

Section 2.7

  

Maturity Date

     57   

Section 2.8

  

Interest

     57   

Section 2.9

  

Register; Notes

     57   

Section 2.10

  

Fees

     58   

ARTICLE III - Payments to Lenders

     58   

Section 3.1

  

General Procedures

     58   

Section 3.2

  

Capital Reimbursement

     59   

Section 3.3

  

Taxes

     60   

Section 3.4

  

Change of Applicable Lending Office

     64   

Section 3.5

  

Replacement of Lenders

     64   

Section 3.6

  

Participants

     64   

ARTICLE IV - Conditions Precedent to Lending

     65   

Section 4.1

  

Closing Date

     65   

ARTICLE V - Representations and Warranties

     68   

Section 5.1

  

No Default

     68   

Section 5.2

  

Organization and Good Standing

     68   

Section 5.3

  

Authorization

     68   

Section 5.4

  

No Conflicts or Consents

     68   

Section 5.5

  

Enforceable Obligations

     69   

Section 5.6

  

Initial Financial Statements

     69   

Section 5.7

  

Other Obligations and Restrictions

     69   

Section 5.8

  

Full Disclosure

     69   

 

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Section 5.9

  

Litigation

     69   

Section 5.10

  

Labor Disputes and Acts of God

     70   

Section 5.11

  

ERISA Plans and Liabilities

     70   

Section 5.12

  

Environmental Matters

     70   

Section 5.13

  

Names and Places of Business and State of Incorporation or Formation

     70   

Section 5.14

  

Borrower’s Subsidiaries

     71   

Section 5.15

  

Title to Properties; Licenses

     71   

Section 5.16

  

Government Regulation

     71   

Section 5.17

  

Solvency

     71   

Section 5.18

  

Taxes

     71   

Section 5.19

  

Restriction on Liens

     71   

Section 5.20

  

Hedging Transactions

     72   

Section 5.21

  

Maintenance of Properties

     72   

Section 5.22

  

Compliance with Laws and Agreements

     72   

Section 5.23

  

Anti-Corruption Laws and Sanctions

     72   

Section 5.24

  

Compliance of Laws

     73   

ARTICLE VI - Covenants

     74   

Section 6.1

  

Reports

     74   

Section 6.2

  

Compliance Certificate

     74   

Section 6.3

  

Taxes

     75   

Section 6.4

  

Stay, Extension of Usury Laws

     75   

Section 6.5

  

Corporate Existence

     75   

Section 6.6

  

Insurance

     75   

Section 6.7

  

Restricted Payments

     76   

Section 6.8

  

Dividend and Other Payment Restrictions Affecting Subsidiaries

     80   

Section 6.9

  

Incurrence of Indebtedness and Issuance of Preferred Stock

     82   

Section 6.10

  

Asset Sales

     86   

Section 6.11

  

Transactions with Affiliates

     88   

Section 6.12

  

Liens

     90   

Section 6.13

  

Designation of Restricted and Unrestricted Subsidiaries

     90   

Section 6.14

  

Additional Guarantees and Collateral

     91   

Section 6.15

  

Depositary Banks.

     93   

ARTICLE VII - SUCCESSORS

     93   

Section 7.1

  

Merger, Consolidation, or Sale of Assets

     93   

Section 7.2

  

Successor Corporation Substituted

     94   

ARTICLE VIII - DEFAULTS AND REMEDIES

     95   

Section 8.1

  

Events of Default

     95   

Section 8.2

  

Waiver of Past Defaults

     98   

Section 8.3

  

Control by Majority

     98   

Section 8.4

  

Priorities

     98   

Section 8.5

  

Credit Bid.

     99   

 

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ARTICLE IX - Administrative Agent

     99   

Section 9.1

  

Appointment and Authority of the Administrative Agent

     99   

Section 9.2

  

Exculpation, Administrative Agent’s Reliance, Etc.

     100   

Section 9.3

  

Credit Decisions

     101   

Section 9.4

  

Indemnification

     102   

Section 9.5

  

Rights as Lender

     102   

Section 9.6

  

Sharing of Set-Offs and Other Payments

     103   

Section 9.7

  

Investments

     103   

Section 9.8

  

Benefit of Article IX

     103   

Section 9.9

  

Resignation

     104   

Section 9.10

  

Delegation of Duties

     104   

Section 9.11

  

Administrative Agent May File Proofs of Claim

     104   

ARTICLE X - Miscellaneous

     105   

Section 10.1

  

Waivers and Amendments; Acknowledgments

     105   

Section 10.2

  

Survival of Agreements; Cumulative Nature

     109   

Section 10.3

  

Notices

     109   

Section 10.4

  

Payment of Expenses; Indemnity

     110   

Section 10.5

  

Joint and Several Liability; Parties in Interest

     111   

Section 10.6

  

Assignments

     111   

Section 10.7

  

Confidentiality

     115   

Section 10.8

  

Governing Law; Submission to Process

     116   

Section 10.9

  

Limitation on Interest

     116   

Section 10.10

  

Termination

     117   

Section 10.11

  

Severability

     117   

Section 10.12

  

Counterparts; Electronic Execution of Assignments

     117   

Section 10.13

  

Waiver of Jury Trial, Punitive Damages, etc.

     118   

Section 10.14

  

Release of Collateral; Collateral Matters

     118   

Section 10.15

  

Release of Guarantee

     119   

Section 10.16

  

USA Patriot Act Notice

     120   

Section 10.17

  

Posting of Approved Electronic Communications

     120   

Section 10.18

  

OTHER LIENS ON COLLATERAL; TERMS OF INTERCREDITOR AGREEMENTS; ETC

     122   

Section 10.19

  

Post-Closing Obligations

     123   

Section 10.20

  

Additional Indebtedness

     123   

Section 10.21

  

Set off.

     124   

Section 10.22

  

Acknowledgment and Consent to Bail-In of EEA Financial Institution.

     124   

SCHEDULES

 

Schedule 1

     

Form of Disclosure Schedule

Schedule 2

     

Security Schedule

Schedule 3

     

Notice Schedule

 

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Schedule 4

     

Mortgaged Properties

Schedule 5

     

Commitments

Schedule 6

     

Existing Affiliate Transactions

EXHIBITS

     

Exhibit A

      Form of Note

Exhibit B

      Borrowing Notice

Exhibit C

      Assignment and Acceptance

Exhibit D-1

      Form of U.S. Tax Compliance Certificate (Foreign Lenders That Are Not Partnerships for U.S. Federal Income Tax Purposes)

Exhibit D-2

      Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Not Partnerships for U.S. Federal Income Tax Purposes)

Exhibit D-3

      Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Partnerships for U.S. Federal Income Tax Purposes)

Exhibit D-4

      Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are Partnerships for U.S. Federal Income Tax Purposes)

Exhibit E

      Form of Solvency Certificate

Exhibit F

      Form of Second Lien Intercreditor Agreement

Exhibit G

      Form of Senior Lien Intercreditor Agreement

 

-iv-


Reference is made to the Intercreditor Agreement, dated as of September 7, 2016, between TORONTO DOMINION (TEXAS), LLC, as Priority Lien Agent (as defined therein), CORTLAND CAPITAL MARKET SERVICES LLC, as 1.5 Lien Agent (as defined therein) (the “Intercreditor Agreement”). Each Person that is secured hereunder, by accepting the benefits of the security provided hereby, (i) consents (or is deemed to consent) to the subordination of Liens provided for in the Intercreditor Agreement, (ii) agrees (or is deemed to agree) that it will be bound by, and will take no actions contrary to, the provisions of the Intercreditor Agreement, (iii) authorizes (or is deemed to authorize) the 1.5 Lien Agent on behalf of such Person to enter into, and perform under, the Intercreditor Agreement and (iv) acknowledges (or is deemed to acknowledge) that a copy of the Intercreditor Agreement was delivered, or made available, to such Person.

Notwithstanding any other provision contained herein, this Agreement, the Liens created hereby and the rights, remedies, duties and obligations provided for herein are subject in all respects to the provisions of the Intercreditor Agreement and, to the extent provided therein, the applicable Security Documents (as defined in the Intercreditor Agreement). In the event of any conflict or inconsistency between the provisions of this Agreement and the Intercreditor Agreement, the provisions of the Intercreditor Agreement shall control.

THIS 1.5 LIEN TERM LOAN CREDIT AGREEMENT (this “Agreement”) is made as of September 7, 2016, by and among W&T Offshore, Inc. (herein called the “Borrower”), a Texas corporation and successor-by-reincorporation to W&T Offshore, Inc., a Nevada corporation, the various financial institutions and other persons from time to time parties hereto, as lenders (collectively, the “Lenders”) and Cortland Capital Market Services LLC as agent for the Lenders (herein called the “Administrative Agent” and the “1.5 Lien Collateral Agent”).

W I T N E S S E T H:

WHEREAS, subject to and upon the terms and conditions set forth herein, the Lenders are willing to make available to the Borrower the term loan facilities provided for herein;

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein the parties hereto agree as follows:

ARTICLE I - Definitions and References

Section 1.1 Defined Terms. As used in this Agreement, each of the following terms has the meaning given it in this Section 1.1 or in the sections and subsections referred to below:

1.5 Lien” means a Lien granted by the Borrower or any other Restricted Person in favor of the Administrative Agent pursuant to any Secured Debt Document at any time, upon any property of the Borrower or any Restricted Person to secure the Obligations.

1.5 Lien Collateral Agent” means Cortland Capital Market Services LLC, as the 1.5 Lien Collateral Agent hereunder, and its successors in such capacity.

1.5 Lien Debt” means Indebtedness of the Borrower and the Guarantors hereunder.

 

5


Acquired Debt” means, with respect to any specified Person (i) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Restricted Subsidiary of, such specified Person, but excluding Indebtedness which is extinguished, retired or repaid in connection with such Person merging with or becoming a Subsidiary of such specified Person; and (2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.

Additional Assets” means:

(1) any assets that are not classified as current assets under GAAP and that are used or useful in the Oil and Gas Business, other than Indebtedness or Capital Stock;

(2) the Capital Stock of a Person that becomes a Restricted Subsidiary as a result of the acquisition of such Capital Stock by the Borrower or any of its Restricted Subsidiaries; or

(3) Capital Stock constituting a minority interest in any Person that at such time is a Restricted Subsidiary;

provided, however that any such Restricted Subsidiary described in clause (2) or (3) is primarily engaged in the Oil and Gas Business.

Adjusted Consolidated Net Tangible Assets” means (without duplication), as of the date of determination:

(1) the sum of:

(a) discounted future net revenue from proved crude oil and natural gas reserves of the Borrower and its Restricted Subsidiaries calculated in accordance with SEC guidelines before any state or federal income taxes, as estimated in a Reserve Report prepared as of the end of the fiscal year ending at least 91 days prior to the date of determination (or as of June 30 ending at least 45 days prior to the date of determination, if the Borrower elects to prepare a mid-year Reserve Report), as increased by, as of the date of determination, the discounted future net revenue of:

(i) estimated proved crude oil and natural gas reserves of the Borrower and its Restricted Subsidiaries attributable to acquisitions consummated since the date of such Reserve Report, and

(ii) estimated crude oil and natural gas reserves of the Borrower and its Restricted Subsidiaries attributable to extensions, discoveries and other additions and upward determinations of estimates of proved crude oil and natural gas reserves (including previously estimated development costs incurred during the period and the accretion of discount since the prior period end) due to exploration, development or

 

6


exploitation, production or other activities which reserves were not reflected in such Reserve Report which would, in accordance with standard industry practice, result in such determinations, in each case calculated in accordance with SEC guidelines (including utilizing the prices under SEC guidelines applicable to a Reserve Report as of its date),

and decreased by, as of the date of determination, the discounted future net revenue attributable to:

(iii) estimated proved crude oil and natural gas reserves of the Borrower and its Restricted Subsidiaries reflected in such Reserve Report produced or disposed of since the date of such Reserve Report, and

(iv) reductions in the estimated oil and natural gas reserves of the Borrower and its Restricted Subsidiaries reflected in such Reserve Report since the date of such Reserve Report attributable to downward determinations of estimates of proved crude oil and natural gas reserves due to exploration, development or exploitation, production or other activities conducted or otherwise occurring since the date of such Reserve Report which would, in accordance with standard industry practice, result in such determinations, in each case calculated in accordance with SEC guidelines (including utilizing the prices under SEC guidelines applicable to a Reserve Report as of its date);

provided, however that, in the case of each of the determinations made pursuant to clauses (i) through (iv), such increases and decreases shall be estimated by the Borrower’s engineers;

(b) the capitalized costs that are attributable to crude oil and natural gas properties of the Borrower and its Restricted Subsidiaries to which no proved crude oil and natural gas reserves are attributable, based on the Borrower’s books and records as of a date no earlier than the date of the Borrower’s latest available annual or quarterly financial statements;

(c) the Net Working Capital (excluding, to the extent included in the determination of discounted future net revenues under clause (1)(a) above, any adjustments made pursuant to FASB ASC Topic 410-20 as of a date no earlier than the date of the Borrower’s latest available annual or quarterly financial statements; and

(d) the greater of (i) the net book value as of a date no earlier than the date of the Borrower’s latest available annual or quarterly financial statements and (ii) the appraised value, as estimated by independent appraisers, of other tangible assets of the Borrower and its Restricted Subsidiaries as of a date no earlier than the date of the Borrower’s latest available annual or quarterly financial statements; provided, however that the Borrower shall not be required to obtain such an appraisal of such assets if no such appraisal has been performed); minus

 

7


(2) the sum of:

(a) Minority Interests;

(b) any net natural gas balancing liabilities of the Borrower and its Restricted Subsidiaries reflected in the Borrower’s latest audited financial statements;

(c) to the extent included in clause (1)(a) above, the discounted future net revenue, calculated in accordance with SEC guidelines (including utilizing the same prices in the Borrower’s Reserve Report used for this definition), attributable to reserves subject to participation interests, overriding royalty interests or other interests of third parties, pursuant to participation, partnership, vendor financing or other agreements then in effect, or which otherwise are required to be delivered to third parties;

(d) to the extent included in clause (1)(a) above, the discounted future net revenue calculated in accordance with SEC guidelines (including utilizing the same prices in the Borrower’s Reserve Report used for this definition), attributable to reserves that are required to be delivered to third parties to fully satisfy the obligations of the Borrower and its Restricted Subsidiaries with respect to Volumetric Production Payments on the schedules specified with respect thereto; and

(e) the discounted future net revenue, calculated in accordance with SEC guidelines, attributable to reserves subject to Dollar-Denominated Production Payments that, based on the estimates of production included in determining the discounted future net revenue specified in the immediately preceding clause (1)(a) (utilizing the same prices utilized in the Borrower’s Reserve Report used for this definition), would be necessary to satisfy fully the obligations of the Borrower and its Restricted Subsidiaries with respect to Dollar-Denominated Production Payments on the schedules specified with respect thereto.

If the Borrower changes its method of accounting from the full cost method to the successful efforts method or a similar method of accounting, “Adjusted Consolidated Net Tangible Assets” will continue to be calculated as if the Borrower were still using the full cost method of accounting.

Administrative Agent” means Cortland Capital Market Services LLC, as the Administrative Agent hereunder, and its successors in such capacity.

Administrative Agent Fee Letter” means that certain fee letter dated as of September 7, 2016 by and between the Administrative Agent and the 1.5 Lien Collateral Agent and the Borrower.

 

8


Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person; provided, however that notwithstanding anything herein to the contrary the Backstop Lender shall not be considered an Affiliate of the Borrower or its Restricted Subsidiaries for purposes of this Agreement. For purposes of this definition, “control,” as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms “controlling,” “controlled by” and “under common control with” have correlative meanings.

Affiliate Transaction” is defined in Section 6.11.

Affiliated Lender” means, at any time, any Lender that is an Affiliate of the Borrower (other than the Borrower, any Guarantor or any Subsidiary of the Borrower) at such time.

Agreement” means this Credit Agreement.

Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to the Borrower or any of its Subsidiaries from time to time concerning or relating to bribery or corruption.

Anti-Terrorism Laws” means any laws, regulations or orders of any governmental authority of the United States, the United Nations, United Kingdom or the European Union relating to terrorism financing or money laundering, including, but not limited to, the International Emergency Economic Powers Act (50 U.S.C. § 1701 et seq.), the Trading With the Enemy Act (50 U.S.C. § 5 et seq.), the International Security Development and Cooperation Act (22 U.S.C. § 2349aa-9 et seq.), the Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001 (the “Executive Order”), the Bank Secrecy Act, as amended by Title III of the USA Patriot Act, and any rules or regulations promulgated pursuant to or under the authority of any of the foregoing.

Applicable Premium” means, with respect to a Loan at any prepayment date, the excess of (1) the present value at such time of (a) the prepayment price of such Loan as of September 7, 2017 (without regard to accrued and unpaid interest) plus (b) all required interest payments due on such Loan through September 7, 2017 (excluding accrued and unpaid interest to the prepayment date), computed using a discount rate equal to the Treasury Rate plus 50 basis points, over (2) the principal amount of such Loan.

Approved Fund” means any Person (other than a natural Person) that (a) is engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business, and (b) is administered or managed by a Lender, an Affiliate of a Lender or a Person or an Affiliate of a Person that administers or manages a Lender.

Asset Sale” means:

(1) the sale, lease, conveyance or other disposition of any assets (including by way of a Production Payment and Reserve Sale or a sale and leaseback transaction);

 

9


provided, however that the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Borrower and its Restricted Subsidiaries taken as a whole will be governed by Sections 2.6(b) and 7.1 and not by the provisions of Section 6.10; and

(2) the issuance of Equity Interests in any of the Borrower’s Restricted Subsidiaries or the sale of Equity Interests held by the Borrower or any of its Subsidiaries in any of its other Subsidiaries.

Notwithstanding the preceding, none of the following items will be deemed to be an Asset Sale:

(1) any single transaction or series of related transactions that involves assets having a Fair Market Value of less than $15.0 million;

(2) a transfer of assets between or among the Borrower and its Restricted Subsidiaries;

(3) an issuance of Equity Interests by a Restricted Subsidiary of the Borrower to the Borrower or to a Restricted Subsidiary of the Borrower;

(4) the disposition of products, services, inventory or accounts receivable in the ordinary course of business and any sale or other disposition of damaged, worn-out or obsolete assets in the ordinary course of business;

(5) the sale or other disposition of cash or Cash Equivalents;

(6) a Restricted Payment that does not violate Section 6.7;

(7) Permitted Investments made with assets not constituting Collateral;

(8) a disposition of Hydrocarbons or mineral products inventory in the ordinary course of business;

(9) the sale or other disposition (whether or not in the ordinary course of business) of crude oil and natural gas properties or direct or indirect interests in real property; provided, however that at the time of such sale or disposition such properties do not have associated with them any proved reserves;

(10) the farm-out, lease or sublease of developed or undeveloped crude oil or natural gas properties owned or held by the Borrower or such Restricted Subsidiary in exchange for crude oil and natural gas properties owned or held by another Person;

(11) any trade or exchange by the Borrower or any Restricted Subsidiaries of oil and gas properties or other properties or assets for oil and gas properties or other properties or assets owned or held by another Person; provided, however that the fair market value of the properties or assets traded or exchanged by the Borrower or such Restricted Subsidiary (together with any cash) is reasonably equivalent to the fair market

 

10


value of the properties or assets (together with any cash) to be received by the Borrower or such Restricted Subsidiary; provided, further that any net cash received must be applied in accordance with the provisions described in Section 6.10;

(12) the creation or perfection of a Lien (but not, except to the extent contemplated in clause (13) below, the sale or other disposition of the properties or assets subject to such Lien);

(13) the creation or perfection of a Permitted Lien and the exercise by any Person in whose favor a Permitted Lien is granted of any of its rights in respect of that Permitted Lien;

(14) the licensing or sublicensing of intellectual property, including, without limitation, licenses for seismic data, in the ordinary course of business and which do not materially interfere with the business of the Borrower and its Restricted Subsidiaries; and

(15) a surrender or waiver of contract rights or the settlement, release or surrender of contract, tort or other claims of any kind

Asset Sale Offer” is defined in Section 2.6(a).

Asset Sale Offer Notice” is defined in Section 2.6(a).

Assignment and Acceptance” means each Assignment and Acceptance, substantially in the form of Exhibit C attached hereto or in another form acceptable to the Administrative Agent.

Attributable Debt” in respect of a sale and leaseback transaction means, at the time of determination, the present value of the obligation of the lessee for net rental payments during the remaining term of the lease included in such sale and leaseback transaction including any period for which such lease has been extended or may, at the option of the lessor, be extended. Such present value shall be calculated using a discount rate equal to the rate of interest implicit in such transaction, determined in accordance with GAAP.

Authorized Officer” means, as to any Person, its President, its Chief Executive Officer, its Chief Financial Officer, its Chief Accounting Officer, its General Counsel, its Chief Operations Officer, its Chief Technical Officer, its Treasurer, or any other officer specified as such to the Administrative Agent in writing by any of the aforementioned officers of such Person or by resolution from the board of directors or similar governing body of such Person.

Backstop Lender” means Franklin Advisers, Inc. and its managed funds and accounts and Affiliates thereof.

Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

Bail-In Legislation” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

 

11


Banking Services” means each and any of the following bank services provided to the Borrower or any Guarantor by any holder of Priority Lien Debt or any Affiliate thereof: (a) commercial credit cards, (b) stored value cards and (c) Treasury Management Arrangements (including controlled disbursement, automated clearinghouse transactions, return items, overdrafts and interstate depository network services).

Banking Services Obligations” means any and all obligations of the Borrower or any Guarantor, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor) in connection with Banking Services.

Bankruptcy Code” means the Federal Bankruptcy Reform Act of 1978 (11 U.S.C. §101, et seq.).

Bankruptcy Law” means Title 11, U.S. Code or any similar federal or state law for the relief of debtors.

Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular “person” (as that term is used in Section 13(d)(3) of the Exchange Act), such “person” will be deemed to have beneficial ownership of all securities that such “person” has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only after the passage of time. The terms “Beneficial Ownership”, “Beneficially Owns” and “Beneficially Owned” have a corresponding meaning.

Board of Directors” means:

(1) with respect to a corporation, the board of directors of the corporation or any committee thereof duly authorized to act on behalf of such board;

(2) with respect to a partnership, the Board of Directors of the general partner of the partnership;

(3) with respect to a limited liability company, the managing member or members or any controlling committee of managing members thereof; and

(4) with respect to any other Person, the board or committee of such Person serving a similar function.

Board of Governors” means the Board of Governors of the Federal Reserve System of the United States of America.

Borrower” means W&T Offshore, Inc., a Texas corporation, and its permitted assigns and successors.

 

12


Borrowing” means a borrowing of Loans pursuant to Section 2.2.

Borrowing Notice” means a written confirmation substantially in the form of Exhibit B made by an Authorized Officer of the Borrower or such other form approved by the Administrative Agent which meets the requirements of Section 2.2.

Building” has the meaning assigned to such term in the applicable Flood Insurance Regulation; provided, however that, in no event shall the term “Building” include platforms and other structures located in state or federal waters offshore of the United States or other areas that are not subject to Flood Insurance Regulation.

Business Day” means a day, other than a Saturday or Sunday or United States federal holiday, on which commercial banks are open for business with the public in New York, New York.

Calculation Date” has the meaning given to it within the definition of “Fixed Charge Coverage Ratio”.

Capital Lease Obligation” means, at the time any determination is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet prepared in accordance with GAAP, and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be prepaid by the lessee without payment of a penalty.

Capital Stock” means:

(1) in the case of a corporation, corporate stock;

(2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

(3) in the case of a partnership or limited liability company, partnership interests (whether general or limited) or membership interests; and

(4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, but excluding from all of the foregoing any debt securities convertible into Capital Stock, whether or not such debt securities include any right of participation with Capital Stock.

Cash Equivalents” means:

(1) United States dollars;

(2) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality of the United States government (provided that the full faith and credit of the United States is pledged in support of those securities) having maturities of not more than one year from the date of acquisition;

 

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(3) marketable general obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition thereof, having a credit rating of “A” or better from either S&P or Moody’s;

(4) certificates of deposit, demand deposit accounts and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers’ acceptances with maturities not exceeding one year and overnight bank deposits, in each case, with any domestic commercial bank having capital and surplus in excess of $500.0 million and a Thomson Bank Watch Rating of “B” or better;

(5) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (2), (3) and (4) above entered into with any financial institution meeting the qualifications specified in clause (4) above;

(6) commercial paper having one of the two highest ratings obtainable from Moody’s or S&P and, in each case, maturing within nine months after the date of acquisition; and

(7) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (1) through (6) of this definition.

CFC” means a “controlled foreign corporation” as defined in Section 957 of the Code.

Change of Control” means the occurrence of any of the following:

(1) the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties and assets of the Borrower and its Subsidiaries taken as a whole to any “person” (as that term is used in Section 13(d) of the Exchange Act) other than the Principals or a Related Party of the Principals;

(2) the adoption of a plan relating to the liquidation or dissolution of the Borrower;

(3) the consummation of any transaction (including, without limitation, any merger or consolidation), the result of which is that any “person” (as defined above), other than the Principals or a Related Party of the Principals becomes the Beneficial Owner, directly or indirectly, of more than 35% of the Voting Stock of the Borrower, measured by voting power rather than number of shares; or

(4) the first day on which the Continuing Directors cease to constitute a majority of the Board of Directors of the Borrower.

Change of Control Offer” is defined in Section 2.6(b).

 

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Change of Control Payment” is defined in Section 2.6(b).

Change of Control Payment Date” is defined in Section 2.6(b).

Closing Date” means the date on which the conditions specified in Section 4.1 are satisfied (or waived in accordance with Section 10.1), which occurred on September 7, 2016.

Code” means the Internal Revenue Code of 1986, as amended.

Collateral” means all property of any kind which is subject to a Lien in favor of Lenders (or in favor of the 1.5 Lien Collateral Agent for the benefit of Lenders) or which, under the terms of any Security Document, is purported to be subject to such a Lien, subject, however, to Section 10.14.

Collateral Disposition” means any sale, transfer or other disposition (whether voluntary or involuntary) to the extent involving assets or other rights or property that constitute Collateral. The sale or issuance of Equity Interests in a Guarantor such that it thereafter is no longer a Guarantor shall be deemed to be a Collateral Disposition of the Collateral owned by such Guarantor.

Commitment” means, for each Lender party to this Agreement on the Closing Date, the amount set forth opposite such Lender’s name on Schedule 5 directly below the column entitled “Commitment”, as the same may be from time to time be (x) reduced or terminated pursuant to the terms herein or (y) adjusted as a result of assignments to or from Lender pursuant hereto.

Communications” is defined in Section 10.17(a).

Consolidated” refers to the consolidation of any Person, in accordance with GAAP, with its properly consolidated subsidiaries. References herein to a Person’s Consolidated financial statements, financial position, financial condition, liabilities, etc. refer to the consolidated financial statements, financial position, financial condition, liabilities, etc. of such Person and its properly consolidated subsidiaries.

Consolidated Cash Flow” means, with respect to any specified Person for any period, the Consolidated Net Income of such Person for such period plus, without duplication:

(1) an amount equal to any extraordinary loss plus any net loss realized by such Person or any of its Restricted Subsidiaries in connection with an Asset Sale (together with any related provision for taxes and any related non-recurring charges relating to any premium or penalty paid, write-off of deferred financing costs or other financial recapitalization charges in connection with redeeming or retiring any Indebtedness prior to its Stated Maturity), to the extent such losses were deducted in computing such Consolidated Net Income; plus

(2) provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was deducted in computing such Consolidated Net Income; plus

 

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(3) the Fixed Charges of such Person and its Restricted Subsidiaries for such period, to the extent that such Fixed Charges were deducted in computing such Consolidated Net Income; plus

(4) depreciation, depletion, amortization (including amortization of intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period), impairment and other non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent that such depreciation, depletion, amortization, impairment and other non-cash expenses were deducted in computing such Consolidated Net Income; minus

(5) non-cash items increasing such Consolidated Net Income for such period, other than items that were accrued in the ordinary course of business; minus

(6) to the extent included in determining Consolidated Net Income, the sum of (a) the amount of deferred revenues that are amortized during such period and are attributable to reserves that are subject to Volumetric Production Payments and (b) amounts recorded in accordance with GAAP as repayments of principal and interest pursuant to Dollar-Denominated Production Payments,

in each case, on a consolidated basis and determined in accordance with GAAP.

Notwithstanding the foregoing, the provision for taxes based on the income or profits of, and the depreciation, depletion and amortization and other non-cash charges and expenses of, a Restricted Subsidiary of the Borrower shall be added to Consolidated Net Income to compute Consolidated Cash Flow of the Borrower only to the extent (and in the same proportion) that the Net Income of such Restricted Subsidiary was included in calculating the Consolidated Net Income of such Person and only if a corresponding amount would be permitted at the date of determination to be dividended to the Borrower by such Restricted Subsidiary without prior governmental approval (that has not been obtained), and without direct or indirect restriction pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Restricted Subsidiary or its stockholders.

Consolidated Net Income” means, with respect to any specified Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided, however that:

(1) the Net Income (but not loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting will be included only to the extent of the amount of dividends or similar distributions paid in cash to the specified Person or a Restricted Subsidiary of the Person;

(2) the Net Income of any Restricted Subsidiary will be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any

 

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prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders, partners or members;

(3) the cumulative effect of a change in accounting principles will be excluded;

(4) income resulting from transfers of assets (other than cash) between such Person or any of its Restricted Subsidiaries, on the one hand, and an Unrestricted Subsidiary, on the other hand, will be excluded;

(5) any non-cash compensation charge arising from any grant of stock, stock options or other equity based awards will be excluded;

(6) any asset impairment writedowns or any asset writeups on oil and gas properties under GAAP or SEC guidelines will be excluded;

(7) any unrealized non-cash gains or losses or charges in respect of hedge or non-hedge derivatives (including those resulting from the application of FASB ASC Topic 815) will be excluded; and

(8) to the extent deducted in the calculation of Net Income, any non-cash write off of deferred debt issuance costs.

Consolidated Net Worth” means, with respect to any specified Person as of any date, the sum of:

(1) the consolidated equity of the common stockholders of such Person and its consolidated Subsidiaries as of such date; plus

(2) the respective amounts reported on such Person’s balance sheet as of such date with respect to any series of preferred stock (other than Disqualified Stock) that by its terms is not entitled to the payment of dividends unless such dividends may be declared and paid only out of net earnings in respect of the year of such declaration and payment, but only to the extent of any cash received by such Person upon issuance of such preferred stock.

Continuing Directors” means, as of any date of determination, any member of the Board of Directors of the Borrower who:

(1) was a member of such Board of Directors on the Closing Date; or

(2) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board of Directors at the time of such nomination or election.

 

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Control Agreement” means an agreement in form and substance reasonably satisfactory to the 1.5 Lien Collateral Agent which provides for the 1.5 Lien Collateral Agent to have “control” (as defined in Section 8-106 of the UCC, as such term relates to investment property (other than certificated securities or commodity contracts) or as used in Section 9-106 of the UCC, as such term relates to commodity contracts, or as used in Section 9-104(a) of the UCC, as such term relates to deposit accounts).

Control Party” is defined in Section 6.15.

Credit Facilities” means, with respect to the Borrower or any of its Restricted Subsidiaries, one or more current or future debt facilities, indentures or commercial paper facilities with banks, investment banks, insurance companies, trust companies, mutual funds, other lenders, investors or any of the foregoing providing for revolving credit loans, term loans, notes, debt securities, guarantees, receivables financing (including through the sale of receivables to such lenders, or to special purpose entities formed to borrow from (or sell such receivables to) such lenders against such receivables), letters of credit, bankers’ acceptances, or other borrowings, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced (in each case, without limitation as to amount), in whole or in part, from time to time and any agreements and related documents governing Indebtedness or other Liabilities incurred to refinance amounts then outstanding or permitted to be outstanding, (whether upon or after termination or otherwise) (including by means of sales of debt securities to investors) in whole or in part from time to time.

Default” means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default.

Disclosure Schedule” means Schedule 1 hereto.

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, in each case at the option of the holder of the Capital Stock), 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 of the Capital Stock, in whole or in part, on or prior to the date that is 91 days after the date on which the Loans mature; provided, however that only the portion of Capital Stock which so matures or is mandatorily redeemable, or is so redeemable at the option of the holder thereof prior to such date, will be deemed to be Disqualified Stock. Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders of the Capital Stock have the right to require the Borrower to repurchase such Capital Stock upon the occurrence of a change of control or an asset sale will not constitute Disqualified Stock if the terms of such Capital Stock provide that the Borrower may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with Section 6.7 hereof. The amount of Disqualified Stock deemed to be outstanding at any time for purposes of this Agreement will be the maximum amount that the Borrower and its Restricted Subsidiaries may become obligated to pay upon the maturity of, or pursuant to any mandatory redemption provisions of, such Disqualified Stock, exclusive of accrued dividends.

 

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Dollar-Denominated Production Payments” means production payment obligations recorded as liabilities in accordance with GAAP, together with all undertakings and obligations in connection therewith.

Domestic Subsidiary” means any Restricted Subsidiary of the Borrower (1) that was formed under the laws of the United States or any state of the United States or the District of Columbia or (2) that Guarantees Indebtedness of the Borrower or of a Guarantor in excess of a Minimum Amount.

EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent;

EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

EEA Resolution Authority” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

Electronic Platform” is defined in Section 10.17(b).

Eligible Transferee” means a Person which either (a) is a Lender or an Affiliate of Lender or an Approved Fund or (b) is consented to as an Eligible Transferee by the Administrative Agent, which consent will not be unreasonably withheld.

Environmental Claims” means any and all administrative, regulatory or judicial actions, suits, obligations, liabilities, losses, proceedings, decrees, judgments, penalties, fees, fines, demand letters, orders, directives, claims (including claims for contribution or claims involving liability in tort, strict, absolute or otherwise), Liens, notices of noncompliance or violation, or claims for legal fees or costs of investigations or proceedings, relating to any Environmental Law or arising from the actual or alleged presence or Release of any Hazardous Material, including, without limitation, enforcement, mitigation, cleanup, removal, response, remedial or other actions or damages or contribution, indemnification, cost recovery, compensation or injunctive or declaratory relief pursuant to any Environmental Law.

Environmental Laws” means all applicable Laws relating to pollution or the regulation or protection of human health or safety (to the extent such health or safety relate to exposure to Hazardous Materials), natural resources or the environment (including ambient air, surface water, ground water, land, natural resources or wetlands), including those relating to any release of hazardous materials, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, management, generation, recycling or handling of, or exposure to, Hazardous Materials. Without limitation, Environmental Laws include the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986; the Resource Conservation and

 

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Recovery Act of 1976, as amended by the Used Oil Recycling Act of 1980, the Solid Waste Disposal Act Amendments of 1980 and the Hazardous and Solid Waste Amendments of 1984; the Toxic Substances Control Act, 15 U.S.C.; the Federal Water Pollution Control Act; the Hazardous Materials Transportation Act; the Clean Air Act; the Safe Drinking Water Act; the Federal Insecticide, Fungicide and Rodenticide Act, the Endangered Species Act and The Oil Pollution Act, each as amended and their state and local counterparts or equivalents.

Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock).

Equity Offering” means any public or private sale of Capital Stock (other than Disqualified Stock) by the Borrower after the Closing Date.

ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor statute of similar import, together with all rules and regulations promulgated with respect thereto.

ERISA Affiliate” means the Borrower and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control that, together with the Borrower, are treated as a single employer under Section 414 of the Internal Revenue Code of 1986, as amended.

ERISA Plan” means any employee pension benefit plan subject to Title IV of ERISA Section 412 of the Code or Section 302 of ERISA maintained by any ERISA Affiliate with respect to which any Restricted Person has a fixed or contingent liability (other than a “multiemployer plan” as that term is defined in Section 4001 of ERISA).

EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.

Event of Default” is defined in Section 8.1.

Excess Proceeds” is defined in Section 6.10.

Exchange Act” means the Securities Exchange Act of 1934, as amended.

Exchange Offer” means the Offer to Exchange any and all outstanding 8.500% Senior Notes due 2019 (CUSIP No. 92922P AC0 / ISIN US92922PAC05) and Solicitation of Consents to Proposed Amendments to the Related Indenture date July 25, 2016, as amended by the Exchange Offer Amendment dated August 16, 2016, as further amended, modified or extended from time to time.

Excluded Account” means (i) each deposit account in which all or substantially all of the deposits consist of amounts utilized to fund payroll, employee benefit or tax obligations of the Borrower and its Subsidiaries, (ii) “zero balance” accounts, (iii) escrow accounts for amounts constituting purchase price deposits held in escrow pursuant to a binding and enforceable purchase and sale agreement with a third party containing customary provisions regarding the payment and refunding of such deposits, (iv) escrow accounts, trust accounts or fiduciary accounts and (v) cash collateral accounts permitted under Section 6.12 of this Agreement.

