10-Q
CNX Resources Corp (CNX)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________________________
FORM 10-Q
__________________________________________________
(Mark One)
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
|---|
For the quarterly period ended June 30, 2022
OR
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|
For the transition period from to
Commission file number: 001-14901
__________________________________________________
CNX Resources Corporation
(Exact name of registrant as specified in its charter)
| Delaware | 51-0337383 |
|---|---|
| (State or other jurisdiction of<br>incorporation or organization) | (I.R.S. Employer<br>Identification No.) |
CNX Center
1000 CONSOL Energy Drive Suite 400
Canonsburg, PA 15317-6506
(724) 485-4000
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
| Securities registered pursuant to Section 12(b) of the Act: | ||
|---|---|---|
| Title of each class | Trading Symbol(s) | Name of exchange on which registered |
| Common Stock ($.01 par value) | CNX | New York Stock Exchange |
| Preferred Share Purchase Rights | -- | New York Stock Exchange |
__________________________________________________
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller Reporting Company ☐
Emerging Growth Company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
| Class | Shares outstanding as of July 19, 2022 |
|---|---|
| Common stock, $0.01 par value | 189,452,074 |
TABLE OF CONTENTS
| Page | ||
|---|---|---|
| PART I FINANCIAL INFORMATION | ||
| ITEM 1. | Unaudited Condensed Consolidated Financial Statements | |
| Consolidated Statements of Income for the three and six months ended June 30, 2022 and 2021 | 5 | |
| Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2022 and 2021 | 6 | |
| Consolidated Balance Sheets at June 30, 2022 and December 31, 2021 | 7 | |
| Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2022 and 2021 | 9 | |
| Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021 | 11 | |
| Notes to Unaudited Consolidated Financial Statements | 12 | |
| ITEM 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 30 |
| ITEM 3. | Quantitative and Qualitative Disclosures About Market Risk | 55 |
| ITEM 4. | Controls and Procedures | 56 |
| PART II OTHER INFORMATION | ||
| ITEM 1. | Legal Proceedings | 57 |
| ITEM 1A. | Risk Factors | 57 |
| ITEM 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 57 |
| ITEM 6. | Exhibits | 58 |
GLOSSARY OF CERTAIN OIL AND GAS TERMS
The following are certain terms and abbreviations commonly used in the oil and gas industry and included within this Form 10-Q:
Bbl - One stock tank barrel, or 42 U.S. gallons liquid volume, used in reference to oil or other liquid hydrocarbons.
Bcf - One billion cubic feet of natural gas.
Bcfe - One billion cubic feet of natural gas equivalents, with one barrel of oil being equivalent to 6,000 cubic feet of gas.
Btu - One British Thermal Unit.
BBtu - One billion British Thermal Units.
Mbbls - One thousand barrels of oil or other liquid hydrocarbons.
Mcf - One thousand cubic feet of natural gas.
Mcfe - One thousand cubic feet of natural gas equivalents, with one barrel of oil being equivalent to 6,000 cubic feet of gas.
MMBtu - One million British Thermal Units.
MMcfe - One million cubic feet of natural gas equivalents, with one barrel of oil being equivalent to 6,000 cubic feet of gas.
Tcfe - One trillion cubic feet of natural gas equivalents, with one barrel of oil being equivalent to 6,000 cubic feet of gas.
NGL - natural gas liquids - those hydrocarbons in natural gas that are separated from the gas as liquids through the process of absorption, condensation or other methods in gas processing plants.
net - "net" natural gas or "net" acres are determined by adding the fractional ownership working interests the Company has in gross wells or acres.
TIL - turn-in-line; a well turned to sales.