 

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Excluded Assets” means (i) cash, certificates of deposit, deposit accounts, money market accounts or other such liquid assets to the extent that such cash, certificates of deposit, deposit accounts, money market accounts or other such liquid assets are on deposit or maintained with the Priority Lien Collateral Agent or any other holder of Priority Lien Obligations to cash collateralize letters of credit constituting Priority Lien Obligations rather than generally to the holders of the Priority Lien Obligations or to the Priority Lien Collateral Agent for the benefit of the holders of Priority Lien Obligations as a whole, (ii) any governmental approval, license or permit that by its terms or by operation of law or regulation would be void, voidable, terminable or revocable if mortgaged, pledged or assigned under the terms of the Loan Documents; provided, however that such assets will constitute Excluded Assets only (x) so long as the mortgage, pledge or assignment would be void, voidable, terminable or revocable and (y) if excluded from the Collateral securing the Priority Lien Obligations, (iii) Equity Interests in excess of 65% of the voting Equity Interests in Subsidiaries that are (a) FSHCOs or (b) Foreign Subsidiaries that are CFCs or are disregarded entities that own Equity Interests in CFCs, and (iv) other property or assets of the Borrower or any Guarantor that are not required to be subject to a Lien securing the Priority Lien Obligations pursuant to the Priority Lien Documents as of the Closing Date, except to the extent that such property or assets are subject to a Priority Lien generally in favor of all holders of Priority Lien Obligations.

Excluded Subsidiary” means (i) a Domestic Subsidiary that is owned directly or indirectly by a CFC or (ii) a FSHCO.

Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by the Recipient’s net income (however denominated), franchise Taxes imposed on the Recipient, and branch profits Taxes imposed on the Recipient, in each case, (i) by the United States of America (or any political subdivision thereof) or by the jurisdiction (or any political subdivision thereof) under the laws of which such Recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, or (ii) by any other jurisdiction as a result of a present or former connection between the Recipient and the jurisdiction imposing such Tax (other than a connection arising solely from such recipient having executed, delivered, become a party to, performed its obligations under or received payments under, received or perfected a security interest under, or enforced, any Loan Document), (b) in the case of a Foreign Lender, any withholding Tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (other than pursuant to an assignment request by the Borrower under Section 3.5) or designates a new lending office, except, in each case, to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts or indemnification from the Borrower with respect to such withholding Taxes pursuant to Section 3.3(a) or (c), (c) Taxes attributable to a Recipient’s failure to comply with Section 3.3(e), (h), or (j), as applicable, (d) any United States backup withholding Tax and (e) any Taxes imposed under FATCA.

 

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Existing Indebtedness” means Indebtedness of the Borrower and its Subsidiaries (other than Indebtedness under the Existing RCF Agreement, the Existing Second Lien Credit Agreement, the New Second Lien Notes, the New Junior Lien Notes or intercompany Indebtedness) in existence as of the Closing Date, until such amounts are repaid.

Existing Notes” means the Borrower’s existing 8.500% senior notes due 2019.

Existing RCF Agreement” means that certain credit agreement, dated as of November 8, 2013, as amended as of the Closing Date, by and among the Borrower, as borrower, Toronto Dominion (Texas) LLC, as the administrative agent, and the lenders from time to time party thereto, including any related notes, Guarantees, collateral documents, instruments and agreements executed in connection therewith and any Permitted Replacement thereof.

Existing RCF Agreement Agent” means, at any time, the Person serving at such time as the “Agent” or “Administrative Agent” under the Existing RCF Agreement or any other representative then most recently designated in accordance with the applicable provisions of the Existing RCF Agreement, together with its successors in such capacity.

Existing Second Lien Collateral Trustee” means, at any time, the Person serving at such time as “Collateral Trustee” under the Existing Second Lien Credit Agreement or any other representative then most recently designated in accordance with the applicable provisions of the Existing Second Lien Credit Agreement, together with its successors in such capacity.

Existing Second Lien Credit Agreement” means the Term Loan Credit Agreement, dated as of May 11, 2015, by and among the Borrower, Morgan Stanley Senior Funding, Inc. as administrative agent and collateral trustee, the lenders party thereto from time to time and Morgan Stanley Senior Funding, Inc., TD Securities (USA) LLC, Wells Fargo Securities, LLC, Natixis, New York Branch, The Bank of Nova Scotia, Citigroup Global Markets Inc., and Goldman Sachs Bank USA as joint lead arrangers and joint bookrunners, including any related notes, Guarantees, collateral documents, instruments and agreements executed in connection therewith, and, in each case, as amended, restated, modified, renewed, refunded, replaced (whether upon or after termination or otherwise), supplemented or refinanced in whole or in part from time to time.

Existing Unsecured Indenture” means the Indenture, dated as of June 10, 2011, by and among the Borrower, the Guarantors and Wilmington Trust, National Association (as successor trustee to Wells Fargo Bank, National Association).

Fair Market Value” means the value that would be paid by a willing buyer to an unaffiliated willing seller in a transaction not involving distress or necessity of either party, determined in good faith by the Board of Directors of the Borrower (unless the value is less than $10.0 million, in which case it may be determined by an officer of the Borrower), which determination will be conclusive for all purposes under this Agreement.

FATCA” means Sections 1471 through 1474 of the Code (and any amended or successor sections thereto), any present or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code, any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to such intergovernmental agreement.

 

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Federal Funds Rate” shall mean, for any day, the rate per annum (rounded upwards, if necessary, to the nearest 1/100th of one percent) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided, however that (a) if the day for which such rate is to be determined is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if such rate is not so published for any day, the Federal Funds Rate for such day shall be the average rate quoted to the Administrative Agent on such day on such transactions as determined by the Administrative Agent in good faith.

Flood Insurance Regulations” is defined in Section 10.14.

Fixed Charge Coverage Ratio” means with respect to any specified Person for any period, the ratio of the Consolidated Cash Flow of such Person for such period to the Fixed Charges of such Person for such period. In the event that the specified Person or any of its Restricted Subsidiaries incurs, assumes, guarantees, repays, repurchases, redeems, defeases or otherwise discharges any Indebtedness (other than ordinary working capital borrowings) or issues, repurchases or redeems preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated and on or prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the “Calculation Date”), then the Fixed Charge Coverage Ratio will be calculated giving pro forma effect to such incurrence, assumption, guarantee, repayment, repurchase, redemption, defeasance or other discharge of Indebtedness, or such issuance, repurchase or redemption of preferred stock, and the use of the proceeds therefrom, as if the same had occurred at the beginning of the applicable four-quarter reference period.

In addition, for purposes of calculating the Fixed Charge Coverage Ratio:

(1) (i) acquisitions that have been made by the specified Person or any of its Restricted Subsidiaries, including through mergers, consolidations or otherwise (including acquisitions of assets used or useful in the Oil and Gas Business), or any Person or any of its Restricted Subsidiaries acquired by the specified Person or any of its Restricted Subsidiaries, and including any related financing transactions and including increases in ownership of Restricted Subsidiaries, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date, shall be deemed to have occurred on the first day of the four-quarter reference period and (ii) the Consolidated Cash Flow for such reference period will be calculated giving pro forma effect to any expense and cost reductions that have occurred or, in the reasonable judgment of the chief financial officer of the Borrower, are reasonably expected to occur in the next 12 months (regardless of whether those operating improvements or cost savings could then be reflected in pro forma financial statements prepared in accordance with Regulation S-X under the Securities Act or any other regulation or policy of the SEC related thereto); provided that the aggregate amount to be included in calculating the

 

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Consolidated Cash Flow pursuant to subsection (ii) in this clause (1) shall not exceed 10% of Consolidated Cash Flow (determined before giving effect to subsection (ii) of this clause (1)) for such period);

(2) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses (and ownership interests therein) disposed of prior to the Calculation Date, will be excluded;

(3) the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses (and ownership interests therein) disposed of prior to the Calculation Date, will be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the specified Person or any of its Restricted Subsidiaries following the Calculation Date;

(4) any Person that is a Restricted Subsidiary on the Calculation Date will be deemed to have been a Restricted Subsidiary at all times during such four-quarter period;

(5) any Person that is not a Restricted Subsidiary on the Calculation Date will be deemed not to have been a Restricted Subsidiary at any time during such four-quarter period; and

(6) if any Indebtedness bears a floating rate of interest, the interest expense on such Indebtedness will be calculated as if the rate in effect on the Calculation Date had been the applicable rate for the entire period (taking into account any Hedging Obligation applicable to such Indebtedness if such Hedging Obligation has a remaining term as at the Calculation Date in excess of 12 months).

Fixed Charges” means, with respect to any specified Person for any period, the sum, without duplication, of:

(1) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued (excluding any interest attributable to Dollar-Denominated Production Payments but including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, imputed interest with respect to Attributable Debt, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers’ acceptance financings) and net of the effect of all payments made or received pursuant to Hedging Obligations in respect of interest rates; plus

(2) the consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period; plus

(3) any interest on Indebtedness of another Person that is guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries, whether or not such Guarantee or Lien is called upon; plus

(4) all dividends, whether paid or accrued and whether or not in cash, on any series of preferred stock of such Person or any of its Restricted Subsidiaries, other than dividends on Equity Interests payable solely in Equity Interests of the Borrower (other than Disqualified Stock) or to the Borrower or a Restricted Subsidiary of the Borrower.

 

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Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other than the United States of America, any State thereof or the District of Columbia.

Foreign Subsidiary” means any Subsidiary that is organized under the laws of a jurisdiction other than the United States of America, any State thereof or the District of Columbia.

FSHCO” means any Domestic Subsidiary (including a disregarded entity for U.S. federal income tax purposes) that has no material assets (held directly or through Subsidiaries) other than (i) Equity Interests of one or more CFCs or (ii) Equity Interests of one or more CFCs and indebtedness of one or more CFCs.

GAAP” means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect on the date of this Agreement.

Guarantee” means a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to maintain financial statement conditions or otherwise), or entered into for purposes of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part).

Guarantors” means:

(1) each Subsidiary of the Borrower that provided a Guarantee of the Obligations on the Closing Date; and

(2) any other Restricted Subsidiary of the Borrower that becomes a Guarantor in accordance with Section 6.14,

and their respective successors and assigns, in each case, until the Guarantee of such Person has been released in accordance with the provisions of this Agreement.

Hazardous Materials” means (a) any petroleum or petroleum product (including crude oil or fraction thereof), explosive, radioactive material, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, lead and radon gas; (b) any chemical, material, gas substance waste which is defined as or included in the definition of “hazardous substance”, “hazardous waste”, “hazardous material”, “extremely hazardous substance”, “hazardous

 

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chemical”, “toxic substance”, “toxic chemical”, “contaminant” or “pollutant” or words of similar import under any Environmental Law; and (c) any other chemical, material, gas substance or waste, exposure to which, or the presence, use, generation, treatment, Release, transport or storage of which is prohibited, limited or regulated under any Environmental Law.

Hedging Contract” means (a) any agreement providing for options, swaps, floors, caps, collars, forward sales or forward purchases involving interest rates, commodities or commodity prices, equities, currencies, bonds, or indexes based on any of the foregoing, (b) any option, futures or forward contract traded on an exchange, and (c) any other hedging contract, derivative agreement or other similar agreement or arrangement.

Hedging Obligations” means, with respect to any specified Person, the obligations of such Person under:

(1) interest rate swap agreements (whether from fixed to floating or from floating to fixed), interest rate cap agreements and interest rate collar agreements entered into with one or more financial institutions and other arrangements or agreements designed to protect the Person entering into the agreement against fluctuations in interest rates with respect to Indebtedness incurred;

(2) foreign exchange contracts and currency protection agreements entered into with one or more financial institutions and designed to protect the Person entering into the agreement against fluctuations in currency exchange rates with respect to Indebtedness incurred;

(3) any commodity futures contract, commodity option or other similar agreement or arrangement designed to protect against fluctuations in the price of commodities used, produced, processed or sold by that Person or any of its Restricted Subsidiaries at the time; and

(4) other agreements or arrangements designed to protect such Person against fluctuations in interest rates, commodity prices or currency exchange rates.

Hydrocarbon Interests” 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, working interests, overriding royalty and royalty interests, net profit interests and production payment interests, including any reserved or residual interests of whatever nature.

Hydrocarbons” means crude oil, natural gas, casinghead gas, drip gasoline, natural gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and all constituents, elements or compounds thereof and products refined or processed therefrom.

Increased Costs” is defined in Section 3.6.

Indebtedness” means, with respect to any specified Person, any indebtedness of such Person (excluding accrued expenses and trade payables), whether or not contingent:

(1) in respect of borrowed money;

 

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(2) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof);

(3) in respect of banker’s acceptances;

(4) representing Capital Lease Obligations or Attributable Debt in respect of sale and leaseback transactions;

(5) representing the balance deferred and unpaid of the purchase price of any property due more than nine months after such property is acquired; and

(6) representing any Hedging Obligations,

if, and to the extent that, any of the items described in clauses (1), (2), (4) and (5) above would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP.

In addition, the term “Indebtedness” includes (1) all Indebtedness described in the preceding paragraph of another Person secured by a Lien on any asset of the specified Person, whether or not such Indebtedness is assumed by the specified Person; provided, however, that the amount of such Indebtedness will be the lesser of (a) the Fair Market Value of such asset at such date of determination and (b) the amount of such Indebtedness of such other Person, and (2) to the extent not otherwise included, the Guarantee by the specified Person of any Indebtedness described in the preceding paragraph of any other Person (including, with respect to any Production Payment, any warranties or guarantees of production or payment by such Person with respect to such Production Payment, but excluding other contractual obligations of such Person with respect to such Production Payment). Notwithstanding any other provision of this definition, neither Dollar-Denominated Production Payments nor Volumetric Production Payments shall be deemed to be Indebtedness.

In addition, “Indebtedness” of any Person shall include Indebtedness described in the preceding paragraph that would not appear as a liability on the balance sheet of such Person if:

(1) such Indebtedness is the obligation of a Joint Venture that is not a Restricted Subsidiary;

(2) such Person or a Restricted Subsidiary of such Person is a general partner of the Joint Venture (a “General Partner”); and

(3) there is recourse, by contract or operation of law, with respect to the payment of such Indebtedness to property or assets by such Person or a Restricted Subsidiary of such Person;

and then such Indebtedness shall be included in an amount not to exceed:

(a) the lesser of (i) the net assets of the General Partner and (ii) the amount of such obligations to the extent that there is recourse, by contract or operation of law, to the property or assets of such Person or a Restricted Subsidiary of such Person; or

(b) if less than the amount determined pursuant to clause (a) immediately above, the actual amount of such Indebtedness that is recourse to such Person or a Restricted Subsidiary of such Person, if the Indebtedness is evidenced by a writing and is for a determinable amount and the related interest expense shall be included in Fixed Charges to the extent actually paid by such Person or its Restricted Subsidiaries.

 

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Indemnified Taxes” means Taxes other than Excluded Taxes and Other Taxes.

Initial Financial Statements” means the audited consolidated financial statements of the Borrower for the fiscal year ended December 31, 2015, and the unaudited interim consolidated financial statements of the Borrower for the three months ended March 31, 2016 and the six months ended June 30, 2016.

Intercreditor Agreements” means the Senior Lien Intercreditor Agreement and the Second Lien Intercreditor Agreement.

Investments” means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of loans (including Guarantees or other obligations) advances or capital contributions (excluding endorsements of negotiable instruments and documents in the ordinary course of business, and commission, travel and similar advances to officers, employees and consultants made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Borrower or any Restricted Subsidiary of the Borrower sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary of the Borrower such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary of the Borrower, the Borrower will be deemed to have made an Investment on the date of any such sale or disposition equal to the Fair Market Value of the Borrower’s Investments in such Restricted Subsidiary that were not sold or disposed of in an amount determined as provided in Section 6.7(c). The acquisition by the Borrower or any Subsidiary of the Borrower of a Person that holds an Investment in a third Person will be deemed to be an Investment by the Borrower or such Subsidiary in such third Person in an amount equal to the Fair Market Value of the Investments held by the acquired Person in such third Person in an amount determined as provided in Section 6.7(c). Except as otherwise provided in this Agreement, the amount of an Investment will be determined at the time the Investment is made and without giving effect to subsequent changes in value.

Investment Grade Securities” means:

(1) securities issued or directly and fully guaranteed or insured by the U.S. government or any agency or instrumentality thereof (other than Cash Equivalents) and in each case with maturities not exceeding two years from the date of acquisition;

 

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(2) investments in any fund that invests exclusively in investments of the type described in clause (1) which fund may also hold immaterial amounts of cash pending investment and/or distribution; and

(3) corresponding instruments in countries other than the United States customarily utilized for high quality investments and in each case with maturities not exceeding two years from the date of acquisition.

Joint Venture” means any Person that is not a direct or indirect Subsidiary of the Borrower in which the Borrower or any of its Restricted Subsidiaries directly or indirectly makes any Investment.

Junior Lien” means a Lien, junior to the Priority Liens, the 1.5 Liens and the Second Liens, as provided in the Second Lien Intercreditor Agreement, granted by the Borrower or any Guarantor in favor of the Junior Lien Collateral Agent, at any time, upon any property of the Borrower or any Guarantor to secure Junior Lien Obligations.

Junior Lien Collateral Agent” means the New Junior Lien Notes Collateral Trustee (or such Person designated by the New Junior Lien Notes Collateral Trustee), or if the New Junior Lien Notes Collateral Trustee ceases to exist, the collateral trustee or other representative of lenders or holders of Junior Lien Obligations designated pursuant to the terms of the Junior Lien Documents and the Second Lien Intercreditor Agreement.

Junior Lien Debt” means:

(1) Indebtedness of the Borrower and the Guarantors under the New Junior Lien Notes that is subject to the Second Lien Intercreditor Agreement and permitted to be incurred and secured under each applicable Secured Debt Document, and

(2) any other Indebtedness (other than intercompany Indebtedness owing to the Borrower or its Subsidiaries) of the Borrower or any Guarantor that is secured by substantially the same assets as the New Junior Lien Notes by a Junior Lien that was permitted to be incurred and so secured under each applicable Secured Debt Document; provided, however that, in the case of any Indebtedness referred to in this definition:

(a) on or before the date on which such Indebtedness is incurred by the Borrower or any Guarantor, such Indebtedness is designated by the Borrower, in an officers’ certificate delivered to the Junior Lien Collateral Agent and collateral trustee as “Junior Lien Debt” for the purposes of the Secured Debt Documents; provided, however that if such Series of Secured Debt is designated “Junior Lien Debt,” it cannot also be designated as Priority Lien Debt, 1.5 Lien Debt or Second Lien Debt (or any combination of the four);

(b) the collateral agent or other representative with respect to such Indebtedness, the Priority Lien Collateral Agent, the 1.5 Lien Collateral Agent, the Second Lien Collateral Agent, the Junior Lien Collateral Agent, the collateral trustee, the Borrower and each applicable Guarantor have duly executed and delivered the Second Lien Intercreditor Agreement (or a joinder to the Second

 

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Lien Intercreditor Agreement or a new Second Lien Intercreditor Agreement substantially similar to the Second Lien Intercreditor Agreement, as in effect on the date of this Agreement, and in a form reasonably acceptable to each of the parties thereto); and

(c) all other requirements set forth in the Second Lien Intercreditor Agreement as to the confirmation, grant or perfection of the Junior Lien Collateral Agent’s Liens to secure such Indebtedness or Liabilities in respect thereof are satisfied.

Junior Lien Documents” means, collectively, the New Junior Lien Indenture, the New Junior Lien Notes and any other Credit Facility pursuant to which any Junior Lien Debt is incurred and the documents pursuant to which Junior Lien Obligations are granted.

Junior Lien Obligations” means Junior Lien Debt and all other Liabilities in respect of Junior Lien Debt, in each case, that are secured by the Junior Liens.

Law” means any statute, law, regulation, ordinance, rule, treaty, judgment, order, decree, permit, concession, franchise, license, agreement or other governmental restriction of the United States or any state or political subdivision or regulatory agency thereof or of any foreign country or any department, province or other political subdivision thereof, including, without limitation, Environmental Laws.

Lender Parties” means the Administrative Agent, the Lenders and their successors, transferees and permitted assigns; and “Lender Party” means any of them.

Lenders” is defined in the preamble hereto.

Lending Office” means, with respect to any Lender, the office, branch, or agency through which it funds its Loans.

Liabilities” means, as to any Person, all indebtedness, liabilities and obligations of such Person, whether matured or unmatured, liquidated or unliquidated, primary or secondary, direct or indirect, absolute, fixed or contingent, and whether or not required to be considered pursuant to GAAP.

Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of any financing statement under the UCC (or equivalent statutes) of any jurisdiction.

Loan” is defined in Section 2.1.

Loan Documents” means this Agreement, the Notes, the Administrative Agent Fee Letter, any Guarantee of the Obligations, the Security Documents and all other agreements, amendments, supplements or other modifications, certificates, documents, instruments and

 

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writings at any time delivered in connection herewith or therewith (exclusive of term sheets, commitment letters, correspondence and similar documents used in the negotiation hereof, but inclusive of any fee letters between any Restricted Person and the Administrative Agent).

Loan Parties” means the Borrower and the Guarantors.

Material Adverse Change” means a material adverse change in, or material adverse effect on (a) the business, operations, property or condition (financial or otherwise) of the Borrower and its Restricted Subsidiaries taken as a whole, (b) the ability of the Borrower or any Restricted Subsidiary to perform any of its obligations under the Loan Documents to which it is a party or (c) the validity or enforceability of any of the Loan Documents or the rights or remedies of or benefits available to the Administrative Agent or the Lenders thereunder.

Maturity Date” means November 15, 2019; provided, however that, if the Existing Notes are not refinanced in whole prior to February 28, 2019 with indebtedness maturing at least 91 days after November 15, 2019, the Maturity Date shall be February 28, 2019.

Minimum Amount” means $5.0 million.

Minority Interest” means the percentage interest represented by any Capital Stock of a Restricted Subsidiary of the Borrower that is not owned by the Borrower or a Restricted Subsidiary of the Borrower.

Mobile Home” has the meaning assigned to the term “Manufactured Home” and “Mobile Home” in the applicable Flood Insurance Regulation; provided, however that, in no event shall the term “Mobile Home” include platforms and other structures located in state or federal waters offshore of the United States or other areas that are not subject to Flood Insurance Regulation.

Moody’s” means Moody’s Investors Service, Inc. or any successor to the rating agency business thereof.

Mortgaged Properties” means all property listed on Schedule 4 and all other property of any Restricted Person as to which a mortgage lien, deed of trust lien or similar lien shall be granted by such Restricted Person in favor of the Administrative Agent and/or a trustee pursuant to a deed of trust, mortgage or other similar instrument in form and substance reasonably satisfactory to the Administrative Agent in order to secure the Obligations, subject, however, to Section 10.14(b).

Mortgages” means all mortgages, deeds of trust and similar documents, instruments and agreements (and all amendments, modifications and supplements thereof) creating, evidencing, perfecting or otherwise establishing the Liens on the Mortgaged Properties and other related assets to secure payment of the Obligations or any part thereof.

 

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Net Income” means, with respect to any specified Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however:

(1) any gain (or loss), together with any related provision for taxes on such gain (but not loss), realized in connection with:

 

  (a) any Asset Sale; or

 

  (b) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries; and

(2) any extraordinary or nonrecurring gain (or loss), together with any related provision for taxes on such extraordinary or nonrecurring gain (or loss).

Net Proceeds” means the aggregate cash proceeds received by the Borrower or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of:

(1) all legal, accounting, investment banking, title and recording tax expenses, commissions and other fees and expenses incurred, and all federal, state, provincial, foreign and local taxes required to be paid or accrued as a liability under GAAP (after taking into account any available tax credits or deductions and any tax sharing agreements), as a consequence of such Asset Sale;

(2) all payments made on any Indebtedness (other than any Secured Debt, including any revolving credit Indebtedness) which is secured by any assets subject to such Asset Sale, in accordance with the terms of any Lien upon such assets, or which must by its terms or by applicable law be repaid out of the proceeds from such Asset Sale;

(3) all distributions and other payments required to be made to holders of Minority Interests in Subsidiaries or joint ventures as a result of such Asset Sale; and

(4) the deduction of appropriate amounts to be provided by the seller as a reserve, in accordance with GAAP, or held in escrow, in either case for adjustment in respect of the sale price or for any liabilities associated with the assets disposed of in such Asset Sale and retained by the Borrower or any Restricted Subsidiary after such Asset Sale.

Net Working Capital” means (a) all current assets of the Borrower and its Restricted Subsidiaries except current assets from commodity price risk management activities arising in the ordinary course of business, less (b) all current liabilities of the Borrower and its Restricted Subsidiaries, except current liabilities included in Indebtedness and any current liabilities from commodity price risk management activities arising in the ordinary course of business, in each case as set forth in the consolidated financial statements of the Borrower prepared in accordance with GAAP (excluding any adjustments made pursuant to FASB ASC Topic 815).

 

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New Junior Lien Notes” means the Borrower’s 8.50%/10.00% Third Lien PIK Toggle Notes due 2021 issued pursuant to the New Junior Lien Notes Indenture, as amended, restated, refinanced, supplemented, modified or replaced.

New Junior Lien Notes Collateral Trustee” means Wilmington Trust, N.A.

New Junior Lien Notes Indenture” means the indenture dated as of the date hereof for the New Junior Lien Notes, as amended, restated, refinanced, supplemented, modified or replaced.

New Second Lien Notes” means the Borrower’s 9.00%/10.75% Second Lien PIK Toggle Notes due 2020 issued pursuant to the New Second Lien Notes Indenture, as amended, restated, refinanced, supplemented, modified or replaced.

New Second Lien Notes Indenture” means the indenture dated as of the date hereof for the New Second Lien Notes, as amended, restated, refinanced, supplemented, modified or replaced.

Non-Consenting Lender” is defined in Section 10.1(h).

Non-Recourse Debt” means Indebtedness:

(1) as to which neither the Borrower nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (b) is directly or indirectly liable as a guarantor or otherwise, or (c) constitutes the lender; and

(2) no default with respect to which (including any rights that the holders of the Indebtedness may have to take enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any holder of any other Indebtedness of the Borrower or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment of the Indebtedness to be accelerated or payable prior to its Stated Maturity.

Note” means a promissory note of the Borrower payable to any Lender, in the form of Exhibit A hereto (as such promissory note may be amended or otherwise modified from time to time), evidencing the aggregate Indebtedness of the Borrower to such Lender resulting from outstanding Loans, and also means all other promissory notes accepted from time to time in substitution therefor or renewal thereof.

NYMEX Pricing” means, as of any date of determination with respect to any month (i) for crude oil, the closing settlement price for the Light, Sweet Crude Oil futures contract for such month, and (ii) for natural gas, the closing settlement price for the Henry Hub Natural Gas futures contract for such month, in each case as published by New York Mercantile Exchange (NYMEX) on its website currently located at www.cmegroup.com, or any successor thereto (as such price may be corrected or revised from time to time by the NYMEX in accordance with its rules and regulations).

 

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Obligations” means all Liabilities from time to time owing by any Restricted Person to any Lender Party under or pursuant to any of the Loan Documents, including, without limitation, all amounts in respect of any principal, premium, interest, penalties, fees, expenses, indemnifications, reimbursements, damages and other liabilities (including any interest, fees, premium and expenses accruing subsequent to the filing of a petition in bankruptcy, reorganization or similar proceeding at the rate provided for in this Agreement, whether or not such interest, fees or expenses is an allowed claim under any such proceeding or under applicable state, federal or foreign law), and guarantees of the foregoing amounts.

Obligation” means any part of the Obligations.

Officer’s Certificate” means a certificate signed on behalf of the Borrower by an Authorized Officer of the Borrower.

Oil and Gas Business” means:

(1) the acquisition, exploration, exploitation, development, production, operation and disposition of interests in crude oil, natural gas and other Hydrocarbon properties;

(2) the gathering, marketing, treating, processing (but not refining), storage, distribution, selling and transporting of any production from such interests or properties;

(3) any business relating to exploration for or development, production, exploitation, treatment, processing (but not refining), storage, transportation or marketing of oil, gas and other minerals and products produced in association therewith; and

(4) any activity that is ancillary or complementary to or necessary or appropriate for the activities described in clauses (1) through (3) of this definition.

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) which may affect all or any portion of the Hydrocarbon Interests; all operating agreements, contracts and other agreements which relate to any of the Hydrocarbon Interests or the production, sale, purchase, exchange or processing of Hydrocarbons from or attributable to such Hydrocarbon Interests; all hydrocarbons in and under and which may be produced and saved or attributable to the Hydrocarbon Interests, including all oil in tanks, the lands covered thereby and all rents, issues, profits, proceeds, products, revenues and other incomes from or attributable to the Hydrocarbon Interests; all tenements, hereditaments, appurtenances and properties in any manner appertaining, belonging, affixed or incidental to the Hydrocarbon Interests; and all properties, rights, titles, interests and estates described or referred to above, including any and all property, real or personal, now owned or hereinafter acquired and situated upon, used, held for use or useful in connection with the operating, working or development of any of such Hydrocarbon Interests or property (excluding drilling rigs, automotive equipment or other personal property which may be on such premises for the purpose of drilling a well or for other similar temporary uses) and including any and all oil wells, gas wells, injection wells or

 

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other wells (including those used for either environmental sampling or remedial purposes), 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.

Other Taxes” means any and all present or future stamp, court or documentary Taxes and any other excise, intangible, recording, filing, property or similar Taxes, charges or levies arising from any payment made hereunder or from the execution, delivery, registration or enforcement of, or otherwise with respect to, any Loan Document, except any such Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 3.5) as a result of a present or former connection between the Recipient and the jurisdiction imposing such Tax (other than a connection arising solely from such Recipient having executed, delivered, become a party to, performed its obligations under or received payments under, received or perfected a security interest under, or enforced, any Loan Document).

Participant Register” is defined in Section 10.6(a).

Patriot Act” is defined in Section 10.16.

Payment Date” means (a) the last Business Day of each March, June, September and December (commencing with December 2016) and (b) any day on which past due interest or principal is owed under the Loans and is unpaid. If the terms of any Loan Document provide that payments of interest or principal on the Loans shall be deferred from one Payment Date to another day, such other day shall also be a Payment Date.

Payment Office” means, with respect to the Administrative Agent, the office, branch or account through which it administers this Agreement and to which payments shall be made hereunder, as designated in writing from time to time by the Administrative Agent.

Percentage Share” means, at any time and with respect to any Lender, the percentage obtained by dividing (a) the Commitment (or, after the making of the Loans on the Closing Date, aggregate principal amount of the outstanding Loans) of such Lender, by (b) the aggregate Commitments (or, after the making of the Loans on the Closing Date, aggregate principal amount of the outstanding Loans) of all Lenders.

Permitted Acquisition Indebtedness” means Indebtedness or Disqualified Stock of the Borrower or any of the Borrower’s Restricted Subsidiaries to the extent such Indebtedness or Disqualified Stock was Indebtedness or Disqualified Stock of:

(1) a Subsidiary prior to the date on which such Subsidiary became a Restricted Subsidiary; or

(2) a Person that was merged, consolidated or amalgamated into the Borrower or a Restricted Subsidiary;

 

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provided, however that on the date such Subsidiary became a Restricted Subsidiary or the date such Person was merged, consolidated and amalgamated into the Borrower or a Restricted Subsidiary, as applicable, after giving pro forma effect thereto:

(a) the Restricted Subsidiary or the Borrower, as applicable, would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 6.9(a);

(b) the Fixed Charge Coverage Ratio for the Restricted Subsidiary or the Borrower, as applicable, would be greater than the Fixed Charge Coverage Ratio for such Restricted Subsidiary or the Borrower immediately prior to such transaction; or

(c) the Consolidated Net Worth of the Restricted Subsidiary or the Borrower, as applicable, would be greater than the Consolidated Net Worth of such Restricted Subsidiary or the Borrower immediately prior to such transaction.

Permitted Business Investments” means Investments made in the ordinary course of, and of a nature that is or shall have become customary in, the Oil and Gas Business, including through agreements, transactions, interests or arrangements that permit one to share risk or costs, comply with regulatory requirements regarding local ownership or satisfy other objectives customarily achieved through the conduct of the Oil and Gas Business jointly with third parties, including without limitation:

(1) direct or indirect ownership of crude oil, natural gas, other related Hydrocarbon and mineral properties or any interest therein or gathering, transportation, processing, storage or related systems or ancillary real property interests; and

(2) Investments in the form of, pursuant to or in accordance with operating agreements, working interests, royalty interests, mineral leases, processing agreements, farm-in agreements, farm-out agreements, contracts for the sale, transportation or exchange of oil, natural gas, other Hydrocarbons and minerals, production sharing agreements, participation agreements, development agreements, area of mutual interest agreements, unitization agreements, pooling agreements, joint bidding agreements, service contracts, joint venture agreements, partnership agreements (whether general or limited), subscription agreements, stock purchase agreements, stockholder agreements and other similar or customary agreements (including for limited liability companies) with third parties, transactions, properties, interests or arrangements and Investments and expenditures in connection therewith or pursuant thereto.

Permitted Conforming Priority Lien Debt” is defined in Section 6.9.

Permitted Debt” is defined in Section 6.9.

Permitted Investments” means

(1) any Investment in the Borrower or in a Restricted Subsidiary of the Borrower;

 

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(2) any Investment in Cash Equivalents or Investment Grade Securities;

(3) any Investment by the Borrower or any Restricted Subsidiary of the Borrower in a Person, if as a result of such Investment:

(a) such Person becomes a Restricted Subsidiary of the Borrower; or

(b) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Borrower or a Restricted Subsidiary of the Borrower;

(4) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with Section 6.10;

(5) any acquisition of assets or Capital Stock solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Borrower;

(6) any Investments received in compromise or resolution of (A) obligations of trade creditors or customers that were incurred in the ordinary course of business of the Borrower or any of its Restricted Subsidiaries, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer; or (B) litigation, arbitration or other disputes with Persons who are not Affiliates;

(7) Investments represented by Hedging Obligations;

(8) loans or advances to employees in the ordinary course of business made for bona fide business purposes not to exceed $5.0 million in the aggregate at any time outstanding;

(9) receivables owing to the Borrower or any Restricted Subsidiary created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as the Borrower or any such Restricted Subsidiary deems reasonable under the circumstances;

(10) surety and performance bonds and workers’ compensation, utility, lease, tax, performance and similar deposits and prepaid expenses in the ordinary course of business;

(11) Guarantees of Indebtedness permitted under Section 6.9;

(12) Guarantees by the Borrower or any of its Restricted Subsidiaries of operating leases (other than Capital Lease Obligations) or of other obligations that do not constitute Indebtedness, in each case entered into by any Restricted Subsidiary in the ordinary course of business;

 

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(13) Investments of a Restricted Subsidiary acquired after the Closing Date or of any entity merged into the Borrower or merged into or consolidated or amalgamated with a Restricted Subsidiary in accordance with Section 7.1 to the extent that such Investments were not made in contemplation of or in connection with such acquisition, merger or consolidation and were in existence on the date of such acquisition, merger or consolidation;

(14) Permitted Business Investments;

(15) Investments received as a result of a foreclosure by the Borrower or any of its Restricted Subsidiaries with respect to any secured Investment in default;

(16) Investments in any units of any oil and gas royalty trust; and

(17) other Investments in any Person (other than any Unrestricted Subsidiary) having an aggregate Fair Market Value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (17) that are at the time outstanding not to exceed the greater of (i) $15.0 million and (ii) 1% of Adjusted Consolidated Net Tangible Assets.

Permitted Liens” means:

(1) Liens securing the Priority Lien Debt, the Second Lien Debt or the Junior Lien Debt incurred under clause (1) of the definition of “Permitted Debt”;

(2) Liens securing the Loans incurred on the Closing Date and the Liabilities of the Borrower and the Guarantors arising under the Loan Documents;

(3) Liens in favor of the Borrower or the Guarantors;

(4) Liens on property of a Person existing at the time such Person is merged with or into or consolidated with the Borrower or any Subsidiary of the Borrower; provided, however that such Liens were in existence prior to the contemplation of such merger or consolidation and do not extend to any assets other than those of the Person merged into or consolidated with the Borrower or the Subsidiary;

(5) Liens on property (including Capital Stock) existing at the time of acquisition of the property by the Borrower or any Subsidiary of the Borrower; provided, however that such Liens were in existence prior to such acquisition and not incurred in contemplation of such acquisition;

(6) Liens (other than for borrowed money) existing on the Closing Date (other than Liens described in another clause of this definition);

(7) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded; provided, however that any reserve or other appropriate provision as is required in conformity with GAAP has been made therefor;

 

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(8) Liens arising from survey exceptions, easements or reservations of, or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real property that were not incurred in connection with Indebtedness and that do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person;

(9) Liens arising from leases or subleases granted to others that do not materially interfere with the ordinary course of business of the Borrower and its Restricted Subsidiaries, taken as a whole;

(10) landlords’, carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or the like Liens arising by contract or statute in the ordinary course of business and with respect to amounts which are not yet delinquent or are being contested in good faith by appropriate proceedings;

(11) Liens arising from pledges or deposits made in the ordinary course of business (A) in connection with leases, tenders, bids, statutory obligations, surety or appeal bonds, government contracts, performance bonds and similar obligations, or (B) in connection with workers’ compensation, unemployment insurance and other social security legislation;

(12) Liens encumbering property or assets under construction arising from progress or partial payments by a customer of the Borrower or its Restricted Subsidiaries relating to such property or assets;

(13) Liens in favor of customs and revenue authorities arising as a matter of law to secure payments of customs duties in connection with the importation of goods;

(14) any attachment or judgment Lien that does not constitute an Event of Default;

(15) Liens to secure any Permitted Refinancing Indebtedness permitted to be incurred under this Agreement; provided, however, that

(a) the new Lien shall be limited to all or part of the same property and assets that secured or, under the written agreements pursuant to which the original Lien arose, could secure the original Lien (plus improvements and accessions to, such property or proceeds or distributions thereof); and

(b) the Indebtedness secured by the new Lien is not increased to any amount greater than the sum of (x) the outstanding principal amount, or, if greater, committed amount, of the Permitted Refinancing Indebtedness and (y) an amount necessary to pay any fees and expenses, including premiums, related to such renewal, refunding, refinancing, replacement, defeasance or discharge;

 

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(16) Liens for the purpose of securing the payment of all or a part of the purchase price of, or Capital Lease Obligations with respect to, or the repair, improvement or construction cost of, assets or property acquired or repaired, improved or constructed in the ordinary course of business; provided, however that:

(a) the aggregate principal amount of Indebtedness secured by such Liens is otherwise permitted to be incurred under this Agreement and does not exceed the cost of the assets or property so acquired or repaired, improved or constructed plus fees and expenses in connection therewith; and

(b) such Liens are created within 180 days of repair, improvement, construction or acquisition of such assets or property and do not encumber any other assets or property of the Borrower or any of its Restricted Subsidiaries other than such assets or property and assets affixed or appurtenant thereto (including improvements);

(17) Liens arising solely by virtue of any statutory or common law provisions relating to banker’s Liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained or deposited with a depositary institution; provided, however that:

(a) such deposit account is not a dedicated cash collateral account and is not subject to restrictions against access by the Borrower in excess of those set forth by regulations promulgated by the Federal Reserve Board; and

(b) such deposit account is not intended by the Borrower or any Restricted Subsidiary to provide collateral to the depositary institution;

(18) Liens arising from Uniform Commercial Code financing statement filings regarding operating leases entered into by the Borrower and its Restricted Subsidiaries in the ordinary course of business;

(19) Liens in respect of Production Payments and Reserve Sales;

(20) Liens on pipelines and pipeline facilities that arise by operation of law;

(21) Liens arising from farmout, carried working interest, joint operating, unitization, royalty, sales and similar agreements relating to the exploration or development of, or production from, oil and gas properties entered into in the ordinary course of business;

(22) Liens reserved in oil and gas mineral leases for bonus or rental payments and for compliance with the terms of such leases;

(23) Liens arising under this Agreement in favor of the Administrative Agent for its own benefit and similar Liens in favor of other trustees, agents and representatives arising under instruments governing Indebtedness permitted to be incurred under this Agreement, provided, however, that such Liens are solely for the benefit of the trustees, agents or representatives in their capacities as such and not for the benefit of the holders of the Indebtedness;

 

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(24) Liens securing Hedging Obligations of the Borrower and its Restricted Subsidiaries incurred under clause (8) of the definition of “Permitted Debt”;

(25) Liens on and pledges of the Equity Interests of any Unrestricted Subsidiary or any Joint Venture owned by the Borrower or any of its Restricted Subsidiary to the extent securing Non-Recourse Debt of such Unrestricted Subsidiary or Joint Venture;

(26) Liens upon specific items of inventory, receivables or other goods or proceeds of the Borrower or any of its Restricted Subsidiaries securing such Person’s obligations in respect of bankers’ acceptances or receivables securitizations issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory, receivables or other goods or proceeds and permitted by Section 6.9;

(27) Liens securing Indebtedness of the Borrower or any Guarantor to the extent such Indebtedness constitutes Junior Lien Debt; provided that after giving effect to such incurrence, the ratio of (x) Adjusted Consolidated Net Tangible Assets (solely for purposes of this clause (27) references to the SEC guidelines in the definition of Adjusted Consolidated Net Tangible Assets shall instead refer to the Strip Price (after giving effect to (i) commodity derivatives contracts in effect as of the date of determination and (ii) current estimates of costs determined in good faith by the Borrower in light of prevailing market conditions) but otherwise in accordance with SEC guidelines) to (y) the aggregate principal amount of Secured Debt, together with any Permitted Refinancing Indebtedness incurred to extend, refinance, renew, replace, defease or refund such Secured Debt, (with the full amount of availability under Credit Facilities being deemed to have been incurred on the date of determination and with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Borrower and its Subsidiaries thereunder) that is then outstanding, determined after giving effect to such incurrence, is at least 1.1 to 1.0; and

(28) Liens of the Borrower or any Subsidiary of the Borrower with respect to Indebtedness (other than with respect to Priority Lien Debt or 1.5 Lien Debt) that does not exceed in principal amount the greater of (a) $25.0 million at any one time outstanding and (b) 1.0% of the Adjusted Consolidated Net Tangible Assets determined as of the date of the incurrence of such Indebtedness after giving pro forma effect to such incurrence and the application of proceeds therefrom.

Permitted Refinancing Indebtedness” means any Indebtedness of the Borrower or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge other Indebtedness of the Borrower or any of its Restricted Subsidiaries (other than intercompany Indebtedness); provided, however that:

(1) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if

 

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applicable) of the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged (plus all accrued interest on the Indebtedness and the amount of all fees and expenses, including premiums, incurred in connection therewith);

(2) (a) if the final maturity date of the Indebtedness being extended, renewed, refunded, refinanced, replaced, defeased or discharged is earlier than the final repayment date of the Loans, the Permitted Refinancing Indebtedness has a final maturity date no earlier than the final maturity date of the Indebtedness being extended, renewed, refunded, discharged, refinanced, replaced or defeased, or

(b) if the final maturity date of the Indebtedness being extended, renewed, refunded, refinanced, replaced, defeased or discharged is later than the final repayment date of the Loans, the Permitted Refinancing Indebtedness has a final maturity date at least 91 days later than the final repayment date of the Loans;

(3) if the Indebtedness being extended, renewed, refunded, refinanced, replaced, defeased or discharged is subordinated in right of payment to the Loans, such Permitted Refinancing Indebtedness is subordinated in right of payment to the Loans on terms at least as favorable to the Lenders as those contained in the documentation governing the Indebtedness being extended, renewed, refunded, refinanced, replaced, defeased or discharged; and

(4) such Indebtedness is incurred either by the Borrower or by the Restricted Subsidiary who is the obligor on the Indebtedness being extended, renewed, refunded, refinanced, replaced, defeased or discharged; provided, however, that a Restricted Subsidiary that is also a Guarantor may guarantee Permitted Refinancing Indebtedness incurred by the Borrower, whether or not such Restricted Subsidiary was an obligor or guarantor of the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged.

Permitted Replacement” means, with respect to the Existing RCF Agreement, a reserved based credit facility which (a) shall refinance or replace the Existing RCF Agreement in full and with respect to which, on the date of such replacement or refinancing, lenders holding at least 50.1% of the commitments and loans thereunder are (i) commercial bank lenders, (ii) investments banks or (iii) Affiliates of Persons described in clauses (i) and (ii), which, in each case, regularly participate in reserve based credit facilities and (b) would otherwise constitute Permitted Refinancing Indebtedness hereunder.

Person” means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company or government or other entity.

Principals” means (a) Tracy W. Krohn, his spouse, Laurie P. Krohn, and their immediate family and descendants by blood or adoption and (b) the Backstop Lender.

 

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Priority Lien” means a Lien granted by the Borrower or any Guarantor in favor of the Priority Lien Collateral Agent, at any time, upon any property of the Borrower or any Guarantor to secure Priority Lien Obligations.

Priority Lien Collateral Agent” means the Existing RCF Agreement Agent (or other Person designated by the Existing RCF Agreement Agent), or if the Existing RCF Agreement ceases to exist, the collateral agent or other representative of lenders or holders of Priority Lien Obligations designated pursuant to the terms of the Priority Lien Documents and the Intercreditor Agreements.

Priority Lien Debt” means Indebtedness of the Borrower and the Guarantors under the Existing RCF Agreement (including letters of credit (with outstanding letters of credit being deemed to have a principal amount equal to the stated amount thereof) and reimbursement obligations with respect thereto) that is subject to the Intercreditor Agreements and permitted to be incurred and secured under each applicable Secured Debt Document.

Priority Lien Documents” means the Existing RCF Agreement and the documents pursuant to which Priority Lien Obligations are granted.

Priority Lien Obligations” means the Priority Lien Debt and all other Liabilities in respect of Priority Lien Debt, Hedging Obligations and Banking Services Obligations, in each case, that are secured by the Priority Liens.

Production Payments” means, collectively, Dollar-Denominated Production Payments and Volumetric Production Payments.

Production Payments and Reserve Sales” means the grant or transfer by the Borrower or a Restricted Subsidiary of the Borrower to any Person of a royalty, overriding royalty, net profits interest, Production Payment or other interest in oil and gas properties, reserves or the right to receive all or a portion of the production or the proceeds from the sale of production attributable to such properties, including any such grants or transfers pursuant to incentive compensation programs on terms that are reasonably customary in the oil and gas business for geologists, geophysicists and other providers of technical services to the Borrower or a Subsidiary of the Borrower.

Property” means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, including, without limitation, cash, securities, accounts and contract rights.

Proposed Change” is defined in Section 10.1(h).

Proved Reserves” means “Proved Reserves” as defined in the Definitions for Oil and Gas Reserves (the “Reserve Definitions”) promulgated by the Society of Petroleum Engineers (or any generally recognized successor) as in effect at the time in question.

Public Lender” is defined in Section 10.17(b).

 

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Rating Agencies” means Moody’s and S&P; provided, however that if Moody’s or S&P shall cease to rate the Loans for reasons outside the control of the Borrower, another security rating agency selected by the Borrower that is nationally recognized in the United States may be substituted therefore (a “Substitute Rating Agency”).

Recipient” means the Administrative Agent, any Lender, or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder or under any other Loan Document.

Register” is defined in Section 2.9(a).

Related Party” means any trust, corporation, partnership, limited liability company or other entity, of which one or more of the Principals or other Related Parties collectively Beneficially Own more than 50% of such entity.

Release” means the release, deposit, disposal or leakage of any Hazardous Material at, into, upon or under any land, water or air or otherwise into the environment, including, without limitation, by means of burial, disposal, discharge, emission, injection, leakage, seepage, dumping, pumping, pouring, escaping, emptying or placement.

Required Lenders” shall mean, at any time, Lenders the sum of whose outstanding Loans at such time represents at least a majority (at least 50.01%) of the sum of all outstanding Loans of the Lenders.

Reserve Report” means one or more an engineering reports dated as of the December 31st immediately prior to the determination date or, if the Borrower elects to create and designate a mid-year report or reports as a “Reserve Report” under this Agreement, the June 30th immediately prior to the determination date (provided that if the Reserve Report as of the December 31st immediately prior to the determination date is not available and the date of determination is on or prior to the following March 31st, the Reserve Report shall be as of the prior December 31st (or if the Borrower so elects or elected to prepare and designate a mid-year reserve report as a “Reserve Report”, the prior June 30th)), in each case concerning all Oil and Gas Properties and interests owned by the Borrower and the Restricted Subsidiaries which are located in or offshore of the United States and which have attributable to them proved oil or gas reserves, which shall be prepared by Netherland Sewell and Associates, Inc., or other nationally recognized independent petroleum engineers chosen by the Borrower and, in the event such other independent petroleum engineers are not nationally recognized (in the Borrower’s reasonable discretion), such other independent petroleum engineers shall be reasonably acceptable to the Administrative Agent. This report shall be reasonably satisfactory to the Administrative Agent, shall take into account any “over-produced” status under gas balancing arrangements, and shall contain information and analysis comparable in scope to that contained in the reserve report of the Borrower prepared by Netherland Sewell and Associates, Inc., dated February 2, 2016. This report shall in each case be in the form delivered in accordance with the requirements of the Existing RCF Agreement, or if there is no Existing RCF Agreement requiring delivery of a Reserve Report, in form substantially consistent as determined in good faith by the Borrower with the form of Reserve Report required under the Existing RCF Agreement as in effect on the Closing Date.

 

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Restricted Investment” means an Investment other than a Permitted Investment.

Restricted Payment” is defined in Section 6.7.

Restricted Person” means any of the Borrower and each Restricted Subsidiary of the Borrower.

Restricted Subsidiary” of a Person means any Subsidiary of such Person that is not an Unrestricted Subsidiary.

RSA” means the Support Agreement, dated as of July 11, 2016, by and among each of the holders listed on the signature pages thereto and the Borrower.

S&P” means Standard & Poor’s Ratings Group (a division of McGraw-Hill, Inc.) and any successor thereto that is a nationally-recognized rating agency.

Sanctions” means all economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or (b) the United Nations Security Council, the European Union, any European Union member state or Her Majesty’s Treasury of the United Kingdom.

Sanctioned Country” means, at any time, a country, region or territory which is itself the subject or target of any Sanctions (at the time of this Agreement, the Crimea region, Cuba, Iran, North Korea, Sudan and Syria).

Sanctioned Person” means, at any time, any Person that is (a) listed on any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State, or by the United Nations Security Council, the European Union or any European Union member, (b) located, organized or resident in a Sanctioned Country or (c) directly or indirectly owned or controlled by any such Person or Persons described in the foregoing clauses (a) or (b).

SEC” means the Securities and Exchange Commission.

Second Lien” means a Lien granted by the Borrower or any Guarantor in favor of the Second Lien Collateral Agent, at any time, upon any property of the Borrower or any Guarantor to secure Second Lien Obligations.

Second Lien Collateral Agent” means the Existing Second Lien Collateral Trustee (or other Person designated by the Existing Second Lien Agent), or if the Existing Second Lien Collateral Trustee ceases to exist, the collateral trustee or other representative of lenders or holders of Second Lien Obligations designated pursuant to the terms of the Second Lien Documents and the Second Lien Intercreditor Agreement.

 

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Second Lien Debt” means:

(1) Indebtedness of the Borrower and the Guarantors under the Existing Second Lien Credit Agreement that is subject to the Second Lien Intercreditor Agreement and permitted to be incurred and secured under each applicable Secured Debt Document;

(2) Indebtedness of the Borrower and the Guarantors under the New Second Lien Notes that is subject to the Second Lien Intercreditor Agreement and permitted to be incurred and secured under each applicable Secured Debt Document; and

(3) additional Indebtedness of the Borrower and the Guarantors under any other Credit Facility that is secured by substantially the same assets as the Existing Second Lien Credit Agreement and the New Second Lien Notes by a Second Priority Lien that was permitted to be incurred and so secured under each applicable Secured Debt Document; provided, however that, in the case of any Indebtedness referred to in this clause (3), that:

(a) on or before the date on which such Indebtedness is incurred by the Borrower and the Guarantors, such Indebtedness is designated by the Borrower, in an Officer’s Certificate delivered to the Second Lien Collateral Agent and the collateral trustee, as “Second Lien Debt” for the purposes of the Secured Debt Documents; provided, however that if such Series of Secured Debt is designated as “Second Lien Debt,” it cannot also be designated as Priority Lien Debt, 1.5 Lien Debt or Junior Lien Debt (or any combination of the four);

(b) the collateral agent or other representative with respect to such Indebtedness, the Priority Lien Collateral Agent, the 1.5 Lien Collateral Agent, the Junior Lien Collateral Agent, the Second Lien Collateral Agent, the collateral trustee, the Borrower and each applicable Guarantor have duly executed and delivered the Second Lien Intercreditor Agreement (or a joinder to the Second Lien Intercreditor Agreement or a new Second Lien Intercreditor Agreement substantially similar to the Second Lien Intercreditor Agreement, as in effect on the date of the indenture, and in a form reasonably acceptable to each of the parties thereto); and

(c) all other requirements set forth in the Second Lien Intercreditor Agreement as to the confirmation, grant or perfection of the Second Lien Collateral Agent’s Liens to secure such Indebtedness or Liabilities in respect thereof are satisfied;

provided, however that all such Indebtedness is pari passu in right of payment, it being understood that there may be different tranches of Second Lien Debt with different maturities and amortization profiles, but the principal amount of Indebtedness under all such tranches must in all other respects be pari passu in right of payment. Any such Indebtedness that is not consistent with the foregoing requirement for pari passu treatment in right of payment with the term loans under Existing Second Lien Credit Agreement and the New Second Lien Notes shall not constitute Second Lien Debt.

 

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Second Lien Documents” means the Existing Second Lien Credit Agreement, the New Second Lien Indenture, the New Second Lien Notes and any other Credit Facility pursuant to which any Second Lien Debt is incurred and the documents pursuant to which Second Lien Obligations are granted.

Second Lien Intercreditor Agreement” means that certain Intercreditor Agreement, dated as of May 11, 2015, by and among the Existing RCF Agent, as the original priority lien agent, the Administrative Agent as a New Representative, Morgan Stanley Senior Funding, Inc., as the original second lien collateral trustee, Wilmington Trust, N.A. as a New Representative (as amended, restated or modified in accordance with the terms hereof and thereof, or replaced, whether upon or after termination or otherwise) and Wilmington Trust, N.A. as the Third Lien Collateral Trustee, substantially in the form of Exhibit F hereto.

Second Lien Obligations” means the Second Lien Debt and all other Liabilities in respect of Second Lien Debt, in each case, that are secured by the Second Liens.

Second Lien Representative” means (1) the Second Lien Collateral Agent, (2) Wilmington Trust, N.A. as the trustee for the New Second Lien Notes or (3) in the case of any other Series of Second Lien Debt, the trustee, agent or representative of the holders of such Series of Second Lien Debt who maintains the transfer register for such Series of Second Lien Debt and is appointed as a representative of the Second Lien Debt (for purposes related to the administration of the Security Documents) pursuant to the credit agreement or other agreement governing such Series of Second Lien Debt.

Secured Debt” means Priority Lien Debt, the Obligations, Second Lien Debt and Junior Lien Debt.

Secured Debt Documents” means the Priority Lien Documents, the Loan Documents, the Second Lien Documents and the Junior Lien Documents.

Security Documents” means the Intercreditor Agreements and all security agreements, pledge agreements, collateral assignments, mortgages, deeds of trust, collateral agency agreements, control agreements or other grants or transfers for security executed and delivered by the Borrower or any Guarantor creating (or purporting to create) a 1.5 Lien upon Collateral in favor of the 1.5 Lien Collateral Agent, in each case, as amended, modified, renewed, restated or replaced, in whole or in part, from time to time.

Security Schedule” means Schedule 2 may be amended or otherwise modified with the consent of the Administrative Agent.

Security Termination” shall mean the payment in full in cash of all Obligations (other than contingent indemnification obligations) and the termination of all Commitments.

Senior Lien Intercreditor Agreement” means that certain Intercreditor Agreement, dated as of the date hereof, between the Existing RCF Agent, as the original priority lien agent, and the 1.5 Lien Collateral Agent, as the original 1.5 lien agent (as amended, restated or modified in accordance with the terms hereof and thereof, or replaced, whether upon or after termination or otherwise) substantially in the form of Exhibit G hereto.

 

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Series of Junior Lien Debt” means, severally, the Indebtedness outstanding under the New Junior Lien Notes and any other Credit Facility that constitutes Junior Lien Debt.

Series of Second Lien Debt” means, severally, the Indebtedness outstanding under the Existing Second Lien Credit Agreement, the New Second Lien Notes and any other Credit Facility that constitutes Second Lien Debt.

Series of Secured Debt” means the Priority Lien Debt, the Obligations, each Series of Second Lien Debt and each Series of Junior Lien Debt.

Significant Subsidiary” means any Subsidiary that would be a “significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the Closing Date.

Solvent” means that (i) the sum of the debt (including contingent liabilities) of the Loan Parties, on a consolidated basis, does not exceed the fair value or the present fair saleable value (in each case, on a going-concern basis) of the assets of the Loan Parties, on a consolidated basis; (ii) the Loan Parties, on a consolidated basis, are able to pay their debts, on a consolidated basis, as they become due generally in the ordinary course of business, (iii) the capital of the Loan Parties, on a consolidated basis, is not unreasonably small in relation to the business of the Loan Parties, on a consolidated basis, in existence or otherwise contemplated as of the date hereof; and (iv) the Loan Parties, on a consolidated basis, do not intend to incur, or believe that they will incur, debts (including current obligations and contingent liabilities) beyond their ability to pay such debts as they mature in the ordinary course of business. For purposes hereof, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

Stated Maturity” means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which the payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and will not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.

Strip Price” shall mean, at any time, (a) for the remainder of the then-current calendar year, the average NYMEX Pricing for the remaining months in such calendar year, (b) for each of the succeeding three complete calendar years, the average NYMEX Pricing for the twelve months in each such calendar year, and (c) for the succeeding fourth complete calendar year and each calendar year thereafter, the average NYMEX pricing for the twelve months in such fourth calendar year.

Subordinated Obligation” means any Indebtedness of the Borrower (whether outstanding on the Closing Date or thereafter incurred) which is subordinate or junior in right of payment to the Loans pursuant to a written agreement or any Indebtedness of a Guarantor (whether outstanding on the Closing Date or thereafter incurred) which is subordinate or junior in right of payment to its guaranty of the Obligations pursuant to a written agreement, as the case may be.

 

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Subsidiary” means, with respect to any specified Person:

(1) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency and after giving effect to any voting agreement or stockholders’ agreement that effectively transfers voting power) to vote in the election of directors, managers or trustees of the corporation, association or other business entity is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and

(2) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are that Person or one or more Subsidiaries of that Person (or any combination thereof).

Taxes” means any and all present or future taxes, levies, imposts, duties, deductions, charges, withholdings (including backup withholding), assessments, fees or other charges imposed by any governmental authority, including any interest, penalties or additions to tax applicable thereto.

Termination Event” means (a) the occurrence with respect to any ERISA Plan of a reportable event described in Section 4043(c) of ERISA other than a reportable event not subject to the provision for 30-day notice to the Pension Benefit Guaranty Corporation pursuant to a waiver by such corporation under Section 4043(a) of ERISA, or (b) the withdrawal of any ERISA Affiliate from an ERISA Plan during a plan year in which it was a “substantial employer” as defined in Section 4001(a)(2) of ERISA, or (c) the filing of a notice of intent to terminate any ERISA Plan or the treatment of any ERISA Plan amendment as a termination under Section 4041 of ERISA, or (d) the institution of proceedings to terminate any ERISA Plan by the Pension Benefit Guaranty Corporation under Section 4042 of ERISA, or (e) the withdrawal or partial withdrawal by any ERISA Affiliate from a “multiemployer plan” as that term is defined in Section 4001 of ERISA, or (f) any other event or condition which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any ERISA Plan.

Transaction” shall mean, collectively, (i) the consummation of the Exchange Offer (ii) the entering into of the Loan Documents on the Closing Date and the incurrence of the Loans on such date, and (iii) the payment of all fees and expenses in connection with the foregoing.

Treasury Management Arrangement” means any agreement or other arrangement governing the provision of treasury or cash management services, including deposit accounts, overdraft, credit or debit card, funds transfer, automated clearinghouse, zero balance accounts, returned check concentration, controlled disbursement, lockbox, account reconciliation and reporting and trade finance services and other cash management services.

Treasury Rate” means, with respect to the Loans as of any prepayment date, the yield to maturity at the time of computation of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15

 

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(519) that has become publicly available at least two Business Days prior to the prepayment date (or, if such Statistical Release is no longer published, any publicly available source or similar market data) most nearly equal to the period from the prepayment date to September 7, 2017; provided, however, that if the period from the prepayment date to September 7, 2017 is not equal to the constant maturity of a United States Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given, except that if the period from the prepayment date to the final maturity of the Loans is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used. The Borrower will (a) calculate the Treasury Rate on the second Business Day preceding the applicable prepayment date and (b) on or prior to such prepayment date file with the Administrative Agent an Officer’s Certificate setting forth the Applicable Premium and the Treasury Rate and showing the calculation of each in reasonable detail.

Tribunal” means, in the case of all parties hereto, any government, any arbitration panel, any court or any governmental department, commission, board, bureau, agency or instrumentality of the United States of America or any state, province, commonwealth, nation, territory, possession, county, parish, town, township, village or municipality, whether now or hereafter constituted and/or existing, and, solely in the case of Lender Parties, any foreign governmental and supervisory authorities and central banks, whether now or hereafter constituted and/or existing.

Uniform Commercial Code” or “UCC” means the Uniform Commercial Code as the same may from time to time be in effect in the State of New York or the Uniform Commercial Code (or similar code or statute) of another jurisdiction, to the extent it may be required to apply to any item or items of Collateral.

Unrestricted Subsidiary” means any Subsidiary of the Borrower that is designated by the Board of Directors of the Borrower as an Unrestricted Subsidiary pursuant to a resolution of the Board of Directors, but only to the extent that such Subsidiary:

(1) has no Indebtedness other than Non-Recourse Debt;

(2) except as permitted by Section 6.11 hereof, is not party to any agreement, contract, arrangement or understanding with the Borrower or any Restricted Subsidiary of the Borrower unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Borrower or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Borrower;

(3) is a Person with respect to which neither the Borrower nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results; and

(4) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Borrower or any of its Restricted Subsidiaries.

 

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Volumetric Production Payments” means production payment obligations recorded as deferred revenue in accordance with GAAP, together with all related undertakings and obligations.

Voting Stock” of any specified Person as of any date means the Capital Stock of such Person that is at the time entitled to vote (without regard to the occurrence of any contingency) in the election of the Board of Directors of such Person.

Withholding Agent” means the Borrower and the Administrative Agent.

Write-Down and Conversion Powers” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.

Section 1.2 Exhibits and Schedules; Additional Definitions. All Exhibits and Schedules attached to this Agreement are a part hereof for all purposes. Reference is hereby made to the Security Schedule for the meaning of certain terms defined therein and used but not defined herein, which definitions are incorporated herein by reference.

Section 1.3 Amendment of Defined Instruments. Unless the context otherwise requires or unless otherwise provided in the relevant defined term or unless otherwise provided herein the terms defined in this Agreement which refer to a particular agreement, instrument or document also refer to and include all renewals, extensions, modifications, amendments and restatements of such agreement, instrument or document in accordance with the Loan Documents; provided, however that nothing contained in this section shall be construed to authorize any such renewal, extension, modification, amendment or restatement.

Section 1.4 References and Titles. All references in this Agreement to Exhibits, Schedules, articles, sections, subsections and other subdivisions refer to the Exhibits, Schedules, articles, sections, subsections and other subdivisions of this Agreement unless expressly provided otherwise. Titles appearing at the beginning of any subdivisions are for convenience only and do not constitute any part of such subdivisions and shall be disregarded in construing the language contained in such subdivisions. The words “this Agreement”, “this instrument”, “herein”, “hereof”, “hereby”, “hereunder” and words of similar import refer to this Agreement as a whole and not to any particular subdivision unless expressly so limited. The phrases “this section” and “this subsection” and similar phrases refer only to the sections or subsections hereof in which such phrases occur. The word “or” is not exclusive, and the word “including” (in its various forms) means “including without limitation”. 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. All references to any Person shall be construed to include such Person’s successors and assigns, provided such successors and assigns are permitted by the Loan Documents.

Section 1.5 Calculations and Determinations. All calculations of interest under the Loan Documents shall be made on the basis of actual days elapsed (including the first day but excluding the last) and a year of 365 or 366 days, as appropriate. Each determination by a Lender Party of amounts to be paid under any of Sections 3.2 or 3.3 or any other matters which are to be determined hereunder by a Lender Party shall, in the absence of manifest error, be conclusive and binding. Unless otherwise expressly provided herein or unless Required Lenders otherwise consent all financial statements and reports furnished to any Lender Party hereunder shall be prepared and all financial computations and determinations pursuant hereto shall be made in accordance with GAAP.

 

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ARTICLE II - The Loans

Section 2.1 Commitments to Make Loans. Subject to the terms and conditions hereof, each Lender that has a Commitment severally agrees to make a term loan or term loans to the Borrower (each a “Loan” and collectively, the “Loans”), which Loans (i) shall be incurred pursuant to a single drawing on the Closing Date and (ii) shall be denominated in U.S. dollars. Once repaid, Loans incurred hereunder may not be re-borrowed.

Section 2.2 Requests for New Loans. The Borrower shall give the Administrative Agent at the Payment Office prior to 12:00 p.m. (New York City time) at least three Business Day’s prior written notice of the Loans to be incurred hereunder on the Closing Date. Such notice (a “Borrowing Notice”) shall be irrevocable and shall be in writing in the form of Exhibit B, appropriately completed to specify: (i) the aggregate principal amount of the Loans to be incurred pursuant to such Borrowing, (ii) the date of such Borrowing (which shall be a Business Day), and (iii) the wire instructions for the Borrower account to which the Loan funds should be sent.

Upon receipt of the Borrowing Notice, the Administrative Agent shall give each Lender prompt notice of the terms thereof. Each Borrowing Notice shall be irrevocable and binding on the Borrower. If all conditions precedent to such Loans have been met, each Lender will on the date requested promptly remit to the Administrative Agent at the Payment Office, for receipt no later than 12:00 p.m. (New York City time) on such date, the amount of such Lender’s Loan in immediately available funds, and upon receipt of all such requested funds, unless to its actual knowledge any conditions precedent to such Loans have been neither met nor waived as provided herein, the Administrative Agent shall promptly make such Loans available to the Borrower. 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 Loan, the Administrative Agent may in its discretion assume that such Lender has made such Loan 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 new Loan available to the Administrative Agent, such Lender and the Borrower severally agree to pay or repay to the Administrative Agent within three days after demand the amount of such Loan together with interest thereon, for each day from the date such amount was made available to the Borrower until the date such amount is paid or repaid to the Administrative Agent, with interest at (i) the Federal Funds Rate, if such Lender is making such payment and (ii) the interest rate applicable to the Loans at such time, if the Borrower is making such repayment. If neither such Lender nor

 

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the Borrower pay or repay to the Administrative Agent such amount within such three-day period, the Administrative Agent shall in addition to such amount be entitled to recover from such Lender and from Borrower, on demand, interest thereon at the interest rate set forth in Section 2.8(b), calculated from the date such amount was made available to the Borrower. 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 new Loan to be made by such other Lender.

Section 2.3 Use of Proceeds. The Borrower shall use the proceeds of all Loans to (i) refinance a portion of the Indebtedness under the Existing RCF Agreement, (ii) finance its working capital and general corporate purposes and (iii) pay fees and expenses related to this Agreement and the Transactions and the closing of the Transactions. In no event shall the funds from any Loan be used directly or indirectly by any Person (a) for personal, family, household or agricultural purposes or (b) for the purpose, whether immediate, incidental or ultimate, of purchasing, acquiring or carrying any “margin stock” or any “margin securities” (as such terms are defined respectively in Regulation T, U and X promulgated by the Board of Governors) or to extend credit to others directly or indirectly for the purpose of purchasing or carrying any such margin stock or margin securities, in each case in violation of Regulation T, U or X or (c) for the acquisition of any Person unless such acquisition has been approved by the board of directors, management committee or partners, as the case may be of such Person. The Borrower represents and warrants that the Borrower is not engaged principally, or as one of the Borrower’s important activities, in the business of extending credit to others for the purpose of purchasing or carrying such margin stock or margin securities.

Section 2.4 Optional Prepayments.

(a) At any time prior to September 7, 2017, the Borrower may prepay all or a part of the Loans, upon not less than three Business Days’ prior written notice to the Administrative Agent, at a prepayment price equal to 100% of the principal amount of Loans prepaid plus the Applicable Premium as of, and accrued and unpaid interest, if any, to, but not including the date of prepayment, subject to the rights of Lenders on the relevant record date to receive interest due on an interest payment date that is on or prior to the prepayment date.

(b) On or after September 7, 2017, the Borrower may prepay all or a part of the Loans upon not less than three Business Days’ prior written notice to the Administrative Agent, at the prepayment prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest on the Loans prepaid to, but not including, the applicable prepayment date, if prepaid during the twelve-month period beginning on September 7 of the years indicated below:

 

Year

   Percentage  

2017

     105.50

2018

     102.75

2019 and thereafter

     100.00

(c) Any prepayment pursuant to this Section 2.4 shall be made pursuant to the provisions of Sections 3.1 through 3.6 hereof. Any notice given pursuant to this Section 2.4 may state that such notice is conditioned upon the effectiveness of other transactions, in which case,

 

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such notice may be revoked or the date of repayment postponed by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied.

(d) (i) If the Loans are accelerated or otherwise become due prior to their stated maturity date, in each case, as a result of an Event of Default (including, but not limited to, upon the occurrence of a bankruptcy or insolvency event (including the acceleration of claims by operation of law)) on or after September 7, 2017, the amount of principal of, accrued and unpaid interest and premium on the Loans that becomes due and payable shall equal the prepayment premium applicable with respect to an optional prepayment of the Loans, in effect on the date of such acceleration as if such acceleration were an optional prepayment of the Loans accelerated. If the Loans are accelerated or otherwise become due prior to their stated maturity date, in each case, as a result of an Event of Default (including, but not limited to, upon the occurrence of a bankruptcy or insolvency event (including the acceleration of claims by operation of law)) prior to September 7, 2017, the amount of principal of, and premium on, the Loans that becomes due and payable shall equal 100% of the principal amount of the Loans redeemed plus the Applicable Premium in effect on the date of such acceleration, as if such acceleration were an optional prepayment of the Loans accelerated. Without limiting the generality of the foregoing, it is understood and agreed that if the Loans are accelerated or otherwise become due prior to their maturity date, in each case, in respect of any Event of Default (including, but not limited to, upon the occurrence of a bankruptcy or insolvency event (including the acceleration of claims by operation of law)), the premium applicable with respect to an optional prepayment of the Loans (which, for all purposes of the paragraphs under “Events of Default,” shall be understood to include the applicable prepayment premium) will also be due and payable as though the Loans were optionally redeemed and shall constitute part of the Obligations, in view of the impracticability and extreme difficulty of ascertaining actual damages and by mutual agreement of the parties as to a reasonable calculation of each Lender’s lost profits as a result thereof. Any premium payable above shall be presumed to be the liquidated damages sustained by each Lender as the result of the prepayment and the Loan Parties agree that it is reasonable under the circumstances currently existing. The premium shall also be payable in the event the Loans (and/or the Indenture) are satisfied or released by foreclosure (whether by power of judicial proceeding), deed in lieu of foreclosure or by any other means. THE LOAN PARTIES EXPRESSLY WAIVE (TO THE FULLEST EXTENT THEY MAY LAWFULLY DO SO) THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE OR LAW THAT PROHIBITS OR MAY PROHIBIT THE COLLECTION OF THE FOREGOING PREMIUM IN CONNECTION WITH ANY SUCH ACCELERATION. The Loan Parties expressly agree (to the fullest extent they may lawfully do so) that: (A) the premium is reasonable and is the product of an arm’s length transaction between sophisticated business people, ably represented by counsel; (B) the premium shall be payable notwithstanding the then prevailing market rates at the time payment is made; (C) there has been a course of conduct between the Lenders and the Loan Parties giving specific consideration in this transaction for such agreement to pay the premium; and (D) the Loan Parties shall be estopped hereafter from claiming differently than as agreed to in this paragraph. The Loan Parties expressly acknowledge that their agreement to pay the premium to the Lenders as herein described is a material inducement to the Lenders to make the Loans.

 

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Section 2.5 Mandatory Prepayments. The Borrower is not required to make mandatory prepayment or sinking fund payments with respect to the Loans.

Section 2.6 Offers to Purchase.

(a) In the event that, pursuant to Section 6.10 hereof, the Borrower is required to commence an Asset Sale Offer, it will comply with the following procedures specified below (collectively, an “Asset Sale Offer”): (A) the Borrower shall deliver a written notice (each, an “Asset Sale Offer Notice”) to the Administrative Agent (for distribution to the Lenders) irrevocably and unconditionally offering to repay the Loans with the then applicable Excess Proceeds, which notice shall set forth (i) the date of the proposed consummation of such Asset Sale Offer (which shall be no later than the fifth Business Day following delivery of the respective Asset Sale Offer Notice), (ii) the last Business Day on which such Asset Sale Offer may be accepted or declined (which shall in no event be later than the date occurring three Business Days after the date of delivery of such Asset Sale Offer Notice) and (iii) the aggregate principal amount of the Loans subject to such Asset Sale Offer and (B) the Borrower shall repay Loans of those Lenders that have accepted the Borrower’s respective Asset Sale Offer, with such repayment of Loans to be applied in accordance with the requirements of Section 3.1. In order to reject such Asset Sale Offer, the Lenders must provide written notice to the Administrative Agent no later than one (1) Business Day prior to the proposed Asset Sale date; any Lender that does not so reject within that time frame shall be deemed to have accepted the Asset Sale Offer. Notwithstanding the foregoing provisions of this Section 2.6(a), the Borrower and its Subsidiaries, the Administrative Agent and the Lenders hereby agree that nothing in this Agreement shall be understood to mean or suggest that the Loans subject to an Asset Sale Offer constitute “securities” for purposes of either the Securities Act or the Securities Exchange Act.

(b) Upon the occurrence of a Change of Control, each Lender will have the right to require the Borrower to make an offer (a “Change of Control Offer”) to repay all or any part (equal to $1,000 or an integral multiple of $1,000) of that Lender’s Loans at a repayment price in cash equal to 101% of the aggregate principal amount of Loans repaid plus accrued and unpaid interest, if any, on the Loans repaid to the date of repayment (the “Change of Control Payment”).