NYMEX - New York Mercantile Exchange.
basis - when referring to commodity pricing, the difference between the price for a commodity at a primary trading hub and the corresponding sales price at various regional sales points. The differential commonly is related to factors such as product quality, location, transportation capacity availability and contract pricing.
blending - process of mixing dry and damp gas in order to meet downstream pipeline specifications.
condensate - a mixture of hydrocarbons that exists in the gaseous phase at original reservoir temperature and pressure, but that, when produced, is in the liquid phase at surface pressure and temperature.
conventional play - a term used in the oil and natural gas industry to refer to an area believed to be capable of producing crude oil and natural gas occurring in discrete accumulations in structural and stratigraphic traps utilizing conventional recovery methods.
developed reserves - developed reserves are reserves that can be expected to be recovered: (i) through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well; and (ii) through installed extraction equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not involving a well.
development well - a well drilled within the proved area of an oil or natural gas reservoir to the depth of a stratigraphic horizon known to be productive.
exploratory well - a well drilled to find a new field or to find a new reservoir in a field previously found to be productive of oil or natural gas in another reservoir. Generally, an exploratory well is any well that is not a development well, an extension well, a service well or a stratigraphic test well.
exploration costs - costs incurred in identifying areas that may warrant examination and in examining specific areas that are considered to have prospects of containing oil and natural gas reserves, including costs of drilling exploratory wells and exploratory-type stratigraphic test wells. Exploration costs may be incurred both before acquiring the related property (sometimes referred to in part as prospecting costs) and after acquiring the property. Principal types of exploration costs, which include depreciation and applicable operating costs of support equipment and facilities and other costs of exploration activities, are: (i) costs of topographical, geographical and geophysical studies and the rights to access the properties in order to conduct those studies, (ii) costs of carrying and retaining undeveloped properties, such as delay rentals and the maintenance of land and lease records, (iii) dry hole contributions (iv) costs of drilling and equipping exploratory wells, and (v) costs of drilling exploratory-type stratigraphic test wells.
gob well - a well drilled or vent hole converted to a well which produces or is capable of producing coalbed methane or other natural gas from a distressed zone created above and below a mined-out coal seam by any prior full seam extraction of the coal.
gross acres - the total acres in which a working interest is owned.
gross wells - the total wells in which a working interest is owned.
lease operating expense - costs of operating wells and equipment on a producing lease, many of which are recurring. Includes items such as water disposals, repairs and maintenance, equipment rental and operating supplies, among others.
net acres - the number of acres an owner has out of a particular number of gross acres.
net wells - the percentage ownership interest in a well that an owner has based on the working interest.
play - a proven geological formation that contains commercial amounts of hydrocarbons.
production costs - costs incurred to operate and maintain wells and related equipment and facilities, including depreciation and applicable operating costs of support equipment and facilities, which become part of the cost of oil and natural gas produced.
proved reserves - quantities of oil, natural gas, and natural gas liquids (NGLs) which, by analysis of geological and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods and government regulations prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation.
proved developed reserves (PDPs) - proved reserves which can be expected to be recovered through existing wells with existing equipment and operating methods.
proved undeveloped reserves (PUDs) - proved reserves that can be estimated with reasonable certainty to be recovered from new wells on undrilled proved acreage or from existing wells where a relatively major expenditure is required for completion.
reservoir - a porous and permeable underground formation containing a natural accumulation of producible natural gas and/or oil that is confined by impermeable rock or water barriers and is separate from other reservoirs.
royalty interest - an interest in an oil and natural gas lease that gives the owner of the interest the right to receive a portion of the production from the leased acreage (or of the proceeds of the sale thereof), but generally does not require the owner to pay any portion of the costs of drilling or operating the wells on the leased acreage. Royalties may be either landowners' royalties, which are reserved by the owner of the leased acreage at the time the lease is granted, or overriding royalties, which are usually reserved by an owner of the leasehold in connection with a transfer to a subsequent owner.
throughput - the volume of natural gas transported or passing through a pipeline, plant, terminal, or other facility during a particular period.
transportation, gathering and compression - cost incurred related to transporting natural gas to the ultimate point of sale. These costs also include costs related to physically preparing natural gas, natural gas liquids and condensate for ultimate sale which include costs related to processing, compressing, dehydrating and fractionating, among others.
service well - a well drilled or completed for the purpose of supporting production in an existing field. Specific purposes of service wells include, among other things, gas injection, water injection and salt-water disposal.
unconventional formations - a term used in the oil and gas industry to refer to a play in which the targeted reservoirs generally fall into one of three categories: (1) tight sands, (2) coal beds or (3) shales. The reservoirs tend to cover large areas and lack the readily apparent traps, seals and discrete hydrocarbon-water boundaries that typically define conventional reservoirs. These reservoirs generally require fracture stimulation treatments or other special recovery processes in order to achieve economic flow rates.