(i) Within thirty days following any Change of Control, the Borrower will provide a written notice to the Administrative Agent that will be posted or otherwise distributed to the Lenders describing the transaction or transactions that constitute the Change of Control and stating:

(A) that a Change of Control Offer is being made pursuant to this Section 2.6(b) and that all Loans offered for repayment prior to the expiration of the Change of Control Offer will be accepted for repayment;

(B) the repayment price and the repayment date, which shall be no earlier than 30 days and no later than 60 days from the date such notice is delivered (the “Change of Control Payment Date”);

(C) that any Loans not repaid will continue to accrue interest; and

 

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(D) that, unless the Borrower defaults in the payment of the Change of Control Payment, all Loans repaid pursuant to the Change of Control Offer will cease to accrue interest after the Change of Control Payment Date; and

(E) that Lenders will be entitled to withdraw their election if the Administrative Agent receives, not later than the close of business on the second Business Day preceding the Change of Control Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Lender, the principal amount of Loans offered for repayment, and a statement that such Lender is withdrawing his election to have its Loans repaid; and

(ii) Promptly following the expiration of the Change of Control Offer, the Borrower will, to the extent lawful, repay all Loans or portions thereof elected to be repaid pursuant to the Change of Control Offer in accordance with Section 3.1.

(iii) Notwithstanding anything to the contrary in this Section 2.6(b), the Borrower will not be required to make a Change of Control Offer upon a Change of Control if (1) a third party makes the Change of Control Offer in the manner, at the time and otherwise in compliance with the requirements set forth in this Section 2.6(b) applicable to a Change of Control Offer made by the Borrower and repays all Loans properly submitted for repayment and not withdrawn under the Change of Control Offer, or (2) notice of prepayment has been given pursuant to Section 3.1 unless and until there is a default in payment of the applicable prepayment price.

(iv) A Change of Control Offer may be made in advance of a Change of Control, and conditioned upon the occurrence of such Change of Control, if a definitive agreement is in place for the Change of Control at the time of making the Change of Control Offer.

(v) In the event that holders of not less than 90% of the aggregate principal amount of the outstanding Loans accept a Change of Control Offer and the Borrower (or the third party making the Change of Control Offer as described above) repays all of the Loans held by such Lenders, the Borrower will have the right, upon not less than three Business Days prior notice, given not more than 30 days following the repayment pursuant to the Change of Control Offer described above, to prepay all of the Loans that remain outstanding following such repayment at a repayment price equal to the Change of Control Payment plus, to the extent not included in the Change of Control Payment, accrued and unpaid interest on the Loans that remain outstanding, to, but not including, the date of prepayment.

(vi) Notwithstanding the foregoing provisions of this Section 2.6(b), the Borrower and its Subsidiaries, the Administrative Agent and the Lenders

 

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hereby agree that nothing in this Agreement shall be understood to mean or suggest that the Loans subject to a Change of Control Offer constitute “securities” for purposes of either the Securities Act or the Securities Exchange Act.

Section 2.7 Maturity Date. The Borrower shall repay in full in cash the unpaid principal amount of all Loans on the Maturity Date, or such earlier date as may be required in accordance with the terms hereof. The Borrower shall deliver a notice to the Administrative Agent on or prior to February 14, 2019 indicating whether the Maturity Date shall be on February 28, 2019 or November 15, 2019.

Section 2.8 Interest. (a) The Borrower agrees to pay interest in respect of the unpaid principal amount of each Loan from the date of Borrowing thereof until the maturity thereof (whether by acceleration or otherwise) at a rate per annum equal to 11.0%.

(b) The Borrower will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at the rate equal to 2% per annum in excess of the then applicable interest rate on the Loans to the extent lawful; it will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace period) at the same rate to the extent lawful. Interest that accrues under this Section 2.8(b) shall be payable on demand.

(c) Accrued (and theretofore unpaid) interest shall be payable (x) quarterly in arrears on each Payment Date, (y) on the date of any repayment or prepayment in full of all outstanding Loans, and (z) at maturity (whether by acceleration or otherwise) and, after such maturity, on demand.

Section 2.9 Register; Notes. The Register shall be maintained on the following terms.

(a) The Borrower hereby designates the Administrative Agent to serve as the Borrower’s agent, solely for the purpose of this clause, to maintain a register (the “Register”) on which the Administrative Agent will record each Lender’s name and address, Commitments, the Loans made by each Lender and each repayment in respect of the principal amount (and stated interest) of the Loans, annexed to which the Administrative Agent shall retain a copy of each Assignment and Acceptance delivered to the Administrative Agent pursuant to Section 10.6. Failure to make any recordation, or any error in such recordation, shall not affect any Restricted Person’s Obligations. The entries in the Register shall be conclusive, in the absence of manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person in whose name a Loan is registered as the owner thereof for the purposes of all Loan Documents, notwithstanding notice or any provision herein to the contrary. Any assignment or transfer of a Commitment or the Loans made pursuant hereto (including an assignment or transfer to an Affiliated Lender) shall be registered in the Register only upon delivery to the Administrative Agent of an Assignment and Acceptance that has been executed by the requisite parties pursuant to Section 10.6. No assignment or transfer of a Lender’s Commitment or Loans shall be effective unless such assignment or transfer shall have been recorded in the Register by the Administrative Agent as provided in this Section 2.9. This Section 2.9 shall be construed so that all Loans are at all times maintained in “registered form” within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the Code and any related Treasury regulations (or any other relevant or successor provisions of the Code or such Treasury regulations).

 

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(b) The Borrower agrees that, upon the request of any Lender, the Borrower will execute and deliver to such Lender a Note evidencing the Loans made by, and payable to, such Lender in a maximum principal amount equal to such Lender’s Loans. The Borrower hereby irrevocably authorizes each Lender to make (or cause to be made) appropriate notations on the grid attached to such Lender’s Note (or on any continuation of such grid), which notations, if made, shall evidence, inter alia, the date of, the outstanding principal amount of, and the interest rate applicable to the Loans evidenced thereby. Such notations shall, to the extent not inconsistent with notations made by the Administrative Agent in the Register, be conclusive and binding on each Restricted Person absent manifest error; provided, however that the failure of any Lender to make any such notations shall not limit or otherwise affect any Obligations of any Restricted Person.

(c) Interest on each Note shall accrue and be due and payable as provided herein and therein, (subject to the applicability of Section 2.8(b) and limited by the provisions of Section 10.9).

Section 2.10 Fees.

(a) In addition to all other amounts due to the Administrative Agent under the Loan Documents, the Borrower will pay fees to the Administrative Agent as described in the Administrative Agent Fee Letter.

(b) In the event that any cash fee is paid by the Borrower or Guarantors to the lenders under the Existing RCF Agreement in connection with any waiver or cure of any event of default under the Existing RCF Agreement or any other Priority Lien Document (as such term is defined thereunder) (any such fee, a “Waiver Fee”), the Borrower shall, within two Business Days of payment of such fee to the lenders under the Existing RCF Agreement (the date of payment of such Waiver Fee, the “Fee Payment Date”), pay to the Administrative Agent for the pro rata account of each Lender a cash fee equal to (i) (x) the Waiver Fee divided by (y) the then effective Borrowing Base (as defined in the Existing RCF Agreement as in effect on the Fee Payment Date) multiplied by (ii) the aggregate outstanding principal amount of Loans on the Fee Payment Date. Any payment made under this Section 2.10(b) shall be made pursuant to the provisions of Sections 3.1 through 3.6 hereof.

ARTICLE III - Payments to Lenders

Section 3.1 General Procedures. Unless otherwise expressly provided in a Loan Document, the Borrower will make each payment which it owes under the Loan Documents to the Administrative Agent at its Payment Office (in accordance with the then effective wire instructions provided by the Administrative Agent to the Borrower) for the account of the Lender Party to whom such payment is owed. Each such payment must be received by the Administrative Agent not later than 12:00 noon, New York City time, on the date such payment becomes due and payable, in lawful money of the United States of America, without set-off, deduction (except for any deduction for Taxes as described in Section 3.3(a)) or

 

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counterclaim, and in immediately available funds. Any payment received by the Administrative Agent after such time may, in Administrative Agent’s discretion, be deemed to have been made on the next following Business Day. Should any such payment become due and payable on a day other than a Business Day, the maturity of such payment shall be extended to the next succeeding Business Day, and, in the case of a payment of principal or past due interest, interest shall accrue and be payable thereon for the period of such extension as provided in the Loan Document under which such payment is due. Each payment under a Loan Document shall be due and payable at the place provided therein and, if no specific place of payment is provided, shall be due and payable at the Payment Office or as otherwise directed by the Administrative Agent. The Administrative Agent shall promptly remit in same day funds to each Lender Party its share, if any, of such payments received by the Administrative Agent for the account of such Lender Party. The Administrative Agent may, subject to the Intercreditor Agreements, and upon direction of the Required Lenders shall, apply all amounts received pursuant to any exercise of remedies under the Loan Documents (including from proceeds of collateral securing the Obligations) or under applicable law upon receipt thereof to the Obligations as follows:

(a) first, for the payment of all fees and expenses of the Administrative Agent and its counsel which are then due until such amounts are paid in full (and, to the extent such amounts received are proceeds from the foreclosure or other sale of real property, for the payment of all fees and expenses of the trustee, if applicable);

(b) then for the payment of all other Obligations which are then due (and if such money is insufficient to pay all such Obligations, first to any reimbursements due the Administrative Agent under Section 10.4 until such amounts are paid in full, second to the payment of all interest on the Loans then due on a pro rata basis until such amounts are paid in full, third to the payment of all principal on the Loans on a pro rata basis until such amounts are paid in full, and fourth to the payment of all other Obligations then due in proportion to the amounts thereof, or as Lender Parties shall otherwise agree) until such amounts are paid in full;

(c) then for the prepayment of any other Obligations, if any until such amounts are paid in full; and

(d) last, to the Borrower or any other Person as directed by a court of competent jurisdiction.

All payments applied to principal or interest on any Loan shall be applied first to any interest then due and payable, then to principal then due and payable, and last to any prepayment of principal and interest in compliance with Sections 2.4 and 2.5. All distributions of amounts described in any of subsections (b), (c) or (d) above shall be made by the Administrative Agent pro rata to each Lender Party then owed Obligations described in such subsection (or subclause thereof) in proportion to all amounts owed to all Lender Parties which are described in such subsection (or subclause thereof).

Section 3.2 Capital Reimbursement. If either (a) the introduction or implementation of or the compliance with or any change in or in the interpretation of any Law, or (b) the introduction or implementation of or the compliance with any request, directive or guideline from any central bank or other governmental authority (whether or not having the force

 

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of Law) affects or would affect the amount of capital or liquidity required or expected to be maintained by any Lender Party (or any assignee of such Lender Party) or any corporation controlling any Lender Party (or its assignee), then, upon demand by such Lender Party, the Borrower will pay to the Administrative Agent for the benefit of such Lender Party, from time to time as specified by such Lender Party, such additional amount or amounts which such Lender Party shall reasonably determine to be appropriate to compensate such Lender Party or any corporation controlling such Lender Party in light of such circumstances, to the extent that such Lender Party reasonably determines that the amount of any such capital would be increased or the rate of return on any such capital would be reduced by or in whole or in part based on the existence of the face amount of such Lender Party’s Loans or commitments under this Agreement; provided, however that notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives promulgated by any Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a change in law, regardless of the date enacted, adopted or issued.

Section 3.3 Taxes.

(a) Any and all payments by or on account of any obligation of the Borrower hereunder shall be made free and clear of and without deduction for any Taxes except as required by applicable law. If any applicable law requires the deduction or withholding of any Taxes from such payments, then (i) in the case of Indemnified Taxes or Other Taxes, the sum payable shall be increased as necessary so that after making all required deductions of Indemnified Taxes or Other Taxes (including deductions of Indemnified Taxes or Other Taxes applicable to additional sums payable under this Section 3.3(a)), the Administrative Agent or Lender (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, and (ii) the applicable Withholding Agent shall make all deductions required by applicable law and shall pay the full amount deducted to the relevant governmental authority in accordance with applicable law.

(b) In addition, the Borrower shall pay any Other Taxes to the relevant governmental authority in accordance with applicable law.

(c) The Borrower shall indemnify the Administrative Agent and each Lender within 10 days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent or such Lender, as the case may be, on or with respect to any payment by or on account of any obligation of the Borrower hereunder (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant governmental authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender, or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

 

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(d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a governmental authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such governmental authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

(e) Any Lender that is entitled to an exemption from or reduction of withholding tax with respect to payments made under any Loan Document shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate. In addition, any Lender, if requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 3.3(e)(i)(A), Section 3.3(h) and Section 3.3.(i) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

Without limiting the generality of the foregoing, (i) a Foreign Lender, that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement or any other Loan Document shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law or reasonably requested by the Borrower as will permit such payments to be made without withholding or at a reduced rate. Without limiting the generality of the foregoing:

(A) each Foreign Lender shall deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever of the following is applicable:

(1) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed originals of IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding tax pursuant to the “business profits” or “other income” article of such tax treaty;

 

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(2) executed copies of IRS Form W-8ECI;

(3) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 871(h) or Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit D-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E; or

(4) to the extent a Foreign Lender is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN or IRS Form W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form of Exhibit D-2 or Exhibit D-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided, however that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit D-4 on behalf of each such direct and indirect partner.

(B) each Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed copies of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made.

(f) If the Administrative Agent or a Lender determines, in its reasonable discretion, that it has received a refund of any Indemnified Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section 3.3, it shall pay over such refund to the Borrower (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section 3.3 with respect to the Indemnified Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative Agent or such Lender and without interest (other than any interest paid by the relevant governmental authority with respect to such refund); provided, however that the Borrower, upon the request of the Administrative Agent or such Lender agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges

 

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imposed by the relevant governmental authority) to the Administrative Agent or such Lender in the event the Administrative Agent or such Lender is required to repay such refund to such governmental authority. Notwithstanding anything to the contrary in this paragraph (f), in no event will the Lender or the Administrative Agent be required to pay any amount to the Borrower pursuant to this paragraph (f) the payment of which would place such Lender or the Administrative Agent in a less favorable net after-Tax position than such person would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This paragraph shall not be construed to require the Administrative Agent or any Lender to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the Borrower or any other Person.

(g) Each Lender agrees to indemnify and hold harmless the Borrower or the Administrative Agent, as applicable, from any United States taxes, penalties, interest and other reasonable expenses incurred or payable by (i) the Borrower or the Administrative Agent as a result of such Lender’s failure to submit any form or certificate that it is required to provide pursuant to this Section 3.3, (ii) the Borrower or the Administrative Agent as a result of their reliance on any such form or certificate which such Lender has provided to them pursuant to this Section 3.3, or (iii) the Borrower or the Administrative Agent as a result of a failure by the Lender to maintain a Participant Register pursuant to Section 10.6(a).

(h) If a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (h), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

(i) U.S. Lenders. Any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed copies of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding Tax.

(j) Administrative Agent Documentation. On or before effective time of this Agreement, Cortland Capital Market Services LLC shall (and any successor or replacement Administrative Agent shall, on or before the date on which it becomes the Administrative Agent hereunder), deliver to the Borrower two duly executed copies of either (i) IRS Form W-9, or (ii) IRS Form W-8ECI (with respect to any payments to be received on its own behalf) and IRS Form W-8IMY (for all other payments), establishing that the Borrower can make payments to the Administrative Agent without deduction or withholding of any Taxes imposed by the United States, including Taxes imposed under FATCA.

 

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Section 3.4 Change of Applicable Lending Office. Each Lender Party agrees that, upon the occurrence of any event giving rise to the operation of any of Sections 3.2 or 3.3 with respect to such Lender Party, it will, if requested by the Borrower, use reasonable efforts (subject to overall policy considerations of such Lender Party) to designate another Lending Office; provided, however that such designation is made on such terms that such Lender Party and its Lending Office suffer no economic, legal or regulatory disadvantage, with the object of avoiding the consequence of the event giving rise to the operation of any such section. Nothing in this section shall affect or postpone any of the obligations of the Borrower or the rights of any Lender Party provided in any of Sections 3.2 or 3.3.

Section 3.5 Replacement of Lenders. If any Lender Party seeks reimbursement for increased costs under any of Sections 3.2 or 3.3, or if any Lender Party becomes a Non-Consenting Lender pursuant to Section 10.1, then within ninety days thereafter and provided no Event of Default then exists, the Borrower shall have the right (unless such Lender Party withdraws its request for additional compensation) to replace such Lender Party or Non-Consenting Lender by requiring such Lender Party or Non-Consenting Lender to assign its Loans, Notes and its Commitments hereunder to an Eligible Transferee reasonably acceptable to the Administrative Agent and to the Borrower; provided, however that: (i) all Obligations of the Borrower owing to such Lender Party or Non-Consenting Lender being replaced (including such increased costs, but excluding principal and accrued interest on the Notes being assigned) shall be paid in full to such Lender Party or Non-Consenting Lender concurrently with such assignment, and (ii) the replacement Eligible Transferee shall purchase the Loans, Notes and Commitments being assigned by paying to such Lender Party or Non-Consenting Lender a price equal to the principal amount thereof, plus accrued and unpaid interest thereon. In connection with any such assignment the Borrower, the Administrative Agent, such Lender Party or Non-Consenting Lender and the replacement Eligible Transferee shall otherwise comply with Section 10.6. Notwithstanding the foregoing rights of the Borrower under this section, however, the Borrower may not replace any Lender Party which seeks reimbursement for increased costs under any of Sections 3.2 or 3.3, unless the Borrower is at the same time replacing all Lender Parties which are then seeking such compensation. In connection with any such replacement of a Lender Party or Non-Consenting Lender, the Borrower shall pay all outstanding and unpaid costs and expenses due to such Lender Party or Non-Consenting Lender hereunder.

Section 3.6 Participants. If a Lender has assigned a participation in its Loans or commitment hereunder to another Person in accordance with Section 10.6, any amount otherwise payable by the Borrower to such Lender under Section 3.3 (in this section called “Increased Costs”), shall include that portion of the Increased Costs determined by such Lender to be allocable to the amount of any interest or participation transferred by such Lender in such Lender’s Loan or commitments under this Agreement; provided, however that, for the avoidance of doubt, the amount of the Increased Costs shall not exceed the amount that would be due if such Lender had not assigned any participation.

 

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ARTICLE IV - Conditions Precedent to Lending

Section 4.1 Closing Date. The obligations of the Lenders to make Loans hereunder shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with Section 10.1):

(a) The Administrative Agent and the Lenders (or their respective counsel) shall have received:

(A) This Agreement and any other Loan Documents that the Restricted Persons are to execute in connection herewith, in each case in form and substance reasonably satisfactory to the Backstop Lender and Administrative Agent (as applicable).

(B) For each Lender requesting a Note, a Note payable to such Lender or its registered assigns.

(C) Executed copies of each Security Document listed on the Security Schedule, in each case in form and substance reasonably satisfactory to the Backstop Lender, together with,

(1) subject to the Senior Lien Intercreditor Agreement, certificates representing the Capital Stock pledged pursuant to the Security Documents, accompanied by undated stock powers executed in blank, or evidence that such certificates and related stock powers were delivered to the Priority Lien Collateral Agent;

(2) proper financing statements, duly prepared for filing under the Uniform Commercial Code of all relevant jurisdictions of incorporation;

(3) completed lien searches, dated on or before the date hereof, listing all effective financing statements filed in the jurisdictions referred to in clause (2) above and any others reasonably requested by the Backstop Lender that name any Loan Party as debtor, together with copies of such other financing statements; and

(4) executed Mortgages, in each case in form and substance satisfactory to the Backstop Lender, covering at least 80% of the value of the oil and gas properties required to be pledged pursuant to the terms of the Credit Agreement and the Loan Documents.

(D) The following certificates of the Loan Parties:

(1) An Officer’s Certificate of each Loan Party, which shall contain the names and signatures of the officers of the respective Loan Party authorized to execute Loan Documents to which it is a party and which shall certify to the truth, correctness and completeness of the following, which shall be exhibits attached thereto: (1) a copy of resolutions duly adopted by the Board of Directors of such Loan Party and

 

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in full force and effect at the time this Agreement is entered into, authorizing the execution of this Agreement and the other Loan Documents delivered or to be delivered in connection herewith and the consummation of the transactions contemplated herein and therein, (2) a copy of the charter documents of such Loan Party and all amendments thereto, certified by the appropriate official of such Loan Party’s state of organization, and (3) a copy of any bylaws of such Loan Party; and

(2) A “Compliance Certificate” delivered by the Borrower, of even date with such Loan, in which the officers signatory thereto certify to the satisfaction of the conditions set out in Section 4.1.

(3) A perfection certificate in form and substance reasonably satisfactory to the Administrative Agent and the Lenders dated as of the Closing Date.

(E) A certificate (or certificates) of the due formation, valid existence and good standing of each Loan Party in its state of organization, issued by the appropriate authorities of such jurisdiction.

(F) At least three Business Days prior to the Closing Date, a Borrowing Notice.

(G) A favorable opinion of Kirkland & Ellis LLP, special New York and Texas counsel for the Loan Parties, in form and substance reasonably satisfactory to the Administrative Agent and the Backstop Lender, as to customary matters, including without limitation valid existence, due authorization, execution and delivery, enforceability, compliance with applicable laws, non-contravention, perfection, and investment company act matters.

(H) A favorable opinion of Jones Walker LLP addressed to the Lender Parties, covering, without limitation, the enforceability of each Mortgage under the laws of the jurisdiction in which the Mortgaged Property subject to such Mortgage is located, the creation of valid mortgage Liens on such Mortgaged Property under the laws of the jurisdiction in which the Mortgaged Property subject to such Mortgage is located and other matters customarily addressed in legal opinions of local counsel with respect to the Mortgages.

(I) Certificates or binders evidencing insurance for each of the Borrower and its Restricted Subsidiaries in effect on the Closing Date in form and substance reasonably satisfactory to the Administrative Agent and the Backstop Lender.

(J) A reasonably satisfactory completed Disclosure Schedule.

(K) A solvency certificate from the chief financial officer of the Borrower substantially in the form of Exhibit E.

 

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(L) All documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation the Patriot Act, in each case to the extent requested at least five Business Days prior to the Closing Date, which shall include, for the avoidance of doubt, a duly completed IRS Form W-9.

(M) An executed amendment to the Existing RCF Agreement, substantially in accordance with the terms set forth in Exhibit C to the RSA or, if not substantially in accordance with such terms, otherwise in form and substance reasonably satisfactory to the Borrower and the Backstop Lender (it being understood that any changes that are not adverse to the Lenders (as determined by the Backstop Lender in its reasonable discretion) shall be deemed satisfactory).

(N) An executed amendment to the Existing Unsecured Indenture to allow for the issuance of the New Second Lien Notes and the New Junior Lien Notes in form and substance reasonably satisfactory to the Borrower and the Backstop Lender.

(b) The Senior Lien Intercreditor Agreement shall have been duly executed and delivered by each party thereto, and shall be in full force and effect.

(c) Substantially simultaneously with the initial funding of the Loans on the Closing Date, the Exchange Offer shall have been consummated in accordance with the terms set forth in the RSA.

(d) The Administrative Agent and the Backstop Lender shall have received payment of all agency and other fees required to be paid to any Lender Party pursuant to any Loan Documents or any commitment or fee letters between or among the Borrower and the Administrative Agent or the Backstop Lender heretofore entered into and all fees and disbursements of their counsel then due such counsel.

(e) There shall be no litigation pending or, to the knowledge of any Borrower or its Subsidiaries, threatened litigation, action, proceeding, investigation or labor controversy which purports to affect the legality, validity or enforceability of any Loan Document.

(f) All representations and warranties contained herein and in any Loan Document shall be true and correct in all material respects as of the date of such Loan (it being understood and agreed that (x) any such representation or warranty that is qualified as to “materiality”, “Material Adverse Change” or similar language shall be true and correct in all respects on such date and (y) any such representation or warranty which by its terms is made as of a specified date shall be required to be true and correct in all material respects (or all respects, as the case may be) only as of such specified date) as if such representations and warranties had been made as of the date of such Loan.

(g) No Default or Event of Default shall have occurred and be continuing at the date of such Loan or would result from the making of such proposed Loan and the consummation of the Transactions under the Existing RCF Agreement, the Existing Unsecured Indenture or the Existing Second Lien Credit Agreement.

 

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ARTICLE V - Representations and Warranties

To confirm each Lender Party’s understanding concerning Restricted Persons and Restricted Persons’ businesses, properties and obligations and to induce each Lender Party to enter into this Agreement and to extend credit hereunder, the Borrower represents and warrants to each Lender Party that as of the Closing Date:

Section 5.1 No Default. No Restricted Person is in default in the performance of any of the covenants and agreements contained in any Loan Document. No event has occurred and is continuing which constitutes a Default.

Section 5.2 Organization and Good Standing. Each Restricted Person is duly organized, validly existing and in good standing under the Laws of its jurisdiction of organization, having all powers and governmental approvals required to carry out the transactions contemplated hereby. Each Restricted Person is duly qualified, in good standing, and authorized to do business in all other jurisdictions within the United States wherein the character of the properties owned or held by it or the nature of the business transacted by it makes such qualification necessary, except as would not cause a Material Adverse Change. Each Restricted Person has taken all actions and procedures customarily taken in order to enter, for the purpose of conducting business or owning property, each jurisdiction outside the United States wherein the character of the properties owned or held by it or the nature of the business transacted by it makes such actions and procedures desirable, except as would not cause a Material Adverse Change.

Section 5.3 Authorization. Each Loan Party has duly taken all action necessary to authorize the execution and delivery by it of the Loan Documents to which it is a party and to authorize the consummation of the transactions contemplated thereby and the performance of its obligations thereunder. The Borrower is duly authorized to borrow funds hereunder.

Section 5.4 No Conflicts or Consents. The execution and delivery by the various Loan Parties of the Loan Documents to which each is a party, the performance by each of its obligations under such Loan Documents and the consummation of the transactions contemplated by the various Loan Documents, do not and will not (a) conflict with any provision of (i) any Law, (ii) the organizational documents of any Restricted Person, or (iii) any agreement, judgment, license, order or permit applicable to or binding upon any Restricted Person other than, in the case of (i) and (iii), such conflicts that could not reasonably be expected to cause a Material Adverse Change, (b) result in the acceleration of any Indebtedness owed by any Restricted Person, or (c) result in or require the creation of any Lien upon any assets or properties of any Restricted Person except as expressly contemplated in the Loan Documents. Except for those which have already been obtained or as expressly contemplated in the Loan Documents, no consent, approval, authorization or order of, and no notice to or filing with, any Tribunal or third party is required in connection with the execution, delivery or performance by any Restricted Person of any Loan Document or to consummate any transactions contemplated by the Loan Documents.

 

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Section 5.5 Enforceable Obligations. This Agreement is, and the other Loan Documents when duly executed and delivered will be, legal, valid and binding obligations of each Restricted Person which is a party hereto or thereto, enforceable in accordance with their terms except as such enforcement may be limited by bankruptcy, insolvency or similar Laws of general application relating to the enforcement of creditors’ rights.

Section 5.6 Initial Financial Statements. The Initial Financial Statements fairly present in all material respects the Borrower’s Consolidated financial position at the respective dates thereof and the Consolidated results of the Borrower’s operations and the Borrower’s Consolidated cash flows for the respective periods thereof. Since the date of the Initial Financial Statements no Material Adverse Change has occurred, except as reflected in the Disclosure Schedule. All Initial Financial Statements were prepared in accordance with GAAP.

Section 5.7 Other Obligations and Restrictions. No Restricted Person has any outstanding Liabilities of any kind (including contingent obligations, tax assessments, and unusual forward or long-term commitments) which is, in the aggregate, material to the Borrower or material with respect to the Borrower’s Consolidated financial condition and not shown in the Initial Financial Statements or disclosed in the Disclosure Schedule. Except as shown in the Initial Financial Statements or disclosed in the Disclosure Schedule, no Restricted Person is subject to or restricted by any franchise, contract, deed, charter restriction, or other instrument or restriction which could reasonably be expected to cause a Material Adverse Change.

Section 5.8 Full Disclosure. No certificate, statement or other written information delivered herewith or heretofore by any Restricted Person to any Lender Party in connection with the negotiation of this Agreement or in connection with any transaction contemplated hereby, when taken as a whole together with the Borrower’s filings with the SEC contains any untrue statement of a material fact or omits to state any material fact known to any Restricted Person (other than industry-wide risks normally associated with the types of businesses conducted by Restricted Persons) necessary to make the statements contained herein or therein not misleading in any material respect as of the date made or deemed made. There is no fact known to any Restricted Person (other than industry-wide risks normally associated with the types of businesses conducted by Restricted Persons) that has not been disclosed to the Administrative Agent in writing which could reasonably be expected to cause a Material Adverse Change.

Section 5.9 Litigation. Except as disclosed in the Initial Financial Statements or in the Disclosure Schedule or in the Borrower’s filings with the SEC: (a) there are no actions, suits or legal, equitable, arbitrative or administrative proceedings pending, or to the knowledge of any Restricted Person threatened, against any Restricted Person before any Tribunal which could reasonably be expected to cause a Material Adverse Change after taking into account insurance proceeds or other recoveries from third parties actually received, and (b) there are no outstanding judgments, injunctions, writs, rulings or orders by any such Tribunal against any Restricted Person or any Restricted Person’s stockholders, partners, directors or officers which could reasonably be expected to cause a Material Adverse Change after taking into account insurance proceeds or other recoveries from third parties actually received.

 

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Section 5.10 Labor Disputes and Acts of God. Except as disclosed in the Disclosure Schedule, neither the business nor the properties of any Restricted Person has been affected by any fire, explosion, accident, strike, lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act of God or of the public enemy or other casualty (whether or not covered by insurance), which could reasonably be expected to cause a Material Adverse Change.

Section 5.11 ERISA Plans and Liabilities. Except as disclosed in the Initial Financial Statements or in the Disclosure Schedule, no Termination Event has occurred with respect to any ERISA Plan and all ERISA Affiliates are in compliance with ERISA except for any non-compliance that would not reasonably be expected to cause a Material Adverse Change. No ERISA Affiliate is required to contribute to, or has any other absolute or contingent liability in respect of, any “multiemployer plan,” as defined in Section 4001 of ERISA, which could reasonably be expected to cause a Material Adverse Change. Except as set forth in the Disclosure Schedule: (i) no “waived funding deficiency” (as defined in Section 412(c)(3) of the Internal Revenue Code of 1986, as amended) exists with respect to any ERISA Plan, and (ii) the current value of each ERISA Plan’s benefits does not exceed the current value of such ERISA Plan’s assets available for the payment of such benefits by more than $2.0 million.

Section 5.12 Environmental Matters. Except as disclosed in the Initial Financial Statements or in the Disclosure Schedule or in the Borrower’s filings with the SEC, or that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Change: (a) Restricted Persons are conducting their businesses in compliance with all Environmental Laws, and have and are in compliance with all material licenses and permits required under any such Environmental Laws; (b) none of the Restricted Persons has received express notice that any of their operations or properties is the subject of a pending Environmental Claim and to the best of the Borrower’s knowledge no Environmental Claims have been threatened; (c) no Restricted Person (and to the best knowledge of the Borrower, no other Person) has filed any notice under any Environmental Law that any Restricted Person improperly Released, or improperly stored or disposed, of any Hazardous Materials or that any Hazardous Materials have been improperly Released, or are improperly stored or disposed of, upon any real property of any Restricted Person which alleged improper matter referenced in such notice has not been fully resolved consistent with Environmental Laws; (d) no Restricted Person has transported or arranged for the transportation of any Hazardous Material to any location which to the knowledge of the Borrower is listed on the National Priorities List (“Superfund List”) under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, or listed on any analogous state Superfund List; and (e) no Restricted Person otherwise has any known contingent liability under any Environmental Laws or as a result of a Release of any Hazardous Materials.

Section 5.13 Names and Places of Business and State of Incorporation or Formation. No Restricted Person has, during the preceding five years, had, been known by, or used any other trade or fictitious name, except as disclosed in the Disclosure Schedule. Except as otherwise indicated in the Disclosure Schedule, the chief executive office and principal place of business of each Restricted Person are (and for the preceding five years have been) located at the address of the Borrower set out in Section 10.3. Except as indicated in the Disclosure Schedule, no Restricted Person has any other office or place of business. The Disclosure Schedule identifies the true and correct states of incorporation or formation of each Restricted Person.

 

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Section 5.14 Borrower’s Subsidiaries. The Borrower does not presently have any Subsidiary or own any stock in any other corporation or association, except those listed in the Disclosure Schedule (which shall identify whether or not a Subsidiary is a Guarantor). Neither the Borrower nor any Restricted Person is a member of any general or limited partnership, joint venture or association of any type whatsoever except (a) those listed in the Disclosure Schedule, and (b) associations, joint ventures or other relationships whose businesses are limited to the exploration, development and operation of oil, gas or mineral properties and interests owned directly by the parties in such associations, joint ventures or relationships. The Borrower owns, directly or indirectly, the equity interest in each of its Subsidiaries which is indicated in the Disclosure Schedule. All Subsidiaries of the Borrower as of the Closing Date of this Agreement are identified in the Disclosure Schedule.

Section 5.15 Title to Properties; Licenses. Each Restricted Person has good and defensible title to all of its material properties and assets, free and clear of all Liens other than Permitted Liens and of all material impediments to the use of such properties and assets in such Restricted Person’s business, except that no representation or warranty is made with respect to any oil, gas or mineral property or interest to which no proved oil or gas reserves are properly attributed. Each Restricted Person possesses all licenses, permits, franchises, patents, copyrights, trademarks and trade names, and other intellectual property (or otherwise possesses the right to use such intellectual property without violation of the rights of any other Person) which are necessary to carry out its business as presently conducted and as presently proposed to be conducted hereafter, and no Restricted Person is in violation in any material respect of the terms under which it possesses such intellectual property or the right to use such intellectual property.

Section 5.16 Government Regulation. Neither the Borrower nor any Guarantor is subject to regulation under the Investment Company Act of 1940 (as any of the preceding acts have been amended).

Section 5.17 Solvency. Upon the execution of the Loan Documents by the Loan Parties and the consummation of the transactions contemplated hereby and the making of each Loan, each of the Borrower and the Restricted Persons on a consolidated basis will be Solvent.

Section 5.18 Taxes. The Borrower and each of its Subsidiaries has filed all tax returns and reports required by law to have been filed by it and has paid all taxes due and owing and has paid all taxes shown to be due on any assessment received to the extent that such taxes have become due and payable (except any such taxes that are being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books), except where the failure to file any such returns or reports or to pay any such taxes could not reasonably be expected to cause a Material Adverse Change.

Section 5.19 Restriction on Liens. Except as could not reasonably be expected to result in a Material Adverse Change, neither the Borrower nor any of its Subsidiaries is a party to any material agreement or arrangement or subject to any order, judgment, writ or decree, that either restricts or purports to restrict its ability to grant Liens to the Administrative Agent and the Lenders on or in respect of their properties to secure the Obligations and the Loan Documents.

 

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Section 5.20 Hedging Transactions. Item 5.20 of the Disclosure Schedule sets forth, a true and complete list of all Hedging Contracts (including commodity price swap agreements, forward agreements or contracts of sale which provide for prepayment for deferred shipment or delivery of oil, gas or other commodities) of the Borrower and each Restricted Subsidiary, the material terms thereof (including the type, term, effective date, termination date and notional amounts or volumes), the net mark to market value thereof, all credit support agreements relating thereto (including any margin required or supplied) and the counterparty to each such agreement.

Section 5.21 Maintenance of Properties. Except for such acts or failures to act as could not be reasonably expected to result in a Material Adverse Change, the Oil and Gas Properties (and properties unitized therewith) have been maintained, operated and developed in a good and workmanlike manner and in conformity with all applicable laws and all rules, regulations and orders of all duly constituted authorities having jurisdiction and in conformity with the provisions of all leases, subleases or other contracts comprising a part of the Hydrocarbon Interests and other contracts and agreements forming a part of the Oil and Gas Properties; specifically in this connection, except for those as could not be reasonably expected to result in a Material Adverse Change, none of the wells comprising a part of the Oil and Gas Properties (or properties unitized therewith) owned by the Borrower or any of the Subsidiaries is deviated from the vertical more than the maximum permitted by applicable laws, regulations, rules and orders, and such wells are, in fact, bottomed under and are producing from, and the well bores are wholly within, the Oil and Gas Properties (or in the case of wells located on properties unitized therewith, such unitized properties) owned by the Borrower or any of the Subsidiaries.

Section 5.22 Compliance with Laws and Agreements. Except as could not reasonably be expected to result in a Material Adverse Change, each of the Borrower and its Restricted Subsidiaries is in compliance with all laws, regulations and orders of any governmental authority (except for Environmental Laws covered under Section 5.12) applicable to it or its property and all material obligations it is required to perform under the terms of each indenture, mortgage, deed of trust, security agreement, lease, franchise, agreement, contract or other instrument or obligation to which it is a party or by which it or any of its properties is bound, in all material respects.

Section 5.23 Anti-Corruption Laws and Sanctions.

(a) The Borrower represents that neither the Borrower nor any of its Subsidiaries nor any director or officer, nor, to the Borrower’s knowledge, any employee, agent, affiliate or representative of the Borrower or any of its Subsidiaries, (i) is a Sanctioned Person, or is owned or controlled by or acting on behalf of a Person that is a Sanctioned Person that would result in a violation of Sanctions or (ii) is located, organized or resident in a county or territory that is, or whose government is, subject to Sanctions or is a Sanctioned Country.

 

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(b) The Borrower represents that it will not, directly or indirectly, use the proceeds of the Loans, or lend, contribute or otherwise make available such proceeds to any Person:

(A) to fund or facilitate any activities or business of or with any Sanctioned Person or in any Sanctioned Country; or

(B) in any other manner that will result in a violation of Sanctions or any Anti-Corruption Laws by any Person (including any Person participating in the Loans, whether as underwriter, advisor, investor or otherwise) or in any Person becoming a Sanctioned Person.

(c) Neither the Borrower nor any of its Subsidiaries, nor any director or officer, nor, to the Borrower’s knowledge, any employee, agent, affiliate or representative of the Borrower or of any of its Subsidiaries, has taken any action in furtherance of an offer, payment, promise to pay, or authorization or approval of the payment or giving of money, property, gifts or anything else of value, directly or indirectly, to any “government official” (including any officer or employee of a government or government-owned or controlled entity or of a public international organization, or any person acting in an official capacity for or on behalf of any of the foregoing, or any political party or party official or candidate for political office) to influence official action or secure an improper advantage; and the Borrower and its Subsidiaries and Affiliates have conducted their businesses in compliance with Anti-Corruption Laws.

(d) The operations of the Borrower and its Subsidiaries are and have been conducted at all times in material compliance with all applicable Anti-Terrorism Laws and Sanctions, and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Borrower or any of its Subsidiaries with respect to the Anti-Terrorism Laws or Sanctions is pending or, to the best knowledge of the Borrower, threatened.

(e) No Borrowing, use of proceeds or other transaction contemplated by this Agreement will violate any Anti-Corruption Law, any Anti-Terrorism Law or applicable Sanctions.

Section 5.24 Compliance of Laws. The Borrower will maintain in effect and enforce policies and procedures designed to ensure compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws, Anti-Terrorism Laws and applicable Sanctions.

 

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ARTICLE VI - Covenants

To conform with the terms and conditions under which each Lender Party is willing to have credit outstanding to the Borrower, and to induce each Lender Party to enter into this Agreement and extend credit hereunder, the Borrower warrants, covenants and agrees to the following (and the Borrower agrees to cause all of its Restricted Subsidiaries to comply with the following) until Security Termination, unless Required Lenders have previously agreed otherwise:

Section 6.1 Reports.

(a) So long as any Loans are outstanding, the Borrower will file with the SEC for public availability, within 30 days of the time periods specified in the SEC’s rules and regulations (unless the SEC will not accept such a filing, in which case the Borrower will furnish to the Administrative Agent, within the time periods specified in the SEC’s rules and regulations):

(i) all quarterly and annual reports that would be required to be filed with the SEC on Forms 10-Q and 10-K if the Borrower were required to file such reports; and

(ii) all current reports that would be required to be filed with the SEC on Form 8-K if the Borrower were required to file such reports.

(b) All such reports will be prepared in all material respects in accordance with all of the rules and regulations applicable to such reports. Each annual report on Form 10-K will include an audit report on the Borrower’s consolidated financial statements by a nationally recognized firm of independent accountants. The Borrower will conduct a conference call for Lenders and any prospective assignee or participant to discuss the information furnished pursuant to the previous paragraph no later than three business days after furnishing any information pursuant to Section 6.1(a)(i).

(c) If, at any time, the Borrower is no longer subject to the periodic reporting requirements of the Exchange Act for any reason, the Borrower will nevertheless continue filing the reports specified in the preceding paragraphs of this covenant with the SEC within the time periods specified above unless the SEC will not accept such a filing. The Borrower will not take any action for the purpose of causing the SEC not to accept any such filings. If, notwithstanding the foregoing, the SEC will not accept the Borrower’s filings for any reason, the Borrower will post the reports referred to in the preceding paragraphs on its website within 30 days of the time periods that would apply if the Borrower were required to file those reports with the SEC.

(d) If the Borrower has designated any of its Subsidiaries as Unrestricted Subsidiaries, then, to the extent material as determined by the Board of Directors of the Borrower in good faith, the quarterly and annual financial information required by the preceding paragraphs will include a reasonably detailed presentation, either on the face of the financial statements or in the footnotes thereto, and in Management’s Discussion and Analysis of Financial Condition and Results of Operations, of the financial condition and results of operations of the Borrower and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Borrower.

Section 6.2 Compliance Certificate.

(a) The Borrower shall deliver to the Administrative Agent, within 90 days after the end of each fiscal year, an Officer’s Certificate stating that a review of the activities of the Borrower and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Authorized Officer with a view to determining whether the Borrower has kept, observed, performed and fulfilled its obligations under the Loan Documents, and further stating, as to each such Authorized Officer signing such certificate, that to the best of his

 

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or her knowledge the Borrower has kept, observed, performed and fulfilled each and every covenant contained in the Loan Documents and is not in default in the performance or observance of any of the terms, provisions and conditions of the Loan Documents (or, if a Default or Event of Default has occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Borrower is taking or proposes to take with respect thereto) and that to the best of his or her knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of or interest, if any, on the Loans is prohibited or if such event has occurred, a description of the event and what action the Borrower is taking or proposes to take with respect thereto.

(b) So long as any of the Loans are outstanding, the Borrower will deliver to the Administrative Agent, within five days of any Authorized Officer becoming aware of any Default or Event of Default, an Officer’s Certificate specifying such Default or Event of Default and what action the Borrower is taking or proposes to take with respect thereto.

Section 6.3 Taxes. The Borrower will pay, and will cause each of its Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and governmental levies except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment is not adverse in any material respect to the Lenders.

Section 6.4 Stay, Extension of Usury Laws. Each Loan Party covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Agreement; and the Borrower and each of the Guarantors (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Administrative Agent, but will suffer and permit the execution of every such power as though no such law has been enacted.

Section 6.5 Corporate Existence. Subject to Article VII hereof, so long as any of the Loans shall remain outstanding, the Borrower will at all times do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence.

Section 6.6 Insurance.

(a) The Borrower and the Guarantors shall:

(i) keep their properties insured at all times by financially sound and reputable insurers;

(ii) maintain such other insurance, to such extent and against such risks (and with such deductibles, retentions and exclusions), including fire and other risks insured against by extended coverage and coverage for acts of terrorism, as is customary with companies in the same or similar businesses operating in the same or similar locations, including public liability insurance against claims for personal injury or death or property damage occurring upon, in, about or in connection with the use of any properties owned, occupied or controlled by them; and

(iii) maintain such other insurance as may be required by law.

 

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(b) Upon the request of the 1.5 Lien Collateral Agent, the Borrower and the Guarantors will furnish to the 1.5 Lien Collateral Agent information as to their property and liability insurance carriers. From and after the Closing Date, the Borrower will use its reasonable efforts to cause the holders of the Obligations to be named as additional insureds on all general liability insurance policies of the Borrower and the Guarantors, and the 1.5 Lien Collateral Agent to be named as loss payee on all property and casualty insurance policies of the Borrower and the Guarantors that insure the Collateral.

Section 6.7 Restricted Payments.

(a) The Borrower will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly:

(1) declare or pay any dividend or make any other payment or distribution on account of the Borrower’s or any of its Restricted Subsidiaries’ Equity Interests (including, without limitation, any dividend payment or distribution made by the Borrower or any of its Restricted Subsidiaries in connection with any merger or consolidation involving the Borrower or any of its Restricted Subsidiaries) or to the direct or indirect holders of the Borrower’s or any of its Restricted Subsidiaries’ Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Borrower and other than dividends or distributions payable to the Borrower or a Restricted Subsidiary of the Borrower);

(2) purchase, redeem or otherwise acquire or retire for value (including, without limitation, any such purchase, redemption, acquisition or retirement made in connection with any merger or consolidation involving the Borrower) any Equity Interests of the Borrower or any direct or indirect parent of the Borrower;

(3) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value prior to the Stated Maturity thereof, any Subordinated Obligation, Second Lien Obligations, Junior Lien Obligations or the Existing Notes; or

(4) make any Restricted Investment (all such payments and other actions set forth in clauses (1) through (4) above being collectively referred to as “Restricted Payments”),

unless, at the time of and after giving effect to such Restricted Payment:

(i) no Default or Event of Default has occurred and is continuing or would occur as a consequence of such Restricted Payment;

 

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(ii) the Borrower would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 6.9(a) hereof; and

(iii) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Borrower and its Restricted Subsidiaries since the Closing Date (excluding Restricted Payments permitted by clauses (2), (3), (4), (5), (6), (7), (9), (10) or (13) of paragraph (b) of this Section 6.7), is equal to or less than the sum, without duplication of the following:

(A) 50% of the Consolidated Net Income of the Borrower for the period (taken as one accounting period) from September 7, 2016 to the end of the Borrower’s most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (but in any event not less than zero dollars); plus

(B) 100% of the aggregate net cash proceeds and 100% of the Fair Market Value of securities or other property other than cash received that is used or useful in the Oil and Gas Business by the Borrower since the Closing Date from the sale of Equity Interests of the Borrower (other than Disqualified Stock and any Equity Interests issued in connection with the Exchange Offer) or as a contribution to the Borrower’s common equity capital or from the sale of convertible or exchangeable Disqualified Stock or convertible or exchangeable debt securities of the Borrower that have been converted or exchanged for such Equity Interests (other than Equity Interests (or Disqualified Stock or debt securities) (i) sold to a Subsidiary of the Borrower or to an employee stock ownership plan, option plan or similar trust to the extent such sale to an employee stock ownership plan, option plan or similar trust is financed by loans from or guaranteed the Borrower or any of its Restricted Subsidiaries unless such loans have been repaid with cash on or prior to the date of determination or (ii) issued in connection with the Exchange Offer); plus

(C) the amount equal to the net reduction in Restricted Investments made by the Borrower or any of its Restricted Subsidiaries in any Person since the Closing Date resulting from:

(i) repurchases or redemptions of such Restricted Investments by such Person or proceeds realized upon the sale of such Restricted Investment to a purchaser other than the Borrower or a Subsidiary of the Borrower; or

(ii) the redesignation of any Unrestricted Subsidiary as a Restricted Subsidiary (valued in each case at the Fair Market Value of the Borrower’s Investment in such Unrestricted Subsidiary at the time of redesignation) not to exceed the amount of Investments previously made by the Borrower or any Restricted Subsidiary of the Borrower in such Unrestricted Subsidiary,

 

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which amount in each case under this clause (C) was included in the calculation of the amount of Restricted Payments; provided, however, that no amount will be included under this clause (C) to the extent it is already included in Consolidated Net Income; plus

(D) 50% of any dividends received by the Borrower or a Restricted Subsidiary of the Borrower that is a Guarantor after the Closing Date from an Unrestricted Subsidiary of the Borrower, to the extent that such dividends were not otherwise included in the Consolidated Net Income of the Borrower for such period.

(b) The provisions of this Section 6.7 hereof will not prohibit:

(1) the payment of any dividend within 90 days after the date of declaration of the dividend or the consummation of any irrevocable redemption within 60 days after the date of giving of the redemption notice, as the case may be, if at the date of declaration or notice, the dividend or redemption payment would have complied with the provisions of this Agreement;

(2) the making of any Restricted Payment since the Closing Date in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Subsidiary of the Borrower) of, Equity Interests of the Borrower (other than Disqualified Stock and other than Equity Interests issued or sold to an employee stock ownership plan, option plan or similar trust to the extent such sale to an employee stock ownership plan, option plan or similar trust is financed by loans from or guaranteed by the Borrower or any of its Restricted Subsidiaries unless such loans have been repaid with cash on or prior to the date of determination) or from the substantially concurrent contribution of common equity capital to the Borrower; provided, however that the amount of any such net cash proceeds that are utilized for any such Restricted Payment will be excluded from clause (a)(iii)(B) of this Section 6.7 hereof;

(3) the repurchase, redemption, defeasance or other acquisition or retirement for value since the Closing Date of Subordinated Obligations, Second Lien Obligations, Junior Lien Obligations or Existing Notes in exchange for, or with the net cash proceeds from a substantially concurrent incurrence of, Permitted Refinancing Indebtedness;

(4) the payment since the Closing Date of any dividend (or, in the case of any partnership or limited liability company, any similar distribution) by a Restricted Subsidiary of the Borrower to the holders of its Equity Interests on a pro rata basis;

(5) so long as no Default has occurred and is continuing or would be caused thereby, the repurchase, redemption or other acquisition or retirement for value since the Closing Date of any Equity Interests of the Borrower or any Restricted Subsidiary of the Borrower held by any of the Borrower’s (or any of its Restricted Subsidiaries’) current or former directors or employees pursuant to any director or employee equity subscription agreement, stock option agreement or restricted stock agreement; provided, however that

 

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the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests may not exceed $5.0 million in any twelve-month period (with unused amounts in any 12-month period being permitted to be carried over into succeeding 12-month periods); provided, further, that the amounts in any 12-month period may be increased by an amount not to exceed (A) the cash proceeds received by the Borrower or any of its Restricted Subsidiaries from the sale of the Borrower’s Equity Interests (other than Disqualified Stock) to any such directors or employees that occurs after the Closing Date (provided that the amount of such cash proceeds utilized for any such repurchase, retirement or other acquisition or retirement will be excluded from clause (a)(iii)(B) of this Section 6.7 hereof) plus (B) the cash proceeds of key man life insurance policies received by the Borrower and its Restricted Subsidiaries after the Closing Date;

(6) so long as no Default has occurred and is continuing or would be caused thereby, the repurchase, redemption or other acquisition or retirement for value since the Closing Date of any Equity Interests of the Borrower or any Restricted Subsidiary of the Borrower held by any of the Borrower’s (or any of its Restricted Subsidiaries’) current or former directors or employees in connection with the exercise or vesting of any equity compensation (including, without limitation, stock options, restricted stock and phantom stock) or made in order to satisfy the Borrower’s or such Restricted Subsidiary’s tax withholding obligation with respect to such exercise or vesting;

(7) so long as no Default has occurred and is continuing or would be caused thereby, repurchases of Subordinated Obligations, Second Lien Obligations, Junior Lien Obligations or Existing Notes at a purchase price not greater than (i) 101% of the principal amount of such Subordinated Obligations, Second Lien Obligations, Junior Lien Obligations or Existing Notes in the event of a Change of Control or (ii) 100% of the principal amount of such Subordinated Obligations, Second Lien Obligations, Junior Lien Obligations or Existing Notes in the event of an Asset Sale, in each case plus accrued and unpaid interest, in connection with any change of control offer or asset sale offer required by the terms of such Subordinated Obligations, Second Lien Obligations, Junior Lien Obligations or Existing Notes, but only if:

(a) in the case of a Change of Control, the Borrower has first complied with and fully satisfied its obligations under Section 2.6(b) (including without limitation the repayment of all Loans in connection therewith); or

(b) in the case of an Asset Sale, the Borrower has complied with and fully satisfied its obligations in accordance with Section 6.10 (including without limitation the repayment of all Loans in connection therewith);

(8) the repurchase, redemption or other acquisition or retirement for value of Capital Stock of the Borrower representing fractional shares of such Capital Stock in connection with a merger, consolidation or other combination involving the Borrower or any other transaction permitted by this Agreement;

 

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(9) Restricted Payments of the type referred to in clauses (1) or (2) of the first paragraph of Section 6.7(a) in an amount up to $5.0 million for each twelve-month period following the Closing Date, with any unused portion of such amount in any such period to be carried forward to succeeding twelve-month periods;

(10) other Restricted Payments in an aggregate amount not to exceed $15.0 million since the Closing Date;

(11) the declaration and payment of regularly scheduled or accrued dividends to holders of any class or series of Disqualified Stock of the Borrower or any Restricted Subsidiary of the Borrower issued on or after the Closing Date in accordance with the Fixed Charge Coverage Ratio test described in Section 6.9 hereof;

(12) so long as no Default or Event of Default has occurred and is continuing or would be caused thereby, repurchases and repayments of the Existing Notes in an amount not to exceed $35.0 million; provided, however that such repurchases are made at a discount to par of not less than 65%; and

(13) so long as no Default or Event of Default has occurred and is continuing or would be caused thereby, the repurchase, redemption, defeasance or other acquisition or retirement for value of Second Lien Obligations, Junior Lien Obligations, Subordinated Obligations or Existing Notes on the Stated Maturity thereof.

(c) The amount of all Restricted Payments (other than cash) will be the Fair Market Value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Borrower or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The Fair Market Value of any assets or securities that are required to be valued by this Section 6.7 will be evidenced by an Officer’s Certificate delivered to the Administrative Agent within five Business Days of the making of the Restricted Payment, together with a copy of any related resolution of the Board of Directors of the Borrower. Such Officer’s Certificate shall state that the Restricted Payment is permitted by this Section 6.7. For purposes of determining compliance with this Section 6.7, in the event that a Restricted Payment meets the criteria of more than one of the exceptions described in (1) through (13) above or is entitled to be made pursuant to the first paragraph of this Section 6.7, the Borrower shall, in its sole discretion, classify such Restricted Payment in any manner that complies with this Section 6.7.

Section 6.8 Dividend and Other Payment Restrictions Affecting Subsidiaries

(a) The Borrower will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to:

(1) pay dividends or make any other distributions on its Capital Stock to the Borrower or any of its Restricted Subsidiaries, or pay any indebtedness owed to the Borrower or any of its Restricted Subsidiaries;

 

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(2) make loans or advances to the Borrower or any of its Restricted Subsidiaries; or

(3) sell, lease or transfer any of its properties or assets to the Borrower or any of its Restricted Subsidiaries.

(b) The restrictions in this Section 6.8 hereof will not apply to encumbrances or restrictions existing under or by reason of:

(1) agreements governing Existing Indebtedness and Credit Facilities as in effect on the Closing Date and any amendments, restatements, modifications, renewals, supplements, increases, refundings, replacements or refinancings of those agreements; provided, however that the amendments, restatements, modifications, renewals, supplements, increases, refundings, replacements or refinancings are not materially more restrictive, taken as a whole, with respect to such dividend and other payment encumbrances or restrictions than those contained in those agreements on the Closing Date;

(2) this Agreement and the other Loan Documents;

(3) applicable law, rule, regulation, order, approval, permit or similar restriction;

(4) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Borrower or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness or Capital Stock was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired; provided, however that, in the case of Indebtedness, such Indebtedness was permitted by the terms of this Agreement to be incurred;

(5) customary non-assignment provisions in contracts, leases and licenses (including, without limitation, licenses of intellectual property) entered into in the ordinary course of business;

(6) purchase money obligations for property (including Capital Stock) acquired in the ordinary course of business, Capital Lease Obligations and mortgage financings that impose restrictions on the property purchased or leased of the nature described in clause (a)(3) of Section 6.8 hereof;

(7) any agreement for the sale or other disposition of assets, including without limitation an agreement for the sale or other disposition of the Capital Stock or assets of a Restricted Subsidiary that restricts distributions by the applicable Restricted Subsidiary pending the sale or other disposition;

(8) Liens permitted to be incurred under the provisions of Section 6.12 hereof that limit the right of the debtor to dispose of the assets subject to such Liens;

 

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(9) provisions limiting the disposition or distribution of assets or property in joint venture agreements, asset sale agreements, sale-leaseback agreements, stock sale agreements and other similar agreements entered into (a) in the ordinary course of business consistent with past practice or (b) with the approval of the Borrower’s Board of Directors, which limitations are applicable only to the assets or property that are the subject of such agreements;

(10) other Indebtedness of the Borrower or any of its Restricted Subsidiaries permitted to be incurred pursuant to an agreement entered into subsequent to the Closing Date in accordance with Section 6.9; provided, however that the provisions of such agreement relating to such dividend and other payment encumbrances or restrictions taken as a whole are not materially more restrictive, as determined by the Board of Directors or the Borrower in good faith, than those provisions contained in the agreements governing Existing Indebtedness and the Existing RCF Agreement, in each case as in effect on the Closing Date;

(11) the issuance of preferred stock by a Restricted Subsidiary or the payment of dividends thereon in accordance with Section 6.9 and the terms thereof; provided, however that issuance of such preferred stock was made in accordance and the terms of such preferred stock do not expressly restrict the ability of a Restricted Subsidiary to pay dividends or make any other distributions on its Capital Stock (other than requirements to pay dividends or liquidation preferences on such preferred stock prior to paying any dividends or making any other distributions on such other Capital Stock);

(12) supermajority voting requirements existing under corporate charters, bylaws, stockholders’ agreements and similar documents and agreements;

(13) customary provisions restricting subletting or assignment of any lease governing a leasehold interest;

(14) encumbrances or restrictions contained in Hedging Obligations permitted from time to time under this Agreement; and

(15) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business.

Section 6.9 Incurrence of Indebtedness and Issuance of Preferred Stock.

(a) The Borrower will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including Acquired Debt), and the Borrower will not issue any Disqualified Stock and will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided, however, that the Borrower and the Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock or preferred stock of a Restricted Subsidiary, if the Fixed Charge Coverage Ratio for the Borrower’s most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or preferred

 

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stock of a Restricted Subsidiary is issued, as the case may be, would have been at least 2.0 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or preferred stock of a Restricted Subsidiary had been issued, as the case may be, at the beginning of such four-quarter period.

(b) The provisions of Section 6.9(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):

(1) the incurrence by the Borrower and any Restricted Subsidiary of Indebtedness (including letters of credit) under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1) (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Borrower and its Restricted Subsidiaries thereunder) not to exceed the greater of (a) $800.0 million and (b) an amount equal to the sum of (A) $600.0 million plus (B) 10% of Adjusted Consolidated Net Tangible Assets determined as of the date of the incurrence of such Indebtedness after giving pro forma effect to such incurrence and the application of the proceeds therefrom; provided, however, that any Priority Lien Debt incurred under this clause (1) shall (i) be in an aggregate principal amount not to exceed $150.0 million or such greater amount permitted by the then applicable borrowing base in the Existing RCF Agreement (which shall be defined in a manner substantially similar to the definition of “Borrowing Base” in the Existing RCF Agreement on the date hereof) and (ii) shall be incurred under the Existing RCF Agreement (the Priority Lien Debt described in this proviso, the “Permitted Conforming Priority Lien Debt”); provided, further, the Borrower and its Restricted Subsidiaries shall be permitted to incur Permitted Conforming Priority Lien Debt notwithstanding that the Borrower and its Restricted Subsidiaries otherwise would not be permitted to incur any other additional Indebtedness under this clause (b)(1) at the time of incurrence;

(2) the incurrence by the Borrower and its Restricted Subsidiaries of the Existing Indebtedness;

(3) the incurrence by the Loan Parties of Indebtedness pursuant to this Agreement and other Loan Documents;

(4) the incurrence by the Borrower or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement of property, plant or equipment used in the business of the Borrower or any of its Restricted Subsidiaries, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed $50.0 million at any time outstanding;

(5) the incurrence by the Borrower or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are

 

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used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Agreement to be incurred under Section 6.9(a) hereof or clauses (2), (3), (4) or (11) of this Section 6.9(b) or this clause (5);

(6) the incurrence by the Borrower or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Borrower and any of its Restricted Subsidiaries; provided, however, that:

(A) if the Borrower or any Guarantor is the obligor on such Indebtedness and the payee is not the Borrower or a Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations; and

(B) (i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Borrower or a Restricted Subsidiary of the Borrower and (ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Borrower or a Restricted Subsidiary of the Borrower will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Borrower or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);

(7) the issuance by any of the Borrower’s Restricted Subsidiaries to the Borrower or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however, that:

(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Borrower or a Restricted Subsidiary of the Borrower; and

(B) any sale or other transfer of any such preferred stock to a Person that is not either the Borrower or a Restricted Subsidiary of the Borrower,

will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);

(8) the incurrence by the Borrower or any of its Restricted Subsidiaries of Hedging Obligations in the ordinary course of business and not for speculative purposes;

(9) the incurrence by the Borrower or any of its Restricted Subsidiaries of obligations relating to net gas balancing positions arising in the ordinary course of business and consistent with past practice;

(10) the Guarantee by the Borrower or any of the Guarantors of Indebtedness of the Borrower or a Restricted Subsidiary of the Borrower that was permitted to be incurred by another provision of this Section 6.9; provided, however that if the

 

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Indebtedness being guaranteed is subordinated to or pari passu with the Loans, then the Guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;

(11) Permitted Acquisition Indebtedness;

(12) the incurrence by the Borrower or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;

(13) Indebtedness consisting of the financing of insurance premiums in customary amounts consistent with the operations and business of the Borrower and its Restricted Subsidiaries;

(14) the incurrence by the Borrower or any of its Restricted Subsidiaries of Indebtedness arising from agreements of the Borrower or any of its Restricted Subsidiaries providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred or assumed in connection with the disposition of any business, assets or Capital Stock of a Subsidiary; provided, however that the maximum aggregate liability in respect of all such Indebtedness shall at no time exceed the gross proceeds actually received by the Borrower and its Restricted Subsidiaries in connection with such disposition;

(15) the incurrence by the Borrower or any of its Restricted Subsidiaries of Indebtedness in respect of bid, performance, surety and similar bonds issued for the account of the Borrower and any of its Restricted Subsidiaries in the ordinary course of business, including guarantees and obligations of the Borrower or any of its Restricted Subsidiaries with respect to letters of credit supporting such obligations (in each case, other than an obligation for money borrowed); and

(16) the incurrence by the Borrower or any of its Restricted Subsidiaries of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding not to exceed $50.0 million.

(c) The Borrower will not incur, and will not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Borrower or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Obligations on substantially identical terms; provided, however, that no Indebtedness shall be deemed to be contractually subordinated in right of payment to any other Indebtedness solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis.

(d) For purposes of determining compliance with this Section 6.9, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above or is entitled to be incurred pursuant to Section 6.9(a) hereof, the Borrower will be permitted to classify such item of Indebtedness on the date of its incurrence in any manner that complies with this Section 6.9; provided, however

 

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that any Indebtedness under the Existing RCF Agreement, the Existing Second Lien Credit Agreement, the New Second Lien Notes and the New Junior Lien Notes on the Closing Date shall be considered incurred under clause (1) of the definition of Permitted Debt and may not be later reclassified. The accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 6.9; provided, however, in each such case, that the amount thereof is included in Fixed Charges of the Borrower as accrued. Notwithstanding any other provision of this Section 6.9, the maximum amount of Indebtedness that the Borrower or any Restricted Subsidiary may incur pursuant to this Section 6.9 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values.

(e) The amount of any Indebtedness outstanding as of any date will be:

(i) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;

(ii) the principal amount of the Indebtedness, in the case of any other Indebtedness; and

(iii) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:

(A) the Fair Market Value of such asset at such date of determination; and

(B) the amount of the Indebtedness of the other Person.

Section 6.10 Asset Sales.

(a) The Borrower will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:

(i) the Borrower (or the Restricted Subsidiary, as the case may be) receives consideration at the time of the Asset Sale at least equal to the Fair Market Value of the Equity Interests or other assets issued or sold or otherwise disposed of; and

(ii) (a) at least 75% of the consideration received in the Asset Sale by the Borrower or such Restricted Subsidiary is in the form of cash or (b) the Fair Market Value of all forms of consideration other than cash received for all Asset Sales since the Closing Date does not exceed in the aggregate 10% of the Adjusted Consolidated Net Tangible Assets of the Borrower at the time each determination is made. For purposes of this provision, each of the following shall be deemed to be cash:

(A) any liabilities, as shown on the Borrower’s most recent consolidated balance sheet, of the Borrower or any Restricted Subsidiary (other than contingent liabilities and Subordinated Obligations) that are assumed by the transferee of any such assets pursuant to a customary novation agreement that releases the Borrower or such Restricted Subsidiary from further liability;

 

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(B) any securities, notes or other obligations received by the Borrower or any such Restricted Subsidiary from such transferee that are converted by the Borrower or such Restricted Subsidiary into cash within 180 days after the date of the Asset Sale, to the extent of the cash received in that conversion;

(C) any stock or assets of the kind referred to in clause (ii) or (iii) of the next paragraph of this Section 6.10; and

(D) accounts receivable of a business retained by the Borrower or any Restricted Subsidiary, as the case may be, following the sale of such business; provided, however that such accounts receivable are not (i) past due more than 90 days and (ii) do not have a payment date greater than 120 days from the date of the invoice creating such accounts receivable.

(b) Within 360 days after the receipt of any Net Proceeds from an Asset Sale, or, if the Borrower has entered into a binding commitment or commitments with respect to the actions described in clause (ii) or (iii) below, within 540 days after the receipt of any Net Proceeds from an Asset Sale, the Borrower (or the applicable Restricted Subsidiary, as the case may be) may apply such Net Proceeds:

(i) if such Asset Sale is a Collateral Disposition, (A) to repay, prepay, redeem or repurchase (I) Priority Lien Debt and permanently reduce the corresponding commitments with respect thereto and (II) the Obligations, (B) to invest in Additional Assets that shall constitute Collateral, (C) to make capital expenditures in respect of the Borrower’s or its Restricted Subsidiaries’ Oil and Gas Business in assets constituting Collateral or (D) any combination of the foregoing; and

(ii) if such Asset Sale is not a Collateral Disposition, (A) to repay, prepay, redeem or repurchase (I) Priority Lien Debt and permanently reduce the corresponding commitments with respect thereto and (II) the Obligations, (B) to invest in Additional Assets, (C) to make capital expenditures in respect of the Borrower’s or its Restricted Subsidiaries’ Oil and Gas Business, or (D) any combination of the foregoing.

Pending the application of any Net Proceeds in the manner provided above, the Borrower or any Restricted Subsidiary may invest the Net Proceeds in any manner that is not prohibited by this Agreement.

 

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(c) Any Net Proceeds from Asset Sales that are not applied or invested as provided in Section 6.10(b) will constitute “Excess Proceeds”. Within five days after the date that the aggregate amount of Excess Proceeds exceeds $20.0 million, the Borrower will make an Asset Sale Offer to all Lenders. The offer price in any Asset Sale Offer will be equal to 100% of the principal amount plus accrued and unpaid interest to, but excluding, the date of purchase or repayment, and will be payable in cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer, the Borrower may use those Excess Proceeds for any purpose not otherwise prohibited by this Agreement. If the aggregate principal amount of Loans tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds allocated for the repayment of Loans pursuant to the Asset Sale Offer, the Administrative Agent shall repay the Loans on a pro rata basis. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds will be reset at zero.

Section 6.11 Transactions with Affiliates.

(a) The Borrower will not, and will not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of the Borrower (each an “Affiliate Transaction”), unless:

(i) the Affiliate Transaction is on terms that are no less favorable to the Borrower or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Borrower or such Restricted Subsidiary with an unrelated Person; and

(ii) the Borrower delivers to the Administrative Agent:

(A) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $20.0 million, an Officer’s Certificate certifying that such Affiliate Transaction complies with this Section 6.11;

(B) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $40.0 million, a resolution of the Board of Directors of the Borrower set forth in an Officer’s Certificate certifying that such Affiliate Transaction complies with this Section 6.11 and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors of the Borrower; or

(C) as an alternative to clause (A) or (B) above, at the Borrower’s option, with respect to any transaction in which the Borrower or any of its Restricted Subsidiaries, as the case may be, deliver to the Administrative Agent a letter from an accounting, appraisal or investment banking firm of national standing stating that such transaction is fair to the Borrower or such Restricted Subsidiary from a financial point of view or that such transaction meets the requirements of Section 6.11(a).

 

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(b) The following items will not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of Section 6.11(a) hereof:

(i) any employment agreement or arrangement, stock option or stock ownership plan, employee benefit plan, officer or director indemnification agreement, restricted stock agreement, severance agreement or other compensation plan or arrangement entered into by the Borrower or any of its Restricted Subsidiaries in the ordinary course of business and payments, awards, grants or issuances of securities pursuant thereto, including, without limitation, pursuant to the Borrower’s long-term incentive compensation plan, as amended;

(ii) transactions between or among the Borrower and/or its Restricted Subsidiaries;

(iii) transactions with a Person (other than an Unrestricted Subsidiary of the Borrower) that is an Affiliate of the Borrower solely because the Borrower owns, directly or through a Restricted Subsidiary, an Equity Interest in, or controls, such Person;

(iv) reasonable fees and expenses and compensation paid to, and indemnity or insurance provided on behalf of, officers, directors or employees of the Borrower or any Restricted Subsidiaries as determined in good faith by the Board of Directors;

(v) any issuance of Equity Interests (other than Disqualified Stock) of the Borrower to, or receipt by the Borrower of a capital contribution from, Affiliates (or a Person that becomes an Affiliate) of the Borrower;

(vi) Restricted Payments (other than Investments in Unrestricted Subsidiaries) that do not violate Section 6.7 hereof;

(vii) transactions between the Borrower or any Restricted Subsidiaries and any Person, a director of which is also a director of the Borrower or any direct or indirect parent company of the Borrower and such director is the sole cause for such Person to be deemed an Affiliate of the Borrower or any Restricted Subsidiaries; provided, however, that such director abstains from voting as director of the Borrower or such direct or indirect parent company, as the case may be, on any matter involving such other Person;

(viii) loans or advances to employees in the ordinary course of business or consistent with past practice not to exceed $5.0 million in the aggregate at any one time outstanding;

 

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(ix) advances to or reimbursements of employees for moving, entertainment and travel expenses, drawing accounts and similar expenditures in the ordinary course of business;

(x) the performance of obligations of the Borrower or any of its Restricted Subsidiaries under the terms of any written agreement to which the Borrower or any of its Restricted Subsidiaries is a party on the Closing Date and which is disclosed on Schedule 6 hereto, as these agreements may be amended, modified or supplemented from time to time; provided, however that any future amendment, modification or supplement entered into after the Closing Date will be permitted to the extent that its terms do not materially and adversely affect the rights of any Lenders (as determined in good faith by the Board of Directors of the Borrower) as compared to the terms of the agreements in effect on the Closing Date; and

(xi) pledges of Equity Interests of the Borrower’s Unrestricted Subsidiaries for the benefit of lenders of the Borrower’s Unrestricted Subsidiaries.

Section 6.12 Liens. The Borrower will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Lien (other than Permitted Liens) upon any of its property or assets (whether now owned or hereafter acquired), securing any Indebtedness of the Borrower or any Guarantor.

Section 6.13 Designation of Restricted and Unrestricted Subsidiaries. The Board of Directors of the Borrower may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if that designation would not cause a Default. If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate Fair Market Value of all outstanding Investments owned by the Borrower and its Restricted Subsidiaries in the Subsidiary designated as an Unrestricted Subsidiary will be deemed to be an Investment made as of the time of the designation and will reduce the amount available for Restricted Payments under Section 6.7 hereof or under one or more clauses of the definition of Permitted Investments, as determined by the Borrower. That designation will only be permitted if the Investment would be permitted at that time and if the Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.

Any designation of a Subsidiary of the Borrower as an Unrestricted Subsidiary will be evidenced to the Administrative Agent by filing with the Administrative Agent a certified copy of a resolution of the Board of Directors giving effect to such designation and an Officer’s Certificate certifying that such designation complied with the preceding conditions of this Section 6.13 and was permitted by Section 6.7 hereof. If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements of this Section 6.13 as an Unrestricted Subsidiary, it will thereafter cease to be an Unrestricted Subsidiary for purposes of this Agreement and any Indebtedness of such Subsidiary will be deemed to be incurred by a Restricted Subsidiary of the Borrower as of such date and, if such Indebtedness is not permitted to be incurred as of such date under Section 6.9 hereof, the Borrower will be in default of such covenant. The Board of Directors of the Borrower may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however that such designation will be

 

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deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Borrower of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation will only be permitted if (1) such Indebtedness is permitted under Section 6.9 hereof, calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period and (2) no Default or Event of Default would be in existence immediately following such designation.

Section 6.14 Additional Guarantees and Collateral.

(a) If, after the Closing Date, any Domestic Subsidiary (other than an Excluded Subsidiary) that is not already a Guarantor has Indebtedness outstanding in excess of a Minimum Amount or guarantees any other Indebtedness of the Borrower or of a Guarantor in excess of a Minimum Amount, then such Domestic Subsidiary will (i) deliver an absolute and unconditional guaranty of the timely repayment of the Obligations and the due and punctual performance of the obligations of the Borrower hereunder, which guaranty shall be reasonably satisfactory to the Administrative Agent and (ii) execute and deliver an amendment, supplement or other instrument in respect of the other Loan Documents reasonably satisfactory to the Administrative Agent necessary to cause such Domestic Subsidiary to become a grantor thereunder and take all action required thereunder to perfect the Liens created thereunder, as well as to execute and deliver to the trustee joinders to the Intercreditor Agreements, in each case within 90 days of the date on which it guaranteed such Indebtedness.

(b) The Borrower and each of the Guarantors shall do or cause to be done all acts and things that may be required, or that the 1.5 Lien Collateral Agent from time to time may reasonably request, to assure and confirm that the 1.5 Lien Collateral Agent holds, for the benefit of the holders of the Obligations, duly created and enforceable and perfected Liens upon the Collateral (including any acquired Property or other Property required by any Security Document to become Collateral after the Closing Date), in each case, as contemplated by, and with the Lien priority required under, the Loan Documents, and in connection with any merger, consolidation or sale of assets of the Borrower or any Guarantor, the property and assets of the Person which is consolidated or merged with or into the Borrower or any Guarantor, to the extent that they are property or assets of the types which would constitute Collateral under the Loan Documents, shall be treated as after-acquired property and the Borrower or such Guarantor shall take such action as may be reasonably necessary to cause such property and assets to be made subject to the 1.5 Liens, in the manner and to the extent required under the Loan Documents.