undeveloped reserves - undeveloped reserves are reserves that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required. Reserves on undrilled acreage are limited to those directly offsetting development spacing areas that are reasonably certain of production when drilled, unless evidence exists that establishes reasonable certainty of economic producibility at greater distances. Undrilled locations can be classified as having proved undeveloped reserves only if a development plan has been adopted indicating that they are scheduled to be drilled within five years, unless the specific circumstances justify a longer time. Under no circumstances shall estimates for undeveloped reserves be attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual projects in the same reservoir or an analogous reservoir, or by other evidence using reliable technology establishing reasonable certainty.
unproved properties - properties with no proved reserves.
working interest - an interest that gives the owner the right to drill, produce and conduct operating activities on a property and receive a share of any production.
wet gas - natural gas that contains significant heavy hydrocarbons, such as propane, butane and other liquid hydrocarbons.
ITEM 1.CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CNX RESOURCES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
| (Dollars in thousands, except per share data) | Three Months Ended | Six Months Ended | ||||||
|---|---|---|---|---|---|---|---|---|
| (Unaudited) | June 30, | June 30, | ||||||
| Revenue and Other Operating Income (Loss): | 2022 | 2021 | 2022 | 2021 | ||||
| Natural Gas, NGLs and Oil Revenue | $ | 1,003,406 | $ | 369,449 | $ | 1,748,030 | $ | 750,674 |
| Loss on Commodity Derivative Instruments | (652,643) | (538,859) | (2,379,036) | (505,445) | ||||
| Purchased Gas Revenue | 46,552 | 16,706 | 92,393 | 50,190 | ||||
| Other Revenue and Operating Income | 23,103 | 25,494 | 45,933 | 50,445 | ||||
| Total Revenue and Other Operating Income (Loss) | 420,418 | (127,210) | (492,680) | 345,864 | ||||
| Costs and Expenses: | ||||||||
| Operating Expense | ||||||||
| Lease Operating Expense | 14,282 | 10,248 | 29,680 | 19,516 | ||||
| Production, Ad Valorem and Other Fees | 9,958 | 7,445 | 19,885 | 13,413 | ||||
| Transportation, Gathering and Compression | 88,357 | 84,114 | 176,644 | 161,273 | ||||
| Depreciation, Depletion and Amortization | 116,180 | 122,607 | 234,803 | 251,551 | ||||
| Exploration and Production Related Other Costs | 4,712 | 2,929 | 6,400 | 5,006 | ||||
| Purchased Gas Costs | 46,041 | 14,551 | 90,858 | 46,961 | ||||
| Selling, General, and Administrative Costs | 30,454 | 23,677 | 62,014 | 51,998 | ||||
| Other Operating Expense | 20,539 | 15,140 | 32,709 | 30,798 | ||||
| Total Operating Expense | 330,523 | 280,711 | 652,993 | 580,516 | ||||
| Other Expense | ||||||||
| Other Expense | 5,179 | 5,865 | 4,441 | 10,231 | ||||
| Gain on Asset Sales and Abandonments, net | (6,240) | (7,186) | (19,634) | (10,060) | ||||
| Loss on Debt Extinguishment | 12,981 | — | 12,981 | — | ||||
| Interest Expense | 31,051 | 39,576 | 58,121 | 75,948 | ||||
| Total Other Expense | 42,971 | 38,255 | 55,909 | 76,119 | ||||
| Total Costs and Expenses | 373,494 | 318,966 | 708,902 | 656,635 | ||||
| Earnings (Loss) Before Income Tax | 46,924 | (446,176) | (1,201,582) | (310,771) | ||||
| Income Tax Expense (Benefit) | 13,567 | (92,117) | (311,997) | (54,737) | ||||
| Net Income (Loss) | $ | 33,357 | $ | (354,059) | $ | (889,585) | $ | (256,034) |
| Earnings (Loss) per Share | ||||||||
| Basic | $ | 0.17 | $ | (1.61) | $ | (4.52) | $ | (1.16) |
| Diluted | $ | 0.15 | $ | (1.61) | $ | (4.52) | $ | (1.16) |
| Dividends Declared | $ | — | $ | — | $ | — | $ | — |
The accompanying notes are an integral part of these financial statements.