(c) Upon the reasonable request of the 1.5 Lien Collateral Agent at any time and from time to time, the Borrower and each of the Guarantors shall promptly execute, acknowledge and deliver such Security Documents, instruments, certificates, financing statements, notices and other documents, and take such other actions as shall be reasonably required, or that the 1.5 Lien Collateral Agent may reasonably request, to create, perfect, protect, assure or enforce the Liens and benefits intended to be conferred, in each case as contemplated by the Security Documents for the benefit of the holders of Obligations.

(d) In addition to the Collateral, from and after the Closing Date, if the Borrower or any Guarantor acquires any Property that constitutes collateral for the Priority Lien Debt, the Second Lien Debt or Junior Lien Debt, if and to the extent that any Priority Lien Document,

 

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Second Lien Document or Junior Lien Document, as applicable, requires any supplemental security document for such collateral or other actions to achieve a perfected Lien on such collateral, the Borrower shall, or shall cause the applicable Guarantor to, promptly (but not in any event no later than the date that is 20 Business Days after which such supplemental security documents are executed and delivered (or other action taken) under such Priority Lien Documents, Second Lien Documents or Junior Lien Documents, as applicable), to the extent permitted by applicable law, execute and deliver to the 1.5 Lien Collateral Agent appropriate Security Documents (or amendments thereto) in such form as shall be necessary to grant the 1.5 Lien Collateral Agent a valid and enforceable perfected Lien on such Collateral or take such other actions in favor of the 1.5 Lien Collateral Agent as shall be reasonably necessary to grant a valid and enforceable perfected Lien on such Collateral to the 1.5 Lien Collateral Agent, for the benefit of the Lenders, subject to the terms of this Agreement, the Intercreditor Agreements and the other Loan Documents. Additionally, subject to this Agreement, the Intercreditor Agreements and the other Loan Documents, if the Borrower or any Guarantor creates any additional Lien upon any Property that would constitute Collateral, or takes any additional actions to perfect any existing Lien on Collateral, in each case for the benefit of the holders of the Priority Lien Debt, the holders of the Second Lien Debt or the holders of Junior Lien Debt, after the Closing Date, the Borrower or such Guarantor, as applicable, must, to the extent permitted by applicable law, within 20 Business Days after such Lien is granted or other action taken, grant a valid and enforceable perfected Lien upon such property or asset, or take such additional perfection actions, as applicable, for the benefit of the Lenders and obtain all related deliverables as those delivered to the Priority Lien Collateral Agent, the Second Lien Representative or Junior Lien Collateral Agent, as applicable, in each case as security for the Obligations. Notwithstanding the foregoing, to the extent that any Lien on any Collateral is perfected by the possession or control of such Collateral or of any account in which such Collateral is held, and if such Collateral or any such account is in fact in the possession or under the control of the Priority Lien Collateral Agent, or of agents or bailees of the Priority Lien Collateral Agent, the perfection actions and related deliverables described in this Section 6.14(d) shall not be required.

(e) The Borrower will deliver to the Administrative Agent, semi-annually on or before March 1 and September 1 in each calendar year, beginning March 1, 2017, an Officer’s Certificate certifying that, as of the date of such certificate, the Collateral includes Oil and Gas Properties that include not less than 90% (or such greater amount as may be required by the Existing RCF Agreement in effect at such time) of the total discounted present value of Proved Reserves attributable the Oil and Gas Properties of the Borrower and its Restricted Subsidiaries, as evaluated in the most recent Reserve Report, after giving effect to exploration and production activities, acquisitions, dispositions and production since the date of such Reserve Report (the “minimum mortgage requirement”), together with (i) such executed Mortgages or amendments or supplements to prior Mortgages naming the 1.5 Lien Collateral Agent, as mortgagee or beneficiary, as may be necessary to cause the minimum mortgage requirement to be satisfied, (ii) reasonably satisfactory evidence of the completion of all recordings and filings of such Mortgages, amendments or supplements in the proper recorders’ offices or appropriate public records (and payment of any taxes or fees in connection therewith) and (iii) local counsel opinion or opinions (each, subject to customary assumptions and qualifications) to the effect that the 1.5 Lien Collateral Agent has a valid and perfected Lien with respect to the real property that is subject to the applicable Mortgage; provided, however that (x) to the extent corresponding

 

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mortgages securing the Priority Lien Obligations are being delivered and (y) Mortgages have previously been recorded in the public records of the county or counties applicable to such additional Mortgages or amendments or supplements to prior Mortgages, no such opinion shall be required unless a corresponding opinion will be delivered to the Priority Lien Collateral Agent. The certificate required by this Section 6.14(e) shall include a schedule tied to the latest Reserve Report identifying those properties treated in the Reserve Report which are Collateral from those properties treated in the Reserve Report which are not Collateral.

(f) Notwithstanding anything herein or in the Loan Documents to the contrary, neither the Borrower nor any Guarantor will be required to grant a security interest in, and the Collateral shall not include, any Excluded Asset.

Section 6.15 Depositary Banks. From and after the date hereof, the Borrower shall and shall cause each Restricted Person to maintain all of its operating accounts, Deposit Accounts and Securities Accounts (as those terms are defined in the Uniform Commercial Code) with the Priority Lien Collateral Agent or a lender under the Priority Lien Documents, or if Priority Lien Obligations or commitments in respect thereof are no longer outstanding, with a depositary bank otherwise satisfactory to the Administrative Agent (each such party, a “Control Party”), and shall cause such operating accounts, Deposit Accounts and Securities Accounts at all times to be subject of a Control Agreement; provided, however, in the event the depositary bank ceases to be a Control Party, the Borrower shall, and shall cause each Restricted Persons to close any such operating account, Deposit Account or Securities Account within forty-five (45) days of the date such Person ceases to be a Control Party. After the date hereof, the Borrower shall not and shall not permit any Restricted Person to open any operating account or other Deposit Account or Securities Account unless concurrently with the opening of such account the Borrower or such Restricted Person, as applicable, shall have delivered to the 1.5 Lien Collateral Agent a duly executed Control Agreement in respect of such account; provided, however, in the event the Borrower or any Restricted Person acquires a Deposit Account or Securities Account pursuant to an acquisition, the Borrower and each Restricted Person shall have forty-five (45) days from the date of such acquisition to (i) close any such acquired Deposit Account or Securities Account in the event such account is not held with a Control Party or (ii) subject any such acquired Deposit Account or Securities Account to a Control Agreement. The requirements of this Section 6.15 shall not apply to Excluded Accounts. Notwithstanding anything to the contrary contained herein or in any other Loan Document, the 1.5 Lien Collateral Agent shall not direct disbursements from such Deposit Accounts or Securities Accounts or prohibit the Borrower from making disbursements from such Deposit Accounts or Securities Accounts unless an Event of Default has occurred and is continuing.

ARTICLE VII - SUCCESSORS

Section 7.1 Merger, Consolidation, or Sale of Assets. The Borrower shall not, directly or indirectly: (i) consolidate or merge with or into another Person (whether or not the Borrower is the surviving corporation); or (2) sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties and assets, in one or more related transactions, to another Person, unless:

(a) either:

(i) the Borrower is the surviving corporation; or

(ii) the Person formed by or surviving any such consolidation or merger (if other than the Borrower) or to which such sale, assignment, transfer, conveyance or other disposition has been made is a corporation, limited liability company or limited partnership organized or existing under the laws of the United States, any state of the United States or the District of Columbia;

 

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(b) the Person formed by or surviving any such consolidation or merger (if other than the Borrower) or the Person to which such sale, assignment, transfer, conveyance or other disposition has been made assumes all the obligations of the Borrower under this Agreement and the other Loan Documents and pursuant to agreements reasonably satisfactory to the Administrative Agent.

(c) immediately after such transaction or transactions, no Default or Event of Default exists;

(d) the Borrower or the Person formed by or surviving any such consolidation or merger (if other than the Borrower), or to which such sale, assignment, transfer, conveyance or other disposition has been made, would, on the date of such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period, (a) be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 6.9(a) hereof or (b) have a Fixed Charge Coverage Ratio not less than the Fixed Charge Coverage Ratio of the Borrower immediately prior to such transaction; and

(e) any Collateral owned by or transferred to the Person formed by or surviving any such consolidation or merger (if other than the Borrower) or the Person to which such sale, assignment, transfer, conveyance or other disposition has been made continues to constitute Collateral under the Loan Documents, subject to the 1.5 Liens, except as permitted by this Agreement or the other Loan Documents.

For purposes of this Section 7.1, the sale, lease, conveyance, assignment, transfer, or other disposition of all or substantially all of the properties and assets of one or more Subsidiaries of the Borrower, which properties and assets, if held by the Borrower instead of such Subsidiaries, would constitute all or substantially all of the properties and assets of the Borrower on a consolidated basis, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Borrower.

Notwithstanding the restrictions described in clause (d) of this Section 7.1, any Restricted Subsidiary may consolidate with, merge into or transfer all or part of its properties and assets to the Borrower, the Borrower may merge into a Restricted Subsidiary for the purpose of reincorporating the Borrower in another jurisdiction, and any Restricted Subsidiary may consolidate with, merge into or transfer all or part of its properties and assets to another Restricted Subsidiary.

Section 7.2 Successor Corporation Substituted. Upon any consolidation or merger, or any sale, assignment, transfer, lease, conveyance or other disposition of all or

 

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substantially all of the properties and assets of the Borrower in a transaction that is subject to, and that complies with the provisions of, Section 7.1 hereof, the successor Person formed by such consolidation or into or with which the Borrower is merged or to which such sale, assignment, transfer, lease, conveyance or other disposition is made shall succeed to, and be substituted for (so that from and after the date of such consolidation, merger, sale, assignment, transfer, lease, conveyance or other disposition, the provisions of this Agreement referring to the “Borrower” shall refer instead to the successor Person and not to the Borrower), and may exercise every right and power of the Borrower under the Loan Documents with the same effect as if such successor Person had been named as the Borrower herein; provided, however that, in the case of a lease of all or substantially all of its properties and assets, the Borrower will not be released from the obligation to pay the Obligations.

ARTICLE VIII - DEFAULTS AND REMEDIES

Section 8.1 Events of Default. Each of the following events constitutes an Event of Default under this Agreement:

(a) default for 30 days in the payment when due of interest or fees on the Loans;

(b) default in the payment when due (at maturity or otherwise) of the principal of, or premium, if any, on, the Loans;

(c) failure by the Borrower or any of its Restricted Subsidiaries to comply with the provisions of Sections 2.6, 6.10 or 7.1 hereof;

(d) failure by the Borrower or any of its Restricted Subsidiaries for 30 days after notice to the Borrower by the Administrative Agent or the Lenders holding at least 25% in aggregate principal amount of the Loans then outstanding voting as a single class to comply with any of the other agreements in this Agreement;

(e) any event of default under and as defined under the Existing RCF Agreement that continues unwaived or uncured for 30 days;

(f) default under any mortgage, indenture or instrument under which there may be issued, or by which there may be secured or evidenced, any Indebtedness for money borrowed by the Borrower or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Borrower or any of its Restricted Subsidiaries), whether such Indebtedness or Guarantee now exists, or is created after the Closing Date, if that default:

(i) is caused by a failure to pay principal of, or interest or premium, if any, on, such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a “Payment Default”); or

(ii) results in the acceleration of such Indebtedness prior to its express maturity,

and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment

 

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Default or the maturity of which has been so accelerated, aggregates $20.0 million or more; provided, however that if any such default is cured or waived or any such acceleration rescinded, or such Indebtedness is repaid, within a period of 15 Business Days from the continuation of such default beyond the applicable grace period, if any, or the occurrence of such acceleration, as the case may be, such Event of Default and any consequential acceleration of the Loans shall be automatically rescinded, so long as such rescission does not conflict with any judgment or decree;

(g) failure by the Borrower or any of its Restricted Subsidiaries to pay final judgments entered by a court or courts of competent jurisdiction aggregating in excess of $20.0 million (net of any amount with respect to which a reputable and solvent insurance company has acknowledged liability in writing), which judgments are not paid, discharged, stayed or fully bonded for a period of 60 days (or, if later, the date when payment is due pursuant to such judgment);

(h) the Borrower or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Borrower that, taken together, would constitute a Significant Subsidiary pursuant to or within the meaning of Bankruptcy Law:

(i) commences a voluntary case,

(ii) consents to the entry of an order for relief against it in an involuntary case,

(iii) consents to the appointment of a custodian of it or for all or substantially all of its property,

(iv) makes a general assignment for the benefit of its creditors, or

(v) generally is not paying its debts as they become due;

(i) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

(i) is for relief against the Borrower or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Borrower that, taken together, would constitute a Significant Subsidiary in an involuntary case;

(ii) appoints a custodian of the Borrower or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Borrower that, taken together, would constitute a Significant Subsidiary or for all or substantially all of the property of the Borrower or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Borrower that, taken together, would constitute a Significant Subsidiary; or

(iii) orders the liquidation of the Borrower or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Borrower that, taken together, would constitute a Significant Subsidiary;

 

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and the order or decree remains unstayed and in effect for 30 consecutive days;

(j) the occurrence of any of the following:

(i) except as permitted by the Loan Documents, any security document establishing the 1.5 Liens ceases for any reason to be enforceable; provided, however that it will not be an Event of Default under this clause (j)(i) if the sole result of the failure of one or more Security Documents to be fully enforceable is that any 1.5 Lien purported to be granted under such Security Documents on Collateral, individually or in the aggregate, having a fair market value of not more than $15.0 million, ceases to be an enforceable; provided further that if such failure is susceptible to cure, no Event of Default shall arise with respect thereto until 45 days after any officer of the Borrower or any Restricted Subsidiary becomes aware of such failure, which failure has not been cured during such time period;

(ii) except as permitted by the Loan Documents, any 1.5 Lien purported to be granted under any Security Document on Collateral, individually or in the aggregate, having a fair market value in excess of $15.0 million, ceases to be an enforceable and perfected 1.5 Lien, subject only to Permitted Liens and the terms of the Intercreditor Agreements; provided, however that if such failure is susceptible to cure, no Event of Default shall arise with respect thereto until 45 days after any officer of the Borrower or any Restricted Subsidiary becomes aware of such failure, which failure has not been cured during such time period;

(iii) the Borrower or any Guarantor, or any Person acting on behalf of any of them, denies or disaffirms, in writing, any obligation of the Borrower or any Guarantor set forth in or arising under any Security Document establishing the 1.5 Liens; and

(iv) except as permitted by any Loan Document, (i) any Guarantee of the Obligations is held in any judicial proceeding to be unenforceable or invalid or ceases for any reason to be in full force and effect, or (ii) any Guarantor, or any Person acting on behalf of any Guarantor, denies or disaffirms its obligations under such Guarantee.

(k) Upon the occurrence of an Event of Default described in clause (h) or (i) of this Section with respect to Borrower, all of the Obligations shall thereupon be immediately due and payable, without demand, presentment, notice of demand or of dishonor and nonpayment, protest, notice of protest, notice of intention to accelerate, declaration or notice of acceleration, or any other notice or declaration of any kind, all of which are hereby expressly waived by

 

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Borrower and each Restricted Person who at any time ratifies or approves this Agreement. During the continuance of any other Event of Default, with the consent of Lenders holding at least 25% in aggregate principal amount of outstanding Loans, the Administrative Agent at any time and from time to time may and upon written instructions from Lenders holding at least 25% in aggregate principal amount of the outstanding Loans, the Administrative Agent shall, without notice to Borrower or any other Restricted Person, declare any or all of the Obligations immediately due and payable, and all such Obligations shall thereupon be immediately due and payable, without demand, presentment, notice of demand or of dishonor and nonpayment, protest, notice of protest, notice of intention to accelerate, declaration or notice of acceleration, or any other notice or declaration of any kind, all of which are hereby expressly waived by Borrower and each Restricted Person who at any time ratifies or approves this Agreement.

The Lenders holding a majority in aggregate principal amount of the then outstanding Loans by written notice to the Administrative Agent may, on behalf of all of the Lenders, rescind an acceleration and its consequences, if the rescission would not conflict with any judgment or decree and if all existing Events of Default (except nonpayment of principal, interest or premium that has become due solely because of the acceleration) have been cured or waived.

Section 8.2 Waiver of Past Defaults. The Required Lenders by notice to the Administrative Agent may on behalf of all Lenders waive an existing Default or Event of Default and its consequences hereunder, except a continuing Default or Event of Default in the payment of the principal of, premium, if any, or interest on, the Loans. Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Agreement; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon.

Section 8.3 Control by Majority. The Required Lenders may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Administrative Agent or exercising any power conferred on the Administrative Agent. However, the Administrative Agent may refuse to follow any direction it or its counsel believes conflicts with law or this Agreement or any other Loan Document or that the Administrative Agent or its counsel determines may be unduly prejudicial to the rights of other Lenders or that may expose the Administrative Agent to liability.

Section 8.4 Priorities. If the Administrative Agent collects any money pursuant to this Article VIII, it shall pay out the money in the following order (subject to the terms of the Intercreditor Agreements):

First: to the Administrative Agent, its agents and attorneys for amounts due under Article IX or Section 10.4 hereof, including payment of all compensation, expenses and liabilities incurred, and all advances made, by the Administrative Agent and the costs and expenses of collection;

Second: to Lenders for amounts due and unpaid with respect to the Loans for principal, premium, if any, and interest ratably, without preference or priority of any kind, according to the amounts due and payable with respect to the Loans for principal, premium, if any, and interest, respectively; and

Third: to the Borrower or to such party as a court of competent jurisdiction shall direct.

 

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Section 8.5 Credit Bid.

(a) The Administrative Agent, on behalf of itself and the Lender Parties, shall have the right, exercisable at the discretion of the Required Lenders, to credit bid and purchase for the benefit of the Administrative Agent and the Lender Parties all or any portion of Collateral at any sale thereof conducted by the Administrative Agent under the provisions of the UCC, including pursuant to Sections 9-610 or 9-620 of the UCC, at any sale thereof conducted under the provisions of the Bankruptcy Code, including Section 363 thereof, or a sale under a plan of reorganization, or at any other sale or foreclosure conducted by the Administrative Agent (whether by judicial action or otherwise) in accordance with applicable law. Such credit bid or purchase may be completed through one or more acquisition vehicles formed by the Administrative Agent to make such credit bid or purchase and, in connection therewith, the Administrative Agent is authorized, on behalf of itself and the other Lender Parties, to adopt documents providing for the governance of the acquisition vehicle or vehicles, and assign the applicable Obligations to any such acquisition vehicle in exchange for Equity Interests and/or debt issued by the applicable acquisition vehicle (which shall be deemed to be held for the ratable account of the applicable Lender Parties on the basis of the Obligations so assigned by each Lender Party); provided, however that any actions by the Administrative Agent with respect to such acquisition vehicle or vehicles, including any disposition of the assets or Equity Interests thereof, shall be governed, directly or indirectly, by the vote of the Required Lenders, irrespective of the termination of this Agreement and without giving effect to the limitations on actions by the Required Lenders contained in Section 10.1.

(b) Each Lender hereby agrees, on behalf of itself and each of its Affiliates that is a Lender Party, that, except as otherwise provided in any Loan Document or with the written consent of the Administrative Agent and the Required Lenders, it will not take any enforcement action, accelerate obligations under any of the Loan Documents, or exercise any right that it might otherwise have under Applicable Law to credit bid at foreclosure sales, UCC sales or other similar dispositions of Collateral.

ARTICLE IX - Administrative Agent

Section 9.1 Appointment and Authority of the Administrative Agent. Each Lender Party hereby irrevocably authorizes the Administrative Agent, and the Administrative Agent hereby undertakes, to receive payments of principal, interest and other amounts due hereunder as specified herein and to take all other actions and to exercise such powers under the Loan Documents as are specifically delegated to the Administrative Agent by the terms hereof or thereof, together with all other powers reasonably incidental thereto. The relationship of the Administrative Agent to the other Lender Parties is only that of one party acting as the Administrative Agent for Lenders, and nothing in the Loan Documents shall be construed to constitute the Administrative Agent, regardless of whether a Default or Event of Default has occurred and is continuing, a trustee or other fiduciary for any Lender Party or Lender or of any participation therein nor to impose on the Administrative Agent duties and obligations other than those expressly provided for in the Loan Documents. The provisions of this Article IX are solely for the benefit of the Administrative Agent and the Lenders, and neither the Borrower nor any of

 

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its Subsidiaries shall have rights as a third-party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” herein or in any other Loan Documents (or any other similar term) 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 as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties. With respect to any matters not expressly provided for in the Loan Documents and any matters which the Loan Documents place within the discretion of the Administrative Agent, the Administrative Agent shall not be required to exercise any discretion or take any action, and it may request instructions from Lenders with respect to any such matter, in which case it shall be required to act or to refrain from acting (and shall be fully protected and free from liability in so acting or refraining from acting) upon the instructions of Required Lenders (including itself); provided, however that the Administrative Agent shall not be required to take any action which exposes it to a risk of personal liability that it considers unreasonable or which is contrary to the Loan Documents or to applicable Law including for the avoidance of doubt any action that may be in violation of the automatic stay under any bankruptcy or insolvency law. The Administrative Agent shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity. Upon receipt by the Administrative Agent from the Borrower of any communication calling for action on the part of Lenders or upon notice from any other Lender Party to the Administrative Agent of any Default or Event of Default, the Administrative Agent shall promptly notify each other Lender Party thereof.

Section 9.2 Exculpation, Administrative Agent’s Reliance, Etc.. Neither the Administrative Agent nor any of its directors, officers, agents, attorneys, or employees shall be liable for any action taken or omitted to be taken by any of them under or in connection with the Loan Documents, including their negligence of any kind, except that each shall be liable for its own gross negligence or willful misconduct (as determined in a final non-appealable judgment by a court of competent jurisdiction). Without limiting the generality of the foregoing, the Administrative Agent (a) may treat the payee of any Note as the holder thereof until the Administrative Agent receives written notice of the assignment or transfer thereof in accordance with this Agreement, signed by such payee and in form satisfactory to the Administrative Agent; (b) may consult with legal counsel (including counsel for the Borrower), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (c) makes no warranty or representation to any other Lender Party and shall not be responsible to any other Lender Party for any statements, warranties or representations made in or in connection with the Loan Documents; (d) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of the Loan Documents on the part of any Restricted Person or to inspect the property (including the books and records) of any Restricted Person; (e) shall not be responsible to any other Lender Party for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of any Loan Document or any instrument or document furnished in connection therewith; (f) may rely upon the representations and warranties of each Restricted Person and the Lender Parties in exercising its powers hereunder; (g) shall incur no liability under or in respect of the Loan Documents by acting upon any notice, consent, certificate or other instrument or writing (including any telecopy) believed by it to be genuine and signed or sent by the proper Person or Persons.

 

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The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith or (iii) the agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default and labeled “Notice of Default” is given to the Administrative Agent in writing by the Borrower or a Lender.

The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan that by its terms must be fulfilled to the satisfaction of a Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender unless the Administrative Agent shall have received written notice to the contrary from such Lender prior to the making of such Loan.

Section 9.3 Credit Decisions. Each Lender Party acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender Party or any of its Affiliates and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and the other Loan Documents. Each Lender Party also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender Party or any of their Affiliates and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.

The Administrative Agent shall not be required to keep itself informed as to the performance or observance by the Borrower or any of its Subsidiaries of this Agreement, the Loan Documents or any other document referred to or provided for herein or to inspect the properties or books of the Borrower or its Subsidiaries. Except for notices, reports and other documents and information expressly required to be furnished to the Lenders by the Administrative Agent hereunder, the Administrative Agent shall have no duty or responsibility to provide any Lender with any credit or other information concerning the affairs, financial condition or business of the Borrower (or any of its Affiliates) which may come into the possession of such Administrative Agent or any of its Affiliates. Each other party hereto will consult with its own legal counsel to the extent that it deems necessary in connection with the Loan Documents and the matters contemplated therein.

 

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Section 9.4 Indemnification. Each Lender agrees to indemnify and hold the Administrative Agent harmless (to the extent not reimbursed by the Borrower within ten (10) days after demand) from and against such Lender’s Percentage Share of any and all liabilities, obligations, claims, losses, damages, penalties, fines, actions, judgments, suits, settlements, costs, expenses or disbursements (including reasonable fees of attorneys, accountants, experts and advisors) of any kind or nature whatsoever (in this section collectively called “liabilities and costs”) which to any extent (in whole or in part) may be imposed on, incurred by, or asserted against the Administrative Agent growing out of, resulting from or in any other way associated with any of the Collateral, the Loan Documents and the transactions and events (including the enforcement thereof) at any time associated therewith or contemplated therein (including any Environmental Claims or violation or noncompliance with any Environmental Laws by any Person or any liabilities or duties of any Person with respect to the presence or Release of Hazardous Materials found in or released into the environment). The Administrative Agent shall not be responsible for any recitals or warranties herein or under any Loan Document, nor for the effectiveness, enforceability, validity or due execution of any Loan Document, nor for the creation, perfection or priority of any Liens purported to be created by any of the Loan Documents, or the validity, genuineness, enforceability, existence, value or sufficiency of any collateral security.

THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM OR THEORY OF STRICT LIABILITY, OR ARE CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY THE ADMINISTRATIVE AGENT;

provided, however that no Lender shall be obligated under this section to indemnify the Administrative Agent for that portion, if any, of any liabilities and costs which is proximately caused by the Administrative Agent’s own individual gross negligence or willful misconduct, as determined in a final non-appealable judgment by a court of competent jurisdiction. Cumulative of the foregoing, each Lender agrees to reimburse the Administrative Agent promptly upon demand for such Lender’s Percentage Share of any costs and expenses to be paid to the Administrative Agent by the Borrower under Section 10.4(a) to the extent that the Administrative Agent is not timely reimbursed for such expenses by the Borrower as provided in such section. As used in this section the term “Administrative Agent” shall refer not only to the Person designated as such in Section 1.1 but also to each director, officer, agent, attorney, employee, representative and Affiliate of such Person.

Section 9.5 Rights as Lender. If applicable, in its capacity as a Lender, the Administrative Agent shall have the same rights, powers, and obligations as any Lender and may exercise such rights and powers as though it were not the Administrative Agent. The Administrative Agent and its Affiliates may accept deposits from, lend money to, act as trustee under indentures of, lend money to, own securities of, act as financial advisor to, and generally engage in any kind of business with any Restricted Person or their Affiliates, all as if it were not the Administrative Agent hereunder and without any duty to account therefor to any other Lender.

 

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Section 9.6 Sharing of Set-Offs and Other Payments. Each Lender Party agrees that if it shall, whether through the exercise of rights under Security Documents or rights of banker’s lien, set off, or counterclaim against the Borrower or otherwise, obtain payment of a portion of the aggregate Obligations owed to it which, taking into account all distributions made by the Administrative Agent under Section 3.1, causes such Lender Party to have received more than it would have received had such payment been received by the Administrative Agent and distributed pursuant to Section 3.1, then (a) it shall be deemed to have simultaneously purchased and shall be obligated to purchase interests in the Obligations as necessary to cause all Lender Parties to share all payments as provided for in Section 3.1, and (b) such other adjustments shall be made from time to time as shall be equitable to ensure that the Administrative Agent and all Lender Parties share all payments of Obligations as provided in Section 3.1; provided, however, that nothing herein contained shall in any way affect the right of any Lender Party to obtain payment (whether by exercise of rights of banker’s lien, set-off or counterclaim or otherwise) of indebtedness other than the Obligations. The Borrower expressly consents to the foregoing arrangements and agrees that any holder of any such interest or other participation in the Obligations, whether or not acquired pursuant to the foregoing arrangements, may to the fullest extent permitted by Law exercise any and all rights of banker’s lien, set-off, or counterclaim as fully as if such holder were a holder of the Obligations in the amount of such interest or other participation. If all or any part of any funds transferred pursuant to this section is thereafter recovered from the seller under this section which received the same, the purchase provided for in this section shall be deemed to have been rescinded to the extent of such recovery, together with interest, if any, if interest is required pursuant to Tribunal order to be paid on account of the possession of such funds prior to such recovery.

Section 9.7 Investments. Whenever the Administrative Agent in good faith determines that it is uncertain about how to distribute to Lender Parties any funds which it has received, or whenever the Administrative Agent in good faith determines that there is any dispute among Lender Parties about how such funds should be distributed, the Administrative Agent may choose to defer distribution of the funds which are the subject of such uncertainty or dispute. If the Administrative Agent in good faith believes that the uncertainty or dispute will not be promptly resolved, or if the Administrative Agent is otherwise required to invest funds pending distribution to Lender Parties, the Administrative Agent shall invest such funds pending distribution, and all interest on any such investment shall be distributed upon the distribution of such investment and in the same proportion and to the same Persons as such investment; provided, however that the Administrative Agent shall not be liable to Lender Parties for any loss on such investment except for its gross negligence or willful misconduct, as determined in a final non-appealable judgment by a court of competent jurisdiction. All moneys received by the Administrative Agent for distribution to Lender Parties (other than to the Person who is the Administrative Agent in its separate capacity as a Lender) shall be held by the Administrative Agent pending such distribution solely as the Administrative Agent for such Lender Parties, and the Administrative Agent shall have no equitable title to any portion thereof.

Section 9.8 Benefit of Article IX. The provisions of this Article IX (other than the following Section 9.9) are intended solely for the benefit of Lender Parties and any subagents

 

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of the Administrative Agent (including the Priority Lien Agent (as such term is defined in the Senior Lien Intercreditor Agreement) as its subagent (the “1.5 Sub-Agent”), and no Restricted Person shall be entitled to rely on any such provision or assert any such provision in a claim or defense against any Lender Party. Lender Parties may waive or amend such provisions as they desire without any notice to or consent of the Borrower or any other Restricted Person.

Section 9.9 Resignation. The Administrative Agent may resign at any time by giving written notice thereof to Lenders and the Borrower. Each such notice shall set forth the date of such resignation. Required Lenders shall have the right to appoint a successor Administrative Agent. A successor must be appointed for any retiring Administrative Agent, and such Administrative Agent’s resignation shall become effective when such successor accepts such appointment. If, within thirty days after the date of the retiring Administrative Agent’s resignation, no successor Administrative Agent has been appointed and has accepted such appointment, then the retiring Administrative Agent may appoint a successor Administrative Agent, which shall be a financial institution organized under the Laws of the United States of America or of any state thereof; provided, however, that, if the Administrative Agent shall notify the Borrower and the Lenders that no successor Administrative Agent has accepted such appointment, then such resignation shall become effective fifteen (15) days following delivery of such notice and in accordance with such notice. Upon the acceptance of any appointment as the Administrative Agent hereunder by a successor Administrative Agent or the effectiveness of a notice as described in the preceding sentence, the retiring Administrative Agent shall be discharged from its duties and obligations under this Agreement and the other Loan Documents. After any retiring Administrative Agent’s resignation hereunder, the provisions of this Article IX shall continue to inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under the Loan Documents.

Section 9.10 Delegation of Duties. The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more subagents appointed by the Administrative Agent, including the 1.5 Sub-Agent as subagent for the Administrative Agent as Priority Lien Agent under the Second Lien Intercreditor Agreement. The Administrative Agent and any such subagent may perform any and all of its duties and exercise its rights and powers by or through their respective Affiliates. The provisions of this Article shall apply to any such subagent, including the 1.5 Sub-Agent, and to the Affiliates of the Administrative Agent and any such subagent, and each subagent, including the 1.5 Sub-Agent, shall have and be protected by all of the rights, immunities, indemnities and other protections of this Article IX, including Sections 9.2 and 9.4, as if it were the Administrative Agent, and shall apply to their respective activities in connection with syndication as well as activities as the Administrative Agent. The Administrative Agent shall not be responsible for the negligence or misconduct of any subagents except to the extent that a court of competent jurisdiction determines in a final and nonappealable judgment that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such subagents.

Section 9.11 Administrative Agent May File Proofs of Claim. In case of the pendency of any proceeding under any bankruptcy or insolvency law or any other judicial proceeding relative to the Borrower or any Subsidiary, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by

 

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declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered (but not obligated) by intervention in such proceeding or otherwise:

(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders and the Administrative Agent under Article III, Section 10.4 and any other provisions under the Loan Documents regarding indemnification by the Borrower or any of its Subsidiaries) allowed in such judicial proceeding; and

(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Article III, Section 10.4 and any other provisions under the Loan Documents regarding indemnification by the Borrower or any of its Subsidiaries.

ARTICLE X - Miscellaneous

Section 10.1 Waivers and Amendments; Acknowledgments.

(a) Amendment and Waiver Without Consent of the Lenders. The Borrower and the Administrative Agent may amend this Agreement and the other Loan Documents without notice to or consent of any Lender:

(i) to cure any ambiguity, defect or inconsistency;

(ii) to provide for the assumption of the Borrower’s or a Guarantor’s Obligations in the case of a merger or consolidation or sale of all or substantially all of the Borrower’s or such Guarantor’s properties and assets, as applicable;

(iii) to make any change that would provide any additional rights or benefits to the Lenders or that does not adversely affect the legal rights of any Lender under this Agreement or other Loan Document;

(iv) to allow any Guarantor to execute a Guarantee of the Obligations or release Guarantees pursuant to the terms of this Agreement;

 

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(v) to add any Collateral or to evidence the release of any Liens, in each case as provided in this Agreement or the other Loan Documents, as applicable;

(vi) with respect to Security Documents establishing the 1.5 Liens, as provided in the Intercreditor Agreements;

(vii) to make, complete or confirm any grant of Collateral permitted or required by this Agreement or any of the Security Documents establishing the 1.5 Liens; or

(viii) to evidence and provide for the acceptance under this Agreement and the other Loan Documents of a successor Administrative Agent.

In addition, the Intercreditor Agreements may be amended in accordance with their terms, including to add additional Indebtedness as Second Lien Debt or Junior Lien Debt and add other parties (or any authorized agent thereof or trustee therefor) holding such Indebtedness thereto and to establish that the Liens on any Collateral securing such Indebtedness shall rank equally with the Liens on such Collateral securing the other Priority Lien Debt, Second Lien Debt or Junior Lien Debt, as applicable, then outstanding.

Each Lender hereunder (x) consents to the amendment of any Loan Document in the manner and for the purposes set forth in this Section 10.1(a), (y) agrees that it will be bound by and will take no actions contrary to the provisions of any amendment to any Loan Document pursuant to Section 10.1(a) and (z) authorizes and instructs the Administrative Agent to enter into any amendment to any Loan Document pursuant to this Section 10.1(a) on behalf of such Lender.

(b) Amendment and Waiver With Consent of the Lenders. The Borrower and the Administrative Agent may amend this Agreement and the other Loan Documents with the written consent of the Required Lenders, and any past default or noncompliance with any provisions may be waived with the consent of the Required Lenders. Notwithstanding the foregoing, without the consent of each Lender of an affected Loan, no amendment may:

(i) reduce the principal amount of such Loan whose Lenders must consent to an amendment, supplement or waiver;

(ii) reduce the principal of or change the fixed maturity of any Loan or alter the provisions with respect to the prepayment of such Loan set forth in Section 2.4;

(iii) reduce the rate of or change the time for payment of interest, including default interest, on any Loan;

(iv) waive a Default or Event of Default in the payment of principal of, or interest or premium on, the Loans (except a rescission of acceleration of the Obligations by the holders of a majority in aggregate principal amount of the then outstanding Loans and a waiver of the payment default that resulted from such acceleration);

 

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(v) make any Loan payable in money other than U.S. dollars;

(vi) make any change in the provisions of this Agreement relating to waivers of past Defaults or the right of any Lender to receive payments of principal of, or interest or premium on, or fees with respect to, such Lender’s Loans;

(vii) waive a prepayment premium with respect to any Loan arising under Section 2.4;

(viii) release any Guarantor from any of its Guarantee of the Obligations, except in accordance with the terms of this Agreement or the Loan Documents;

(ix) make any change in the preceding amendment and waiver provisions set forth in this Section 10.1(b).

In addition, any amendment or supplement to, or waiver of, the provisions of this Agreement or any Security Document that that has the effect of releasing all or substantially all of the Collateral from the Liens securing the Obligations will require the consent of holders of at least 66  23% in aggregate principal amount of the Loans then outstanding.

(c) No Waiver. No failure or delay (whether by course of conduct or otherwise) by any Lender Party in exercising any right, power or remedy which such Lender Party may have under any of the Loan Documents shall operate as a waiver thereof or of any other right, power or remedy, nor shall any single or partial exercise by any Lender Party of any such right, power or remedy preclude any other or further exercise thereof or of any other right, power or remedy. No waiver of any provision of any Loan Document and no consent to any departure therefrom shall ever be effective unless it is in writing and signed as provided in this Section 10.1, and then such waiver or consent shall be effective only in the specific instances and for the purposes for which given and to the extent specified in such writing. No notice to or demand on any Restricted Person shall in any case of itself entitle any Restricted Person to any other or further notice or demand in similar or other circumstances.

(d) Revocation and Effect of Consents. Until an amendment, supplement or waiver becomes effective, a consent to it by a Lender is a continuing consent by such Lender and any successor thereto. However, any such Lender or subsequent Lender may revoke such consent if the Administrative Agent receives written notice of such revocation before the date the applicable amendment, supplement or waiver becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Lender.

(e) Administrative Agent to Sign Amendments, etc. The Administrative Agent will sign any amendment, supplement or waiver authorized pursuant to this Section 10.1 if such amendment, supplement or waiver does not adversely affect the rights, duties, liabilities or immunities of the Administrative Agent. The Borrower may not sign an amendment,

 

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supplement or waiver until the Board of Directors of the Borrower approves it. In executing any amendment, supplement or waiver, the Administrative Agent will be entitled to receive and will be fully protected in relying upon an Officer’s Certificate of the Borrower and an opinion of counsel to the Borrower stating that the execution of such amendment, supplement or waiver is authorized or permitted by this Agreement.

(f) Acknowledgment. Notwithstanding anything to the contrary herein, this Section 10.1 shall be subject to the provisions of Section 10.6(c).

(g) Acknowledgments and Admissions. The Borrower hereby represents, warrants, acknowledges and admits that (i) it has been advised by counsel in the negotiation, execution and delivery of the Loan Documents to which it is a party, (ii) it has made an independent decision to enter into this Agreement and the other Loan Documents to which it is a party, without reliance on any representation, warranty, covenant or undertaking by the Administrative Agent or any Lender Party, whether written, oral or implicit, other than as expressly set out in this Agreement or in another Loan Document delivered on or after the date hereof, (iii) there are no representations, warranties, covenants, undertakings or agreements by any Lender Party as to the Loan Documents except as expressly set out in this Agreement or in another Loan Document delivered on or after the date hereof, (iv) no Lender Party has any fiduciary obligation toward the Borrower with respect to any Loan Document or the transactions contemplated thereby, (v) the relationship pursuant to the Loan Documents between the Borrower and the other Restricted Persons, on one hand, and each Lender Party, on the other hand, is and shall be solely that of debtor and creditor, respectively, (vi) no partnership or joint venture exists with respect to the Loan Documents between any Restricted Person and any Lender Party, (vii) The Administrative Agent is not the Borrower’s Administrative Agent, but the Administrative Agent for the Lender Parties in the capacity described in the second sentence of Section 9.1, (viii) should an Event of Default or Default occur or exist, each Lender Party will determine in its sole discretion and for its own reasons what remedies and actions it will or will not exercise or take at that time, (ix) without limiting any of the foregoing, the Borrower is not relying upon any representation or covenant by any Lender Party, or any representative thereof, and no such representation or covenant has been made, that any Lender Party will, at the time of an Event of Default or Default, or at any other time, waive, negotiate, discuss, or take or refrain from taking any action permitted under the Loan Documents with respect to any such Event of Default or Default or any other provision of the Loan Documents, and (x) all Lender Parties have relied upon the truthfulness of the acknowledgments in this section in deciding to execute and deliver this Agreement and to become obligated hereunder.

(h) Replacement of Lenders. Notwithstanding the foregoing, in connection with any proposed amendment, modification, waiver or termination (a “Proposed Change”) requiring the consent of all Lenders, if the consent of Required Lenders is obtained, but the consent of the other Lenders whose consent is required is not obtained (any such Lender whose consent is not obtained being referred to as a “Non-Consenting Lender”), at the Borrower’s request, the Administrative Agent, or one or more Eligible Transferees, shall have the right (but not the obligation) to purchase from such Non-Consenting Lenders, and such Non-Consenting Lenders agree that they shall, upon the Administrative Agent’s request, sell and assign to the Administrative Agent or such Person, all of the Loans and other Obligations of such Non-Consenting Lenders in accordance with Section 3.5, such purchase and sale to be consummated

 

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pursuant to an executed Assignment and Acceptance (which Assignment and Assumption shall become effective without the consent of the Non-Consenting Lender if not promptly executed by the Non-Consenting Lender following request).

(i) Joint Acknowledgment. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES HERETO.

Section 10.2 Survival of Agreements; Cumulative Nature. All of Restricted Persons’ various representations, warranties, covenants and agreements in the Loan Documents shall survive the execution and delivery of this Agreement and the other Loan Documents and the performance hereof and thereof, including the making or granting of the Loans and the delivery of the Notes and the other Loan Documents, and shall further survive until all of the Obligations are paid in full to each Lender Party and all of Lender Parties’ obligations to the Borrower are terminated. All statements and agreements contained in any certificate or other instrument delivered by any Restricted Person to any Lender Party under any Loan Document shall be deemed representations and warranties by the Borrower or agreements and covenants of the Borrower under this Agreement. The representations, warranties, indemnities, and covenants made by Restricted Persons in the Loan Documents, and the rights, powers, and privileges granted to Lender Parties in the Loan Documents, are cumulative, and, except for expressly specified waivers and consents, no Loan Document shall be construed in the context of another to diminish, nullify, or otherwise reduce the benefit to any Lender Party of any such representation, warranty, indemnity, covenant, right, power or privilege. In particular and without limitation, no exception set out in this Agreement to any representation, warranty, indemnity, or covenant herein contained shall apply to any similar representation, warranty, indemnity, or covenant contained in any other Loan Document, and each such similar representation, warranty, indemnity, or covenant shall be subject only to those exceptions which are expressly made applicable to it by the terms of the various Loan Documents.

Section 10.3 Notices. All notices, requests, consents, demands and other communications required or permitted under any Loan Document shall be in writing, unless otherwise specifically provided in such Loan Document; provided, however that the Administrative Agent may give telephonic notices to the other Lender Parties, and shall be deemed sufficiently given or furnished if delivered by personal delivery, by telecopy, by e-mail, by delivery service with proof of delivery, or by registered or certified United States mail, postage prepaid, to the Borrower and Restricted Persons at the address of the Borrower specified on the signature pages hereto and to each Lender Party at its address specified in the Notice Schedule as its lending offices (unless changed by similar notice in writing given by the particular Person whose address is to be changed). Any such notice or communication shall be deemed to have been given (a) in the case of personal delivery or delivery service, as of the date of first attempted delivery during normal business hours at the address provided herein, (b) in the case of telecopy or e-mail, upon receipt, or (c) in the case of registered or certified United States mail, three days after deposit in the mail; provided, however that no Borrowing Notice shall become effective until actually received by the Administrative Agent.

 

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Section 10.4 Payment of Expenses; Indemnity.

(a) Payment of Expenses. The Borrower will promptly (and in any event, within 30 days after any invoice or other statement or notice) pay: (i) all transfer, stamp, mortgage, documentary or other similar taxes, assessments or charges levied by any governmental or revenue authority in respect of this Agreement or any of the other Loan Documents or any other document referred to herein or therein, (ii) all reasonable costs and expenses incurred by or on behalf of the Administrative Agent (including attorneys’ fees, consultants’ fees and engineering fees, travel costs and miscellaneous expenses) in connection with (1) granting, creating documenting and perfecting the security interests in the Collateral securing the Obligations, (2) before and following the Closing Date, (A) the negotiation, preparation, execution and delivery of the Loan Documents and any and all consents, waivers, amendments or modifications to the Loan Documents or other documents or instruments relating thereto, (B) the borrowings hereunder and other action reasonably required in the course of administration hereof, and (C) monitoring or confirming (or preparation or negotiation of any document related to) the Borrower’s compliance with any covenants or conditions contained in this Agreement or in any Loan Document, and (iii) all reasonable costs and expenses incurred by or on behalf of any Lender Party (including reasonable attorneys’ fees, consultants’ fees and accounting fees) in connection with the defense or enforcement of any of the Loan Documents (including this section and including proceedings in bankruptcy) or the defense of any Lender Party’s exercise of its rights thereunder (including proceedings in bankruptcy).

(b) Indemnity. The Borrower agrees to indemnify each Lender Party, upon demand, from and against any and all liabilities, obligations, claims, losses, damages, penalties, fines, actions, judgments, suits and settlements and costs, expenses or disbursements relating thereto (including reasonable fees of attorneys, accountants, experts and advisors) of any kind or nature whatsoever (in this section collectively called “liabilities and costs”) which to any extent (in whole or in part) may be imposed on, incurred by, or asserted against such Lender Party by the Borrower or any Restricted Person or by any third party growing out of, resulting from or in any other way associated with any of the Collateral, the Loan Documents and the transactions and events (including the enforcement or defense thereof) at any time associated therewith or contemplated therein (including any Environmental Claims or violation or noncompliance with any Environmental Laws by any Restricted Person or any liabilities or duties of any Restricted Person or any Lender Party with respect to the presence or Release of Hazardous Materials found in or released into the environment). For the avoidance of doubt, any indemnification relating to Taxes shall be covered exclusively by Section 3.3 and shall not be covered by this Section 10.4.

THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM OR THEORY OF STRICT LIABILITY, OR ARE CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY ANY LENDER PARTY;

provided, however that no Lender Party shall be entitled under this section to receive indemnification for that portion, if any, of any liabilities and costs which is proximately caused by its own individual gross negligence or willful misconduct, as determined in a final non-appealable judgment of a court of competent jurisdiction. If any Person (including the Borrower

 

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or any of its Affiliates) ever alleges such gross negligence or willful misconduct by any Lender Party, the indemnification provided for in this section shall nonetheless be paid upon demand, subject to later adjustment or reimbursement, until such time as a court of competent jurisdiction enters a final non-appealable judgment as to the extent and effect of the alleged gross negligence or willful misconduct. As used in this section the term “Lender Parties” shall refer not only to the Persons designated as such in Section 1.1 but also to each director, officer, agent, attorney, employee, representative and Affiliate of such Persons.

Section 10.5 Joint and Several Liability; Parties in Interest. All Obligations which are incurred by two or more Restricted Persons shall be their joint and several obligations and liabilities. All grants, covenants and agreements contained in the Loan Documents shall bind and inure to the benefit of the parties thereto and their respective successors and assigns; provided, however, that no Restricted Person may assign or transfer any of its rights or delegate any of its duties or obligations under any Loan Document without the prior consent of Required Lenders, except as expressly permitted by this Agreement or the Loan Documents. Except as otherwise provided in this Agreement, neither the Borrower nor any Affiliates of the Borrower shall directly or indirectly purchase or otherwise retire any Obligations owed to any Lender nor will any Lender accept any offer to do so, unless each Lender shall have received substantially the same offer with respect to the same Percentage Share of the Obligations owed to it. If the Borrower or any Affiliate of the Borrower at any time purchases some but less than all of the Obligations owed to all Lender Parties, such purchaser shall not be entitled to any rights of any Lender Party under the Loan Documents unless and until the Borrower or its Affiliates have purchased all of the Obligations.

Section 10.6 Assignments.

(a) Participations.

(A) Any Lender may sell a participation interest in its commitments hereunder or any of its rights under its Loans or under the Loan Documents to any Person; provided, however that the agreement between such Lender and such participant must at all times provide: (i) that such participation exists only as a result of the agreement between such participant and such Lender and that such transfer does not give such participant any right to vote as a Lender or any other direct claims or rights against any Person other than such Lender, (ii) that such participant is subject to the requirements set forth in Section 3.3(e), (h) and (i) (with such documentation to be delivered to the participating Lender to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section), as applicable, and is not entitled to payment from any Restricted Person under any of Sections 3.2 or 3.3 of amounts in excess of those payable to such Lender under such sections (determined without regard to the sale of such participation), and (iii) unless such participant is an Affiliate of such Lender, that such participant shall not be entitled to require such Lender to take any action under any Loan Document or to obtain the consent of such participant prior to taking any action under any Loan Document, except for actions which would require the consent of all Lenders under Section 10.1(h). No Lender selling such a participation shall, as between the other parties hereto and

 

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such Lender, be relieved of any of its obligations hereunder as a result of the sale of such participation. Each Lender which sells any such participation to any Person (other than an Affiliate of such Lender) shall give prompt notice thereof to the Administrative Agent and the Borrower.

(B) Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each participant and the principal amounts (and stated interest) of each participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant Register”); provided, however that no Lender shall have any obligation to disclose all or any portion of the Participant Register to any Person (including the identity of any participant or any information relating to a participant’s interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) except to the extent that such disclosure is necessary to establish that such commitment, loan or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. Unless otherwise required by the Internal Revenue Service, any disclosure required by the foregoing sentence shall be made by the relevant Lender directly and solely to the Internal Revenue Service. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.

(b) Assignments. Except for sales of participations under the immediately preceding subsection (a) or as otherwise provided in this Section 10.6, no Lender shall make any assignment or transfer of any kind of its commitments or obligations to participate in any of its rights under its Loans or under the Loan Documents, except for assignments to an Eligible Transferee, and then only if such assignment is made in accordance with the following requirements:

(i) In the case of an assignment of Loans and Commitments, immediately after giving effect to such assignment, the assignor’s Commitment and Loans shall not be less than $5.0 million and the assignee’s Commitment and Loans shall equal or exceed $5.0 million (unless such assignor is assigning all of its Commitments and Loans or unless such assignment is to an Affiliate of such assignor or an Approved Fund administered or managed by such assignor or an Affiliate of such assignor); provided, however that the foregoing requirement may be waived by a writing signed by the Administrative Agent.

(ii) The parties to each such assignment shall execute and deliver to the Administrative Agent, for its acceptance and recording in the Register, an Assignment and Acceptance, appropriately completed, together with the Note (if any) subject to such assignment and a processing fee payable to the Administrative Agent of $3,500. Upon such execution, delivery, and payment and upon the satisfaction of the conditions set out in such Assignment and Acceptance, then (A) the Borrower shall, if requested by the assignor and/or

 

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assignee, issue new Notes, to such assignor and assignee in exchange for the return of the old Notes to the Borrower, and (B) as of the “Effective Date” specified in such Assignment and Acceptance the assignee thereunder shall be a party hereto and a Lender hereunder and the Administrative Agent shall thereafter deliver or make available to the Borrower and each Lender one or more schedules showing the revised Percentage Shares of all other Lenders.

(iii) Each assignee Lender shall (to the extent it has not already done so) provide the Administrative Agent and the Borrower with the documentation referred to in Section 3.3(e), (h) and (i) and such other “know-your-customer” documentation as reasonably requested by the Administrative Agent.

(iv) No Assignment to Certain Persons. Other than as set forth in Section 10.6(c), no such assignment of Loans shall be made to the Borrower or any of the Borrower’s Affiliates or Subsidiaries.

(v) No Assignment to Natural Persons. No such assignment shall be made to a natural Person.

(c) Assignment to Affiliated Lenders.

(1) In addition to the other rights provided in this Section 10.6 and notwithstanding anything to the contrary in this Agreement, each Lender may assign all or a portion of its Loans to any Person who, after giving effect to such assignment, would be an Affiliated Lender or (if such Loans are immediately cancelled) the Borrower (without the consent of any Person but subject to acknowledgment by the Administrative Agent (which acknowledgment shall be provided promptly after request therefor)); provided, however that

(A) except as previously disclosed in writing to the Administrative Agent and the Lenders, each such Person represents and warrants as of the date of any assignment to such Person pursuant to this Section 10.6(c), that such Person does not have any material non-public information with respect to any Loan Party or any of their respective securities that both (1) has not been disclosed to the assigning Lender (other than because such assigning Lender does not wish to receive material non-public information with respect to any Loan Party or any of their respective securities) prior to such date and (2) could reasonably be expected to have a material effect upon, or otherwise by material, to a Lender’s decision to assign Loans to such Person;

(B) the assigning Lender and such Person purchasing such Lender’s Loans shall execute and deliver to the Administrative Agent an assignment agreement in a form reasonably satisfactory to the Administrative Agent; and

(C) in the case of an assignment to an Affiliated Lender, at the time of such assignment and after giving effect to such assignment, the aggregate principal amount of the Loans held by all Affiliated Lenders taken as a whole shall not exceed 10% of the aggregate principal amount of the Loans outstanding under this Agreement at any time.

 

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(ii) Notwithstanding anything to the contrary in this Agreement, no Affiliated Lender shall have any right to (A) in its role as a Lender, attend (including by telephone) any meeting or discussions (or portion thereof) among any agent or any Lender to which representatives of the Loan Parties are not invited or (B) receive any information or material prepared by any agent or any Lender or any communication by or among any agent and/or one or more Lenders, except to the extent such information or materials have been made available to any Loan Party or any representative of any Loan Party.

(iii) Notwithstanding anything in Section 10.1 or the definition of “Required Lenders” to the contrary, Affiliated Lenders shall not be permitted to vote on any amendment, modification, waiver, consent or other action with respect to any Loan Document; provided, however that no such amendment, modification, waiver, consent or other action shall deprive such Affiliated Lender of its pro rata share of any payments to which such Affiliated Lender is entitled under the Loan Documents without such Affiliated Lender providing its consent; provided, further, that such Affiliated Lender’s sole right to approve any amendment, modification, waiver or consent shall be limited to any amendment, modification, waiver or consent that is of the type described in clauses (ii), (iii), (iv), (vi) (regarding the right to receive payment) and (vii) of Section 10.1(b) to the extent that such Affiliated Lender is affected thereby and which, that by its terms, does not treat the Affiliated Lender on the same or better terms than any other Lender; and in furtherance of the foregoing, the Affiliated Lender agrees to execute and deliver to the Administrative Agent any instrument reasonably requested by the Administrative Agent to evidence the voting of its interest as a Lender in accordance with the provisions of this Section 10.6(c).

(iv) Each Affiliated Lender, solely in its capacity as a Lender, hereby agrees that, if any Loan Party shall be subject to any insolvency proceeding, (A) such Affiliated Lender (in its capacity as such) shall not take any step or action in such insolvency proceeding to object to, impede, or delay the exercise of any right or the taking of any action by the Administrative Agent (or the taking of any action by a third party that is supported by the Administrative Agent) in relation to such Affiliated Lender’s claim with respect to its Loans (a “Claim”) (including, without limitation, objecting to any debtor in possession financing, use of cash collateral, grant of adequate protection, sale or disposition, compromise, or plan of reorganization) so long as such Affiliated Lender is treated in connection with such exercise or action on the same or better terms as the other Lenders, (B) with respect to any matter requiring the vote of Lenders during the pendency of an insolvency proceeding (including, without limitation, voting on any plan of reorganization pursuant to 11 U.S.C. §1126), the Loans held by such Affiliated Lender (and any Claim with respect thereto) shall be deemed assigned for all purposes to the Administrative Agent which shall cast such vote in the same proportion, for and against, as the votes of Lenders who are not Affiliated Lenders, and (C) such Affiliated Lender shall otherwise give or refrain from giving any consent in any such insolvency proceeding at the direction of the Required Lenders. For the avoidance of doubt, the Lenders and each Affiliated Lender agree and acknowledge that the provisions set forth

 

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in this clause (iv), and any related provisions set forth in any related assignment agreement, constitute a “subordination agreement” as such term is contemplated by, and utilized in, Section 510(a) of the Bankruptcy Code, and, as such, would be enforceable for all purposes in any case where a Loan Party has filed for protection under the Bankruptcy Code.

(d) Nothing contained in this section shall prevent or prohibit any Lender from assigning or pledging all or any portion of its Loans and Note to any Federal Reserve Bank as collateral security pursuant to Regulation A of the Board of Governors and any Operating Circular issued by such Federal Reserve Bank or to any central bank having jurisdiction over such Lender or to one of its Affiliates or as otherwise required by applicable Law; provided, however that no such assignment or pledge shall relieve such Lender from its obligations hereunder.

(e) By executing and delivering an Assignment and Acceptance, each assignee Lender thereunder will be confirming to and agreeing with the Borrower, the Administrative Agents and each other Lender hereunder that such assignee understands and agrees to the terms hereof, including Article IX hereof.

(f) Subject to acceptance thereof by the Administrative Agent pursuant to paragraph (b)(ii) of this Section, from and after the effective date specified in each Assignment and Acceptance, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance 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 Section 10.4 with respect to facts and circumstances occurring prior to the effective date of such assignment. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this paragraph 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 paragraph (a) of this Section.

Section 10.7 Confidentiality. Each Lender Party agrees that it will follow its customary procedures to keep confidential any proprietary information given to it by any Restricted Person, provided, however, that this restriction shall not apply to information which (a) has at the time in question entered the public domain, (b) is required to be disclosed by Law (whether valid or invalid) of any Tribunal or is disclosed pursuant to Section 10.17, (c) is disclosed to any Lender Party’s Affiliates, auditors, attorneys, agents or to any credit insurance provider relating to the Borrower and its obligations, (d) is furnished to any other Lender Party or to any purchaser or prospective purchaser of participations or other interests in any Loan or Loan Document or to any direct, indirect, actual or prospective counterparty (and its advisor) to any swap, derivative or securitization transaction related to the obligations under this Agreement; provided, however that each such purchaser, prospective purchaser, counterparty or prospective counterparty first agrees to hold such information in confidence on the terms provided in this section), (e) is furnished to S&P or Moody’s or any similar organization or any nationally recognized rating agency in connection with ratings issued with respect to such Lender Party or

 

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with respect to any Restricted Person, or (f) is disclosed in the course of enforcing its rights and remedies during the existence of an Event of Default; provided, however that this obligation of confidence shall not apply to, and each of the Administrative Agent and the other Lender Parties (and each Person employed or retained by them who are or are expected to become engaged in evaluating, approving, structuring or administering the Loans) may disclose to any Tribunal, without limitation of any kind, the tax treatment and tax structure of the transactions contemplated by this Agreement and the other Loan Documents, and all materials of any kind (including opinions or other tax analyses) related thereto that are or have been provided to the Administrative Agent or such Lender Party relating to such tax treatment or tax structure.

Section 10.8 Governing Law; Submission to Process.

(a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. Except to the extent that the law of another jurisdiction is expressly elected in a Loan Document, the Loan Documents shall be deemed contracts and instruments made under and governed by the laws of the State of New York (including for such purposes Sections 5-1401 and 5-1402 of the General Obligations Law of the State of New York). In any legal proceeding relating to the Loan Documents or the Obligations, each of the parties hereto hereby irrevocably submits itself to the exclusive jurisdiction of the state and federal courts for the Southern District of New York sitting in New York County, Borough of Manhattan and agrees and consents that service of process may be made upon it in any legal proceeding relating to the Loan Documents or the Obligations by any means allowed under applicable Law; provided, however that nothing contained herein or in any other Loan Document will prevent any Lender, the 1.5 Lien Collateral Agent or the Administrative Agent from bringing any action to enforce any award or judgment or exercise any right under the Loan Documents against any Collateral or any other property of any Loan Party in any other forum in which jurisdiction can be established.

(b) THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM OR THAT SUCH COURT LACKS PERSONAL JURISDICTION OVER THE BORROWER.

Section 10.9 Limitation on Interest. Lender Parties, Restricted Persons and any other parties to the Loan Documents intend to contract in strict compliance with applicable usury Law from time to time in effect. In furtherance thereof such Persons stipulate and agree that none of the terms and provisions contained in the Loan Documents shall ever be construed to create a contract to pay, for the use, forbearance or detention of money, interest in excess of the maximum amount of interest permitted to be charged by applicable Law from time to time in effect. Neither any Restricted Person nor any present or future guarantors, endorsers, or other Persons hereafter becoming liable for payment of any Obligation shall ever be liable for unearned interest thereon or shall ever be required to pay interest thereon in excess of the

 

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maximum amount that may be lawfully charged under applicable Law from time to time in effect, and the provisions of this Section 10.9 shall control over all other provisions of the Loan Documents which may be in conflict or apparent conflict herewith. Lender Parties expressly disavow any intention to charge or collect excessive unearned interest or finance charges in the event the maturity of any Obligation is accelerated. If (a) the maturity of any Obligation is accelerated for any reason, (b) any Obligation is prepaid and as a result any amounts held to constitute interest are determined to be in excess of the legal maximum, or (c) any Lender or any other holder of any or all of the Obligations shall otherwise collect moneys which are determined to constitute interest which would otherwise increase the interest on any or all of the Obligations to an amount in excess of that permitted to be charged by applicable Law then in effect, then all sums determined to constitute interest in excess of such legal limit shall, without penalty, be promptly applied to reduce the then outstanding principal of the related Obligations or, at such Lender’s or holder’s option, promptly returned to the Borrower or the other payor thereof upon such determination. In determining whether or not the interest paid or payable, under any specific circumstance, exceeds the maximum amount permitted under applicable Law, Lender Parties and Restricted Persons (and any other payors thereof) shall to the greatest extent permitted under applicable Law, characterize any non-principal payment as an expense, fee or premium rather than as interest, exclude voluntary prepayments and the effects thereof, and amortize, prorate, allocate, and spread the total amount of interest throughout the entire contemplated term of the instruments evidencing the Obligations in accordance with the amounts outstanding from time to time thereunder and the maximum legal rate of interest from time to time in effect under applicable Law in order to lawfully charge the maximum amount of interest permitted under applicable Law.

Section 10.10 Termination. In its sole and absolute discretion the Borrower may at any time that no Obligations are owing elect in a written notice delivered to the Administrative Agent to terminate this Agreement. Upon receipt by the Administrative Agent of such a notice, if no Obligations are then owing, this Agreement and all other Loan Documents shall thereupon be terminated and the parties thereto released from all prospective obligations thereunder. Notwithstanding the foregoing or anything herein to the contrary, any waivers or admissions made by any Restricted Person in any Loan Document, any Obligations under any of Sections 3.2 or 3.3, and any obligations which any Person may have to indemnify or compensate any Lender Party shall survive any termination of this Agreement or any other Loan Document. At the request and expense of the Borrower, the Administrative Agent shall prepare and execute all necessary instruments to reflect and effect such termination of the Loan Documents. The Administrative Agent is hereby authorized to execute all such instruments on behalf of all Lenders, without the joinder of or further action by any Lender.

Section 10.11 Severability. If any term or provision of any Loan Document shall be determined to be illegal or unenforceable all other terms and provisions of the Loan Documents shall nevertheless remain effective and shall be enforced to the fullest extent permitted by applicable Law.

Section 10.12 Counterparts; Electronic Execution of Assignments. This Agreement may be separately executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to constitute one and the same Agreement. The words “execution,” “signed,” “signature,” and words of like

 

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import in any Assignment and Acceptance or Loan Document shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

Section 10.13 Waiver of Jury Trial, Punitive Damages, etc.. The Borrower and each Lender Party hereby knowingly, voluntarily, intentionally, and irrevocably (a) waives, to the maximum extent not prohibited by Law, any right it may have to a trial by jury in respect of any litigation based hereon, or directly or indirectly at any time arising out of, under or in connection with the Loan Documents or any transaction contemplated thereby or associated therewith, before or after maturity; (b) waives, to the maximum extent not prohibited by Law, any right it may have to claim or recover in any such litigation any “Special Damages”, as defined below, (c) certifies that no party hereto nor any representative or agent or counsel for any party hereto has represented, expressly or otherwise, or implied that such party would not, in the event of litigation, seek to enforce the foregoing waivers, and (d) acknowledges that it has been induced to enter into this Agreement, the other Loan Documents and the transactions contemplated hereby and thereby by, among other things, the mutual waivers and certifications contained in this section. As used in this section, “Special Damages” includes all special, consequential, exemplary, or punitive damages (regardless of how named), but does not include any payments or funds which any party hereto has expressly promised to pay or deliver to any other party hereto.

Section 10.14 Release of Collateral; Collateral Matters.

(a) Notwithstanding anything to the contrary in the Security Documents, the Lender Parties irrevocably authorize the 1.5 Lien Collateral Agent, at its option and in its discretion to (A) release Collateral from the Lien and security interest created by the Security Documents to secure the Loans and other Obligations at any time or from time to time in accordance with the provisions of the Intercreditor Agreements or as provided hereby and (B) subordinate any Lien on any Excluded Assets or any other property granted to or held by the 1.5 Lien Collateral Agent under any Loan Document to the holder of any Permitted Lien. Upon request by the 1.5 Lien Collateral Agent, at any time, the Lenders will confirm in writing the 1.5 Lien Collateral Agent’s authority to release particular types or items of Collateral or subordinate any Lien pursuant to this Section 10.14. The applicable property and assets included in the Collateral shall be automatically released from the Liens securing the Loans, and the applicable Guarantor shall be automatically released from its obligations under this Agreement and the Security Documents, under any one or more of the following circumstances or any applicable circumstance as provided in the Intercreditor Agreements or the Security Documents:

(i) upon the Security Termination;

(ii) as to any Collateral of the Borrower or a Guarantor that is sold, transferred or otherwise disposed of by the Borrower or any Guarantor to a Person that is not (either before or after such sale, transfer or disposition) the Borrower or

 

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a Restricted Subsidiary of the Borrower in a transaction or other circumstance that does not violate Section 6.10 and is permitted by all of the other Loan Documents, at the time of such sale, transfer or other disposition or to the extent of the interest sold, transferred or otherwise disposed of; provided, however that the 1.5 Lien Collateral Agent’s Liens upon the Collateral will not be released if the sale or disposition is subject to Section 7.1;

(iii) as provided in Section 10.1(b); and

(iv) with respect to the assets of any Guarantor, at the time that such Guarantor is released from its Guarantee of the Obligations pursuant to Section 10.15.

In connection with any termination or release pursuant to this Section 10.14 or a release of a Guarantee pursuant to Section 10.15, the 1.5 Lien Collateral Agent shall execute and deliver to any Loan Party, at such Loan Party’s expense, all documents that such Loan Party shall reasonably request to evidence such termination or release (including UCC termination statements), and will duly assign and transfer to such Loan Party, such of the Collateral that may be in the possession of the 1.5 Lien Collateral Agent and has not theretofore been sold or otherwise applied or released pursuant to this Agreement or the Security Documents. Any execution and delivery of documents pursuant to this Section 10.14 shall be without recourse to or warranty by the 1.5 Lien Collateral Agent. In connection with any release pursuant to this Section 10.14 or 10.15, the Loan Party shall be permitted to take any action in connection therewith consistent with such release including the filing of UCC termination statements. Upon the receipt of any necessary or proper instruments of termination, satisfaction or release prepared by the Borrower, the 1.5 Lien Collateral Agent shall execute, deliver or acknowledge such instruments or releases to evidence the release of any Collateral permitted to be released pursuant to this Agreement or the Security Documents.

(b) Notwithstanding any provision in this Agreement or any other Loan Document to the contrary, in no event is any Building or Mobile Home included in the definition of “Mortgaged Properties” or the definition of “Collateral” and no Building or Mobile Home is hereby encumbered by any security interest or lien granted pursuant to this Agreement or any other Loan Document. As used herein, “Flood Insurance Regulations” means (a) the National Flood Insurance Act of 1968 as now or hereafter in effect or any successor statute thereto, (b) the Flood Disaster Protection Act of 1973 as now or hereafter in effect or any successor statue thereto, (c) the National Flood Insurance Reform Act of 1994 (amending 42 USC 4001, et seq.), as the same may be amended or recodified from time to time and (d) the Flood Insurance Reform Act of 2004 and any regulations promulgated thereunder.

Section 10.15 Release of Guarantee. Each Subsidiary’s Guarantee of the Obligations shall be automatically released upon:

(a) any sale or other disposition of all or substantially all of the assets of that Guarantor (including by way of merger or consolidation) to a Person that is not (either before or after giving effect to such transaction) the Borrower or a Restricted Subsidiary of the Borrower, if the sale or other disposition does not violate Section 6.10;

 

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(b) any sale or other disposition of the Capital Stock of such Guarantor to a Person that is not (either before or after giving effect to such transaction) the Borrower or a Restricted Subsidiary of the Borrower, if the sale or other disposition does not violate Section 6.10 and the Guarantor ceases to be a Subsidiary of the Borrower as a result of such sales or disposition;

(c) designation of such Guarantor as an Unrestricted Subsidiary in accordance with the applicable provisions of this Agreement;

(d) liquidation or dissolution of such Guarantor, provided no Default or Event of Default has occurred and is continuing; or

(e) the time such Guarantor is no longer required to be a Guarantor of the Obligations as described below under Section 6.14, provided no Default or Event of Default has occurred and is continuing.

Section 10.16 USA Patriot Act Notice. The Administrative Agent hereby notifies the Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot Act”), it is required to obtain, verify and record information that identifies the Borrower and its Subsidiaries, which includes the names and addresses of the Borrower and its Subsidiaries and other information that will allow the Administrative Agent to identify the Borrower and its Subsidiaries and partners in accordance with the Patriot Act. This notice is given in accordance with the requirements of the Patriot Act and is effective as to the Administrative Agent and each Lender Party.

Section 10.17 Posting of Approved Electronic Communications.

(a) In addition to providing the Administrative Agent with all originals or copies of all Communications (as defined below) in the manner specified by Section 10.3, the Borrower hereby also agrees, unless directed otherwise by the Administrative Agent or unless the electronic mail address referred to below has not been provided by the Administrative Agent to the Borrower, that it will, or will cause its Subsidiaries to, provide to the Administrative Agent all information, documents and other materials that it is obligated to furnish to the Administrative Agent or to the Lender Parties pursuant to the Loan Documents, including all notices, requests, financial statements, financial and other reports, certificates and other information materials (all such communications being referred to herein collectively as “Communications”), by transmitting the Communications in an electronic/soft medium that is properly identified in a format acceptable to the Administrative Agent to an electronic mail address as directed by the Administrative Agent.

(b) The Borrower further agrees that (i) the Administrative Agent may make the Communications available to the Lender Parties by posting the Communications on Intralinks or a substantially similar electronic transmission system (the “Electronic Platform”) and (ii) certain of the Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to receive material non-public information with respect to the Borrower or its securities) (each, a “Public Lender”). The Borrower hereby agrees that (A) all Communications that are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (B) by marking

 

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Communications “PUBLIC,” the Borrower shall be deemed to have authorized the Administrative Agent and each Lender Party to treat such Communications as either publicly available information or not material information (although it may be sensitive and proprietary) with respect to the Restricted Persons or their securities for purposes of United States Federal and state securities laws; (C) all Communications marked “PUBLIC” are permitted to be made available through a portion of the Electronic Platform designated “Public Investor” or other similar designation; and (D) the Administrative Agent shall be entitled to treat any Communications that are not marked “PUBLIC” as being suitable only for posting on a portion of the Electronic Platform not designated “Public Investor” or otherwise not designated as public.

(c) THE ELECTRONIC PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE”. THE LENDER PARTIES DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS OR THE ADEQUACY OF THE ELECTRONIC PLATFORM AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS IS MADE BY THE LENDER PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE ELECTRONIC PLATFORM. IN NO EVENT SHALL THE LENDER PARTIES HAVE ANY LIABILITY TO ANY RESTRICTED PERSON, ANY OTHER LENDER PARTY OR ANY OTHER PERSON FOR DAMAGES OF ANY KIND, WHETHER OR NOT BASED ON STRICT LIABILITY AND INCLUDING DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF ANY RESTRICTED PERSON’S OR THE ADMINISTRATIVE AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET, EXCEPT TO THE EXTENT THE LIABILITY OF ANY LENDER PARTY IS FOUND IN A FINAL NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FROM SUCH LENDER PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

(d) The Administrative Agent agrees that the receipt of the Communications by the Administrative Agent at its e-mail address set forth herein shall constitute effective delivery of the Communications to the Administrative Agent for purposes of the Loan Documents. Each Lender Party agrees that receipt of notice to it (as provided in the next sentence) specifying that the Communications have been posted to the Electronic Platform shall constitute effective delivery of the Communications to such Lender Party for purposes of the Loan Documents. Each Lender Party agrees to notify the Administrative Agent in writing (including by electronic communication) from time to time of such Lender Party’s e-mail address to which the foregoing notice may be sent by electronic transmission and that the foregoing notice may be sent to such e-mail address.

(e) Nothing herein shall prejudice the right of the Administrative Agent or any Lender Party to give any notice or other communication pursuant to any Loan Document in any other manner specified in such Loan Document.

 

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Section 10.18 OTHER LIENS ON COLLATERAL; TERMS OF INTERCREDITOR AGREEMENTS; ETC.

(a) EACH LENDER UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT LIENS SHALL BE CREATED ON THE COLLATERAL PURSUANT TO THE SECURITY DOCUMENTS, WHICH LIENS SHALL BE SUBJECT TO TERMS AND CONDITIONS OF THE INTERCREDITOR AGREEMENTS. PURSUANT TO THE EXPRESS TERMS OF THE INTERCREDITOR AGREEMENTS, IN THE EVENT OF ANY CONFLICT BETWEEN THE TERMS OF THE INTERCREDITOR AGREEMENTS AND ANY OF THE LOAN DOCUMENTS, THE PROVISIONS OF THE APPLICABLE INTERCREDITOR AGREEMENT SHALL GOVERN AND CONTROL. IN THE EVENT OF ANY CONFLICT BETWEEN THE TERMS OF THE SENIOR LIEN INTERCREDITOR AGREEMENT AND THE SECOND LIEN INTERCREDITOR AGREEMENT, THE SENIOR LIEN INTERCREDITOR AGREEMENT SHALL CONTROL.

(b) EACH LENDER HEREBY (I) AUTHORIZES AND INSTRUCTS THE ADMINISTRATIVE AGENT TO ENTER INTO EACH OF THE INTERCREDITOR AGREEMENTS ON BEHALF OF THE LENDERS, AND TO TAKE OR CAUSE ONE OR MORE SUBAGENTS TO TAKE ALL ACTIONS (AND EXECUTE ALL DOCUMENTS) REQUIRED (OR DEEMED ADVISABLE) BY IT OR SUCH SUBAGENT IN ACCORDANCE WITH THE TERMS OF THE INTERCREDITOR AGREEMENTS (II) AUTHORIZES THE ADMINISTRATIVE AGENT TO APPOINT THE 1.5 SUB-AGENT AS ITS SUBAGENT TO ACT FOR IT AS PRIORITY LIEN AGENT FOR SUCH LENDER UNDER THE SECOND LIEN INTERCREDITOR AGREEMENT (III) ACKNOWLEDGES THAT THE 1.5 SUB-AGENT IS ALSO ACTING AS PRIORITY LIEN AGENT UNDER THE SECOND LIEN INTERCREDITOR AGREEMENT FOR THE PRIORITY LIEN SECURED PARTIES (AS THAT TERM IS DEFINED IN THE SENIOR LIEN INTERCREDITOR AGREEMENT) AND (IV) CONSENTS TO THE PRIORITY LIEN AGENT’S SERVING IN SUCH CAPACITIES AND AGREES NOT TO ASSERT ANY CLAIM (INCLUDING AS A RESULT OF ANY CONFLICT OF INTEREST) AGAINST THE PRIORITY LIEN AGENT ARISING FROM ITS ACTIONS OR INACTIONS IN SUCH CAPACITIES SO LONG AS SUCH ACTIONS OR INACTIONS ARE CONSISTENT WITH THE SENIOR INTERCREDITOR AGREEMENT AND THE SECOND LIEN INTERCREDITOR AGREEMENT OR OTHERWISE DO NOT CONSTITUTE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

(c) THE PROVISIONS OF THIS SECTION 10.18 ARE NOT INTENDED TO SUMMARIZE ALL RELEVANT PROVISIONS OF THE INTERCREDITOR AGREEMENTS. REFERENCE MUST BE MADE TO EACH OF THE INTERCREDITOR AGREEMENTS ITSELF TO UNDERSTAND ALL TERMS AND CONDITIONS THEREOF. EACH LENDER IS RESPONSIBLE FOR MAKING ITS OWN ANALYSIS AND REVIEW OF THE INTERCREDITOR AGREEMENTS AND THE TERMS AND PROVISIONS THEREOF, AND NEITHER THE ADMINISTRATIVE AGENT NOR ANY OF ITS AFFILIATES MAKES ANY REPRESENTATION TO ANY LENDER AS TO THE SUFFICIENCY OR ADVISABILITY OF THE PROVISIONS CONTAINED IN THE INTERCREDITOR AGREEMENTS.

 

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Section 10.19 Post-Closing Obligations. Notwithstanding anything to the contrary contained in this Agreement or the other Loan Documents, the parties hereto acknowledge and agree that the Borrower shall deliver, or cause one or more Guarantors to deliver to the Administrative Agent the following items within 15 days after the Closing Date (as such date may be extended by an additional 15 days (with respect to a given action or actions) at the reasonable discretion of the Administrative Agent):

(a) fully executed counterparts of any Mortgages not yet delivered (in sufficient counterparts for the prompt recordation in each jurisdiction in which the Mortgaged Property subject to such Mortgage is located) and to the extent requested by the Administrative Agent, corresponding UCC fixture filings or as-extracted collateral filings (or, if UCC fixture filings and as-extracted collateral filings are not available in the applicable jurisdiction, equivalent filings as available in such jurisdiction), and any similar filings as shall be required by local law, in form and substance reasonably satisfactory to the Administrative Agent, which Mortgages, UCC fixture filings or as-extracted collateral filings (or, in the case of UCC fixture filings and as-extracted collateral filings, any other equivalent filings, as available in each applicable jurisdiction) or other similar filings shall cover each Mortgaged Property, together with evidence reasonably satisfactory to the Administrative Agent that such Mortgages, UCC fixture filings or as-extracted collateral filings (or, in the case of UCC fixture filings and as-extracted collateral filings, any other equivalent filings, as available in each applicable jurisdiction) or similar filings have been delivered to the Persons responsible for recording or filing, as applicable, of such Mortgages, UCC fixture filings, as-extracted collateral filings, equivalent filings or similar filings, as the case may be;

(b) title information and lien searches with respect to the Mortgaged Properties, as requested by the Administrative Agent;

(c) legal opinions addressed to the Lender Parties from (1) local counsel, covering, without limitation, the enforceability of each Mortgage under the laws of the jurisdiction in which the Mortgaged Property subject to such Mortgage is located, the creation of valid mortgage Liens on such Mortgaged Property under the laws of the jurisdiction in which the Mortgaged Property subject to such Mortgage is located and other matters customarily addressed in legal opinions of local counsel with respect to the Mortgages, and (2) outside counsel to the Borrower of national standing, covering, without limitation, the due authorization, execution and delivery of the Mortgages with respect to Delaware and Texas laws, in each case, in form and substance substantially equivalent to the opinions previously delivered to the Administrative Agent pursuant to Section 4.1; and

(d) any deposit account control agreements required to perfect the Liens in the deposit accounts of the Loan Parties, in each case in form and substance reasonably satisfactory to the Administrative Agent and the Backstop Lender.

Section 10.20 Additional Indebtedness. In connection with the incurrence by any Loan Party or any Subsidiary thereof of any Priority Lien Obligations, Second Lien Obligations or Junior Lien Obligations permitted to be incurred pursuant to the terms hereof and of any other then outstanding Priority Lien Documents, Loan Documents, Second Lien Documents and Junior Lien Documents, each of the Administrative Agent and the 1.5 Lien Collateral Agent agree to

 

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execute and deliver any necessary supplements, joinders or confirmations to the Intercreditor Agreements and any amendments, amendments and restatements, restatements or waivers of or supplements to or other modifications to any Security Document (including but not limited to any Mortgages and UCC fixture filings), and to make or consent to any filings or take any other actions in connection therewith, as may be reasonably deemed by the Borrower to be necessary or reasonably desirable for any Lien on the assets of any Loan Party permitted to secure such Indebtedness to become a valid, perfected lien (with such priority as may be designated by the relevant Loan Party or Subsidiary, to the extent such priority is permitted by the Loan Documents) pursuant to the Security Document being so amended, amended and restated, restated, waived, supplemented or otherwise modified or otherwise.

Section 10.21 Set off. In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, after the occurrence and during the continuance of any Event of Default each Lender Party is hereby authorized by each Loan Party at any time or from time to time subject to the consent of the Administrative Agent and the Required Lenders (such consent not to be unreasonably withheld or delayed), without notice to any Loan Party or to any other Person (other than the Administrative Agent), any such notice being hereby expressly waived, to set off and to appropriate and to apply any and all deposits (general or special, including Indebtedness evidenced by certificates of deposit, whether matured or unmatured, but not including trust accounts) and any other Indebtedness at any time held or owing by such Lender Party to or for the credit or the account of any Loan Party against and on account of the obligations and liabilities of any Loan Party to such Lender Party hereunder, including all claims of any nature or description arising out of or connected hereto, irrespective of whether or not (a) such Lender Party shall have made any demand hereunder or (b) the principal of or the interest on the Loans or any other amounts due hereunder shall have become due and payable pursuant to Section 2.

Section 10.22 Acknowledgment and Consent to Bail-In of EEA Financial Institution. Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:

(a) the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and

(b) the effects of any Bail-in Action on any such liability, including, if applicable:

(1) a reduction in full or in part or cancellation of any such liability;

(2) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or

(3) the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.

 

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IN WITNESS WHEREOF, the parties hereto have caused their duly authorized officers to execute and deliver this Agreement as of the date first above written.

 

W&T OFFSHORE, INC.
as the Borrower
By:  

/s/ John D. Gibbons

  Name:   John D. Gibbons
  Title:   Senior Vice President and Chief Financial Officer

 

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Franklin Custodian Funds - Franklin Income Fund, as Lender
By:  

/s/ Ed Perks

  Name:   Ed Perks
  Title:   EVP

 

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CORTLAND CAPITAL MARKET SERVICES LLC
as Administrative Agent and 1.5 Lien Collateral Agent
By:  

/s/ Emily Ergang Pappas

  Name:   Emily Ergang Pappas
  Title:   Associate Counsel

 

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SCHEDULE 1

DISCLOSURE SCHEDULE

 

ITEM 5.6.    No Material Adverse Change regarding Financial Statements
ITEM 5.7.    Liabilities, Obligations and Restrictions
ITEM 5.9.    Litigation Matters
ITEM 5.10    Extraordinary Events, Labor Disputes and Acts of God
ITEM 5.11.    ERISA Plans and Liabilities
ITEM 5.12.    Environmental Matters
ITEM 5.13.    Names and Places of Business and State of Incorporation or Formation
ITEM 5.14.    Subsidiaries
ITEM 5.20.    Hedging Transactions

 

Sch 1-1


ITEM 5.6

No Material Adverse Change regarding Financial Statements

None.

 

Item 5.6 - 1


ITEM 5.7

Liabilities, Obligations and Restrictions

None.

 

Item 5.7 - 1


ITEM 5.9

Litigation Matters

None.

 

Item 5.9 - 1


ITEM 5.10

Extraordinary Events, Labor Disputes and Acts of God

None.

 

Item 5.10 - 1


ITEM 5.11

ERISA Plans and Liabilities

None.

 

Item 5.11 - 1


ITEM 5.12

Environmental Matters

None.

 

Item 5.12 - 1


ITEM 5.13

Names and Places of Business and State of Incorporation or Formation

 

1. Name of Restricted Party: W&T Offshore, Inc.

 

  a. State of Formation: Texas

 

  b. Other names used in preceding five years:

 

  i. Successor by merger with Offshore Energy I LLC, a Delaware limited liability company

 

  ii. Successor by merger with Offshore Energy II LLC, a Delaware limited liability company

 

  iii. Successor by merger with Offshore Energy III LLC, a Delaware limited liability company

 

  iv. Successor by merger with Gulf of Mexico Oil and Gas Properties LLC, a Delaware limited liability company

 

  v. Successor by merger with Offshore Shelf LLC, a Delaware limited liability company

 

  c. Prior Chief Executive Office or Principal Place of Business in the preceding five years:

 

  i. None.

 

  d. Other Offices and Places of Business:

 

  i. 1100 Poydras, Suite 1100, New Orleans, Louisiana, 70163

 

  ii. 13700 Dauphin Island Pkwy, Coden, Alabama 36523

 

2. Name of Restricted Party: W & T Energy VI, LLC

 

  a. State of Formation: Delaware

 

  b. Other names used in preceding five years:

 

  i. None.

 

  c. Prior Chief Executive Office or Principal Place of Business in the preceding five years:

 

  i. None.

 

Item 5.13 - 1


  d. Other Offices and Places of Business:

 

  i. None.

 

3. Name of Restricted Party: W & T Energy VII, LLC

 

  a. State of Formation: Delaware

 

  b. Other names used in preceding five years:

 

  i. None.

 

  c. Prior Chief Executive Office or Principal Place of Business in the preceding five years:

 

  i. None.

 

  d. Other Offices and Places of Business:

 

  i. None.

 

Item 5.13 - 2


ITEM 5.14

Subsidiaries

1. W & T Energy VI, LLC, a Delaware limited liability company (Guarantor, 100% owned by the Borrower).

2. W & T Energy VII, LLC, a Delaware limited liability company (Guarantor, 100% owned by the Borrower).

3. White Shoal Pipeline Corporation, a Delaware corporation (not a Guarantor, 74.3% owned by the Borrower).

 

Item 5.14 - 1


ITEM 5.20

Hedging Transactions

Summary:

 

Crude Oil: Two-way collars, Priced off WTI (NYMEX)

 
          Notional
Quantity
(Bbls/day)
     Notional
Quantity
(Bbls)
     Weighted Average
Contract Price
 

Termination Period

         Put Option
(Bought)
     Call Option
(Sold)
 

2016:

  

3rd Quarter

     5,000         460,000       $ 40.00       $ 81.47   
  

4th Quarter

     5,000         460,000         40.00         81.47   

 

Natural Gas: Three-way collars, Priced off Henry Hub (NYMEX)

 
          Notional
Quantity
(MMBTUs/day)
     Notional
Quantity
(MMBTUs)
     Weighted Average Contract Price  

Termination Period

         Put Option
(Bought)
     Call Option
(Sold)
     Call
Option
(Bought)
 

2016:

  

3rd Quarter

     40,000         2,440,000       $ 2.25       $ 3.50       $ 3.77   
  

4th Quarter

     40,000         3,680,000         2.25         3.50         3.77   

All counterparties are lenders under the Credit Agreement

No credit support agreements have been entered into with any of the counterparties

No margins are required or supplied with any counterparty

Oil Contracts per Counterparty:

 

Priced off WTI

(NYMEX)

                           
          Oil Contracts  

Seller:

Citi

   Put (bought)      Call (sold)  

Termination Period

   Notional
Quantity
(Bbls)
     Weighted
Average
Contract
Price
     Notional
Quantity
(Bbls)
     Weighted
Average
Contract
Price
 

2016:

  

3rd Quarter

     92,000         40.00         92,000         81.80   
  

4th Quarter

     92,000         40.00         92,000         81.80   
     

 

 

    

 

 

    

 

 

    

 

 

 
        184,000       $ 40.00         184,000       $ 81.80   
     

 

 

    

 

 

    

 

 

    

 

 

 

 

Item 5.20 - 1


Priced off WTI

(NYMEX)

                           
          Oil Contracts  

Seller:

Goldman Sachs

   Put (bought)      Call (sold)  

Termination Period

   Notional
Quantity
(Bbls)
     Weighted
Average
Contract
Price
     Notional
Quantity
(Bbls)
     Weighted
Average
Contract
Price
 

2016:

  

3rd Quarter

     92,000         40.00         92,000         81.00   
  

4th Quarter

     92,000         40.00         92,000         81.00   
     

 

 

    

 

 

    

 

 

    

 

 

 
        184,000       $ 40.00         184,000       $ 81.00   
     

 

 

    

 

 

    

 

 

    

 

 

 

 

Priced off WTI

(NYMEX)

                           
          Oil Contracts  

Seller:

Scotia Bank

   Put (bought)      Call (sold)  

Termination Period

   Notional
Quantity
(Bbls)
     Weighted
Average
Contract
Price
     Notional
Quantity
(Bbls)
     Weighted
Average
Contract
Price
 

2016:

  

3rd Quarter

     92,000         40.00         92,000         81.03   
  

4th Quarter

     92,000         40.00         92,000         81.03   
     

 

 

    

 

 

    

 

 

    

 

 

 
        184,000       $ 40.00         184,000       $ 81.03   
     

 

 

    

 

 

    

 

 

    

 

 

 

 

Item 5.20 - 2


Priced off WTI

(NYMEX)

                           
          Oil Contracts  

Seller:

Toronto Dominion

   Put (bought)      Call (sold)  

Termination Period

   Notional
Quantity
(Bbls)
     Weighted
Average
Contract
Price
     Notional
Quantity
(Bbls)
     Weighted
Average
Contract
Price
 

2016:

  

3rd Quarter

     184,000         40.00         184,000         81.75   
  

4th Quarter

     184,000         40.00         184,000         81.75   
     

 

 

    

 

 

    

 

 

    

 

 

 
        368,000       $ 40.00         368,000       $ 81.75   
     

 

 

    

 

 

    

 

 

    

 

 

 

Natural Gas Contracts per Counterparty:

 

Priced off WTI

(NYMEX Henry Hub)

                                         
          Natural Gas Contracts  

Seller:

Morgan Stanley

   Put (bought)      Call (sold)      Call (Bought)  
Ref: F16579208-1, _184-1           Weighted             Weighted             Weighted  

Termination Period

   Notional
Quantity
(MMBtu)
     Average
Contract
Price
     Notional
Quantity
(MMBtu)
     Average
Contract
Price
     Notional
Quantity
(MMBtu)
     Average
Contract
Price
 

2016:

  

3rd Quarter

     610,000         2.25         610,000         3.50         610,000         3.74   
  

4th Quarter

     920,000         2.25         920,000         3.50         920,000         3.74   
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
        1,530,000       $ 2.25         1,530,000       $ 3.50         1,530,000       $ 3.74   
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

Priced off WTI

(NYMEX Henry Hub)

                                         
          Natural Gas Contracts  

Seller:

Natixis

   Put (bought)      Call (sold)      Call (Bought)  
Ref: 160103212, 214, 217           Weighted             Weighted             Weighted  

Termination Period

   Notional
Quantity
(MMBtu)
     Average
Contract
Price
     Notional
Quantity
(MMBtu)
     Average
Contract
Price
     Notional
Quantity
(MMBtu)
     Average
Contract
Price
 

2016:

  

3rd Quarter

     610,000         2.25         610,000         3.50         610,000         3.80   
  

4th Quarter

     920,000         2.25         920,000         3.50         920,000         3.80   
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
        1,530,000       $ 2.25         1,530,000       $ 3.50         1,530,000       $ 3.80   
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

Item 5.20 - 3


Priced off WTI

(NYMEX Henry Hub)

                                         
          Natural Gas Contracts  

Seller:

Toronto Dominion

   Put (bought)      Call (sold)      Call (Bought)  
Ref: 476459, 461, 462           Weighted             Weighted             Weighted  

Termination Period

   Notional
Quantity
(MMBtu)
     Average
Contract
Price
     Notional
Quantity
(MMBtu)
     Average
Contract
Price
     Notional
Quantity
(MMBtu)
     Average
Contract
Price
 

2016:

  

3rd Quarter

     610,000         2.25         610,000         3.50         610,000         3.75   
  

4th Quarter

     920,000         2.25         920,000         3.50         920,000         3.75   
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
        1,530,000       $ 2.25         1,530,000       $ 3.50         1,530,000       $ 3.75   
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

Priced off WTI

(NYMEX Henry Hub)

                                         
          Natural Gas Contracts  

Seller:

ABN - AMBRO

   Put (bought)      Call (sold)      Call (Bought)  

Ref: 13741337-39

13741345-47

   Notional
Quantity
(MMBtu)
     Weighted
Average
Contract
Price
     Notional
Quantity
(MMBtu)
     Weighted
Average
Contract
Price
     Notional
Quantity
(MMBtu)
     Weighted
Average
Contract
Price
 

Termination Period

                 

2016:

  

3rd Quarter

     610,000         2.25         610,000         3.50         610,000         3.78   
  

4th Quarter

     920,000         2.25         920,000         3.50         920,000         3.78   
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
        1,530,000       $ 2.25         1,530,000       $ 3.50         1,530,000       $ 3.78   
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

For natural gas, contracts close one month ahead of production, i.e July contracts closed last week of June

 

Item 5.20 - 4


SCHEDULE 2

SECURITY SCHEDULE

 

1. Security Agreement, Pledge and Irrevocable Proxy, dated as of September 7, 2016, from W&T Offshore, Inc. (the “Borrower”) in favor of Cortland Capital Market Services LLC, as 1.5 Lien Collateral Agent for the benefit of the Lenders (the “1.5 Lien Collateral Agent”).

 

2. Security Agreement, Pledge and Irrevocable Proxy, dated as of September 7, 2016, from W & T Energy VI, LLC and W & T Energy VII, LLC (each a “Guarantor”, and together the “Guarantors”) in favor of the 1.5 Lien Collateral Agent.

 

3. Guaranty, dated as of September 7, 2016, from W & T Energy VI, LLC in favor of the Administrative Agent and each of the other Lender Parties.

 

4. Guaranty, dated as of September 7, 2016, from W & T Energy VII, LLC in favor of the Administrative Agent and each of the other Lender Parties.

 

5. Intercreditor Agreement, dated as of May 11, 2015, by and among the Existing RCF Agent, as the original priority lien agent, the Administrative Agent as a New Representative, Morgan Stanley Senior Funding, Inc., as the original second lien collateral trustee and Wilmington Trust, N.A. as a New Representative.

 

6. Intercreditor Agreement, dated as of September 7, 2016, between the Existing RCF Agent, as the original priority lien agent, and the 1.5 Lien Collateral Agent, as the original 1.5 lien agent.

 

Sch 2-1


SCHEDULE 3

NOTICE SCHEDULE

Administrative Agent:

Cortland Capital Market Services LLC

225 West Washington Street, 21st Floor

Chicago, Illinois 60606

Attention: Ryan Morick and Legal Department

Email: ryan.morick@cortlandglobal.com and legal@cortlandglobal.com

Fax: 312-376-0751

1.5 Lien Collateral Agent:

Cortland Capital Market Services LLC

225 West Washington Street, 21st Floor

Chicago, Illinois 60606

Attention: Ryan Morick and Legal Department

Email: ryan.morick@cortlandglobal.com and legal@cortlandglobal.com

Fax: 312-376-0751

Lender:

Franklin Advisors, Inc.

One Franklin Parkway, Suite 2100

San Mateo, CA 94403

 

Sch 3-1


SCHEDULE 4

MORTGAGED PROPERTIES

[to be attached]

 

Sch 4-1


W & T Offshore, Inc. and W & T Energy VI, LLC

 

Mortgagor        Block        Area        Addition       

Adjacent

State

       OCS        Effective
Date
      

Interest

Type

       Description        WI%        NRI%             Acres

W&T

Offshore Inc.

      2       East Cameron               Cameron, Louisiana       SL 18121       7/1/2013      

Record

Title

     

 

Portion of Tract 36235 - Portion of Blocks 2 and 3, East Cameron Area, Revised, Cameron Parish, Louisiana. The beds and bottoms of all water bodies belonging to the State of Louisiana located in that portion of Blocks 2 and 3, East Cameron Area, Revised, together with any present lands formed by accretion to the shoreline, located in Cameron Parish, Louisiana, and not presently under mineral lease on May 12, 2004, the geographical area of which is more fully described as follows: Beginning at a point on the North line of Block 2, East Cameron Area, Revised, also being the Northeast corner of State Lease No. 16475 having Coordinates of X =1,471,141.95 and Y = 374,758.05; thence East 600.00 feet to the North line of said Block 2 to a point having Coordinates of X = 1,471,741.95 and Y = 374,758.05; thence South 3,884.61 feet to a point having Coordinates of X = 1,471,741.95 and Y = 370,873.44; thence West 4,333.94 feet to a point on the East boundary of said State Lease No. 16475 having Coordinates of X = 1,467,408.01 and Y = 370,873.44; thence North 43 degrees 52 minutes 01 seconds East 5,388.18 feet on the East boundary of said State Lease No. 16475 to the point of beginning, containing approximately 220.00 acres, all as more particularly outlined on a plat in the Office of Mineral Resources, Department of Natural Resources.

 

      42.52       36.08491           220

 

W&T

Offshore, Inc.

 

      321      

 

East

Cameron

 

      South      

 

Cameron,

Louisiana

 

      G02061       2/1/1971      

Record

Title

      All of Block 321, East Cameron Area       100       83.333           5,000

W&T

Offshore, Inc.

      331      

East

Cameron

             

Cameron

Parish,

Louisiana

      G08658       8/1/1987       ORRI       All of Block 331, East Cameron Area,       0       1.3333           5,000

 

141


W & T Offshore, Inc. and W & T Energy VI, LLC

 

W&T

Offshore, Inc.

 

    

  331      

East

Cameron

             

Cameron,

Louisiana

      G08658       8/1/1987       ORRI      

 

All of Block 331, East Cameron Area, INSOFAR AND ONLY INSOFAR as said Block covers operating rights from a depth below 100 feet below the stratigraphic equivalent of 12,590 feet MD being the deepest depth drilled in the FMI OCS-G 8658 No. 2 Well to 100,000 feet TVD.

 

      0       1.3333           5,000

W&T

Offshore, Inc.

      338      

East

Cameron

      South      

Cameron,

Louisiana

      G02063       2/1/1971      

 

Record

Title

 

      All of Block, EC 338       71.8306       59.85886           5,000

W&T

Offshore, Inc.

      338      

East

Cameron

      South      

Cameron,

Louisiana

      G02063       2/1/1971      

 

Operating

Rights

 

      All of Block 338, East Cameron Area, from the surface to 7,274’ TVDSS       71.8306       59.85886           5,000.02

W&T

Offshore, Inc.

      338      

East

Cameron

      South      

Cameron,

Louisiana

      G02063       2/1/1971      

 

Operating

Rights

 

      All of Block 338, East Cameron Area, from 7,274’ TVDSS to 99,999’ TVDSS       71.8306       59.85886           5,000.02

W&T

Offshore, Inc.

      349      

East

Cameron

             

Cameron,

Louisiana

      G14385       5/1/1994      

Operating

Rights

     

 

All of Block 349, East Cameron Area, INSOFAR AS Lease covers operating rights from surface down to stratigraphic equivalent of the deepest productive reservoir discovered in the field, which is defined as the base of the Lentic Sand as seen in the OCS-G 15157 No. A-5 on the CDR TVD Log at 9,296’ TVD.

 

      75       62.5           5,000

W&T

Offshore, Inc.

      349      

East

Cameron

             

Cameron,

Louisiana

      G14385       5/1/1994      

Operating

Rights

     

 

All of Block 349, East Cameron Area, INSOFAR AS Lease covers operating rights below the stratigraphic equivalent of the deepest productive reservoir discovered in the field, which is defined as the base of the Lentic Sand as seen in the OCS-G 157157 A-5 Well No. A-5, on the CDR TVD at 9,296’ TVD.

 

      37.5       37.5           5,000

 

142


W & T Offshore, Inc. and W & T Energy VI, LLC

 

 

W&T

Offshore, Inc.

 

        204       Eugene Island              

 

Terrebonne and St. Mary, Louisiana

 

      00804       5/1/1960      

UNIT Operating

Rights

      All of Block 204, Eugene Island Area, as to depths below 15,891’ TVDDS       100                   5,000

 

W&T

Offshore, Inc.

 

      205       Eugene Island              

 

Terrebonne and St. Mary, Louisiana

 

      00805       5/1/1960      

UNIT

Operating

Rights

      All of Block 205, Eugene Island Area, as to depths below 15,891’ TVDSS       100                   5,000

 

W&T

Offshore, Inc.

 

      206       Eugene Island              

 

Terrebonne and St. Mary, Louisiana

 

      00806       5/1/1960      

UNIT

Operating

Rights

      All of Block 206, Eugene Island Area, as to depths below 15,891’ TVDSS       100                   5,000

 

W&T

Offshore, Inc.

 

      218       Eugene Island              

 

Terrebonne and St. Mary, Louisiana

 

      00807       5/1/1960      

UNIT

Operating

Rights

      W1/2 of Block 218, Eugene Island Area,, as to depths below 15,891’ TVDSS       100                   5,000

 

W&T

Offshore, Inc.

 

      219       Eugene Island               Terrebonne and St. Mary, Louisiana       00808       5/1/1960      

UNIT

Operating

Rights

     

 

All of Block 219, Eugene Island Area, below the base of base of the VAL. “HA No. 2 Sand as seen in the Eugene Island E-1 Well at 5,600’, measured depth

 

      100                   5,000

 

W&T

Offshore, Inc.

 

      219       Eugene Island               Terrebonne and St. Mary, Louisiana       00808       5/1/1960      

UNIT

Operating

Rights

      All of Block 219, Eugene Island Area, as to depths below 15,891’ TVDSS       100                   5,000

 

W&T

Offshore, Inc.

 

      954       Ewing Bank              

 

Terrebonne and Lafourche, Louisiana

 

      G13081       7/1/1991      

Contractual

Operating

Rights

      All of Block 954, Ewing Bank, from surface down to 12,447’ SSTVD       50       41.67           5,760.00

 

W&T

Offshore, Inc.

 

      988       Ewing Bank              

 

Terrebonne and Lafourche, Louisiana

 

      G05809       7/1/1983       ORRI       All of Blocks 944 and 988, Ewing Bank Area       0       1.188863           5,000

 

W&T

Offshore Inc.

 

      988       Ewing Bank              

 

Terrebonne and Lafourche, Louisiana

 

      G05809       7/1/1983       Operating Rights       S1/2S1/2 of Block 988, Ewing Bank Area from 17,000’ TVDSS down to 25,000’ TVDSS.       26.6667                   1,435.66

 

143


W & T Offshore, Inc. and W & T Energy VI, LLC

 

W&T

Offshore Inc.

 

   

  988       Ewing Bank              

 

Terrebonne and Lafourche, Louisiana

 

      G05809       7/1/1983       Operating Rights       S1/2S1/2 of Block 988, Ewing Bank Area from 25,000’ TVDSS down to 99,999’ TVDSS.       26.6667                   1,435.66

W&T

Offshore Inc.

      988       Ewing Bank              

 

Terrebonne and Lafourche, Louisiana

 

      G05809       7/1/1983       Operating Rights      

 

All of Block 944, Ewing Bank Area from surface down to 99,999’ TVDSS and N/2; N2/S/2 of Block 988, Ewing Bank Area from surface down to 99,999’ TVDSS.

 

      26.6667                   407.54

W&T

Offshore Inc.

      385       Garden Banks              

 

Cameron and Vermilion, Louisiana

 

      G17358       11/1/1996       ORRI       All of Block 385, Garden Banks       0       0.5           5,760

W&T

Offshore, Inc.

      386       Garden Banks              

 

Cameron and Vermilion, Louisiana

 

      G10350       10/1/1988       ORRI       All of Block 386, Garden Banks       0       0.5           5,760

W&T

Offshore, Inc.

      108       Grand Isle              

 

Lafourche and Jefferson, Louisiana

 

      G32231       6/1/2008      

Record

Title

      All of Block 108, Grand Isle       100          81.25              4,539.89

W&T

Offshore, Inc.

      18       Green Canyon              

 

Terrebonne and Lafourche, Louisiana

 

      G04940       12/1/1981       Operating Rights       All of Block 18, Green Canyon, from 17,000’ TVDSS down to 25,000’ TVDSS       25.36                   5,760

W&T

Offshore, Inc.

      18       Green Canyon              

 

Terrebonne and Lafourche, Louisiana

 

      G04940       12/1/1981       Operating Rights       All of Block 18, Green Canyon, from 25,000’ TVDSS down to 99,999 TVDSS       25.36                   5,760

W&T

Offshore, Inc.

      69       Main Pass       South      

 

Plaquemines and St. Bernard, Louisiana

 

      00372       8/5/1947       Operating Rights      

 

Block 69, Main Pass Area, INSOFAR AND ONLY INSOFAR as the lease covers and affects operating rights in depths below a TVD of 9,000’ below the earth’s surface.

 

      64       56           1,074.60

W&T

Offshore, Inc.

      69       Main Pass       South      

 

Plaquemines and St. Bernard, Louisiana

 

      00372       8/5/1947      

Record

Title

      That portion of Block 69, Main Pass Area       100       87.5           1,074.60

 

144


W & T Offshore, Inc. and W & T Energy VI, LLC

 

 

W&T

Offshore, Inc.

 

      98       Main Pass              

 

Plaquemines and St. Bernard, Louisiana

 

      G27965       7/1/2006      

Record

Title

      S1/2 of Block 98, Main Pass Area       100       71.16666           2,497.28

 

W&T

Offshore, Inc.

 

      98       Main Pass              

 

Plaquemines and St. Bernard, Louisiana

 

      G27965       7/1/2006      

Record

Title

      N1/2 of Block 98, Main Pass Area       100       71.16666           2,497.28

 

W&T

Offshore, Inc.

 

      107       Main Pass              

 

Plaquemines and St. Bernard, Louisiana

 

      G18088       8/1/1997      

Record

Title

      NW1/4NE1/4NE1/4; NE1/4NW1/4NE1/4; W1/2W1/2E1/2; W1/2 of Block 107, Main Pass Area       33.3334       27.77783           3,277.67

 

W&T

Offshore, Inc.

 

      107       Main Pass               Plaquemines and St. Bernard, Louisiana       G18088       8/1/1997       Operating Rights      

 

NW1/4NE1/4NE1/4; NE1/4NW1/4NE1/4; W1/2W1/2E1/2; and the W1/2 of Block 107, Main Pass Area, including depths from the surface to 100’ below the stratigraphic equivalent of the base of the 11,600’ sand as seen in the MP 107 OCS-G 18088 #1 Well at 11,630’ MD

 

      33.3334       27.77783           3,277.67

 

W&T

Offshore, Inc.

 

      180       Main Pass              

 

Plaquemines and St. Bernard, Louisiana

 

      G27966       7/1/2006      

Record

Title

      All of Block 180, Main Pass Area       100       80.33333           4,994.55

 

W&T

Offshore, Inc.

 

      279       Main Pass              

 

Plaquemines and St. Bernard, Louisiana

 

      G26168       7/1/2004      

Record

Title

      All of Block 279, Main Pass Area       88.5       73.95           4,994.55

 

W&T

Offshore, Inc.

 

      283       Main Pass       South and East      

 

Plaquemines and St. Bernard, Louisiana

 

      G13662       9/1/1992      

Record

Title

      All of Block 283, Main Pass Area       100       83.33           4,560.81

 

W&T

Offshore, Inc.

 

      283       Main Pass       South and East      

 

Plaquemines and St. Bernard, Louisiana

 

      G13662       9/1/1992       Operating Rights       All of Block 283, Main Pass Area, from 0’ to 99,999’ TVD       100       83.33           4,560.83

 

145


W & T Offshore, Inc. and W & T Energy VI, LLC

 

 

W&T

Offshore, Inc.

 

 

   

  800       Mississippi Canyon              

 

Plaquemines and Jefferson, Louisiana

 

      G18292       7/1/1997      

Record

Title

      All of Block 800, Mississippi Canyon       57.5       58.35           5,760

 

W&T

Offshore, Inc.

 

      177       Ship Shoal              

 

Terrebonne and St. Mary, Louisiana

 

      00590       9/1/1955      

Record

Title

      All of Block 177, Ship Shoal Area       75       62.5           5,000

 

W&T

Offshore, Inc.

 

      186       Ship Shoal              

 

Terrebonne and St. Mary, Louisiana

 

      G32197       8/1/2008      

Record

Title

      All of Block 186, Ship Shoal Area       40       40.2           5,000

 

W&T

Offshore, Inc.

 

      186       Ship Shoal              

 

Terrebonne and St. Mary, Louisiana

 

      G32197       8/1/2008       Operating Rights       All of Block 186, Ship Shoal Area, from 18,000’ TVDSS to 99,999’ TVDSS       40       40.2           5,000

 

W&T

Offshore, Inc.

 

      214       Ship Shoal              

 

Terrebonne and St. Mary, Louisiana

 

      00828       5/1/1960      

Record

Title

      All of Block 214, Ship Shoal Area       64.5161       53.76344           5,000

 

W&T

Offshore, Inc.

 

      214       Ship Shoal              

 

Terrebonne and St. Mary, Louisiana

 

      00828       5/1/1960       Operating Rights       N/2NE/4, N/2S/2NE/4, SE/4SE/4SE/4, SW/4SE/4SE/4, E/2NE/4SE/4, and NW/4NE/4SE/4 of Block 214, Ship Shoal Area from 12,087’ TVD to 50,000’ TVD       86.4536       77.23835           5,000

 

W&T

Offshore, Inc.

 

      301       Ship Shoal              

 

Terrebonne and St. Mary, Louisiana

 

      G10794       5/1/1989      

Record

Title

      All of Block 301, Ship Shoal Area       3.005                   5,000

 

W&T

Offshore, Inc.

 

      314       Ship Shoal       South      

 

Terrebonne and St. Mary, Louisiana

 

      G26074       5/1/2004       Operating Rights       W1/2W1/2 of Block 314, Ship Shoal Area, INSOFAR AND ONLY INSOFAR as it covers rights from surface to 10,750’ TVD       100       83.333           1,250

 

W&T

Offshore, Inc.

 

      315       Ship Shoal       South      

 

Terrebonne and St. Mary, Louisiana

 

      G09631       6/1/1988      

Record

Title

      All of Block 315, Ship Shoal Area       75       56.25           5,000

 

146


W & T Offshore, Inc. and W & T Energy VI, LLC

 

 

W&T Offshore, Inc.

 

        349      

 

Ship Shoal

 

             

 

Terrebonne and St. Mary, Louisiana

 

      G12008       6/1/1990      

Record

Title

      All of Block 349, Ship Shoal Area       100       83.333           5,000
W&T Offshore, Inc.       359       Ship Shoal              

 

Terrebonne and St. Mary, Louisiana

 

      G12010       6/1/1990      

Record

Title

      All of Block 359, Ship Shoal Area       100       83.333           5,000
W&T Offshore, Inc.       238       Ship Shoal              

 

Terrebonne and St. Mary, Louisiana

 

      G03169       7/1/1975      

Record

Title

      All of Block 238, Ship Shoal Area       65.5                   5,000
W&T Offshore, Inc.       149       Ship Shoal              

 

Terrebonne and St. Mary, Louisiana

 

      00434       1/1/1955      

Record

Title

      All of Block 149, Ship Shoal Area, as shown on OCS Leasing Map, LA5       100                   5,000
W&T Offshore, Inc.       149       Ship Shoal              

 

Terrebonne and St. Mary, Louisiana

 

      00434       1/1/1955       Operating Rights       NE1/4NE1/4;N1/2NW1/4NE1/4; N1/2SE1/4NE1/4; SE1/4SE1/4NE1/4 of Block 149, Ship Shoal Area       87.5                   5,000
W&T Offshore, Inc.       149       Ship Shoal              

 

Terrebonne and St. Mary, Louisiana

 

      00434       1/1/1955       Operating Rights       SW1/4NW1/4NE1/4; SW1/4NE1/4; SW1/4SE1/4NE1/4; W1/2; SE1/4 of Block 149, Ship Shoal Area below 9,000’       87.5                   5,000
W&T Offshore, Inc.       130       Ship Shoal              

 

Terrebonne and St. Mary, Louisiana

 

      00453       1/1/1955      

Record

Title

      All of Block 130, Ship Shoal Area, as shown on OCS Louisiana Leasing Map, LA5       100                   5,000

 

147


W & T Offshore, Inc. and W & T Energy VI, LLC

 

W&T Offshore, Inc.         130       Ship Shoal              

 

Terrebonne and St. Mary, Louisiana

 

      00453       1/1/1955