CNX RESOURCES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
| Three Months Ended | Six Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| (Dollars in thousands) | June 30, | June 30, | ||||||
| (Unaudited) | 2022 | 2021 | 2022 | 2021 | ||||
| Net Income (Loss) | $ | 33,357 | $ | (354,059) | $ | (889,585) | $ | (256,034) |
| Other Comprehensive Income: | ||||||||
| Actuarially Determined Long-Term Liability Adjustments (Net of tax: $(48), $(48), $(96), $(96)) | 135 | 136 | 270 | 271 | ||||
| Comprehensive Income (Loss) | $ | 33,492 | $ | (353,923) | $ | (889,315) | $ | (255,763) |
The accompanying notes are an integral part of these financial statements.
CNX RESOURCES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| (Unaudited) | ||||
|---|---|---|---|---|
| (Dollars in thousands) | June 30,<br>2022 | December 31,<br>2021 | ||
| ASSETS | ||||
| Current Assets: | ||||
| Cash and Cash Equivalents | $ | 238 | $ | 3,565 |
| Accounts and Notes Receivable: | ||||
| Trade, net | 447,464 | 330,122 | ||
| Other Receivables, net | 6,010 | 8,924 | ||
| Supplies Inventories | 14,490 | 6,147 | ||
| Recoverable Income Taxes | — | 72 | ||
| Derivative Instruments | 137,492 | 95,002 | ||
| Prepaid Expenses | 12,503 | 15,975 | ||
| Total Current Assets | 618,197 | 459,807 | ||
| Property, Plant and Equipment: | ||||
| Property, Plant and Equipment | 11,606,088 | 11,362,102 | ||
| Less—Accumulated Depreciation, Depletion and Amortization | 4,593,364 | 4,372,619 | ||
| Total Property, Plant and Equipment—Net | 7,012,724 | 6,989,483 | ||
| Other Non-Current Assets: | ||||
| Operating Lease Right-of-Use Assets | 176,613 | 56,022 | ||
| Derivative Instruments | 420,291 | 131,994 | ||
| Goodwill | 323,314 | 323,314 | ||
| Other Intangible Assets | 80,266 | 83,543 | ||
| Deferred Income Taxes | 14,107 | — | ||
| Other | 50,378 | 56,588 | ||
| Total Other Non-Current Assets | 1,064,969 | 651,461 | ||
| TOTAL ASSETS | $ | 8,695,890 | $ | 8,100,751 |
The accompanying notes are an integral part of these financial statements.
CNX RESOURCES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| (Unaudited) | ||||
|---|---|---|---|---|
| (Dollars in thousands, except per share data) | June 30,<br>2022 | December 31,<br>2021 | ||
| LIABILITIES AND EQUITY | ||||
| Current Liabilities: | ||||
| Accounts Payable | $ | 154,449 | $ | 121,751 |
| Derivative Instruments | 1,210,715 | 521,598 | ||
| Current Portion of Finance Lease Obligations | 637 | 555 | ||
| Current Portion of Long-Term Debt | 322,622 | — | ||
| Current Portion of Operating Lease Obligations | 40,951 | 22,940 | ||
| Other Accrued Liabilities | 302,599 | 287,732 | ||
| Total Current Liabilities | 2,031,973 | 954,576 | ||
| Non-Current Liabilities: | ||||
| Long-Term Debt | 1,907,074 | 2,214,121 | ||
| Finance Lease Obligations | 1,342 | 1,218 | ||
| Operating Lease Obligations | 139,428 | 33,672 | ||
| Derivative Instruments | 1,899,736 | 687,354 | ||
| Deferred Income Taxes | — | 328,601 | ||
| Asset Retirement Obligations | 88,463 | 88,859 | ||
| Other | 90,850 | 92,077 | ||
| Total Non-Current Liabilities | 4,126,893 | 3,445,902 | ||
| TOTAL LIABILITIES | 6,158,866 | 4,400,478 | ||
| Stockholders’ Equity: | ||||
| Common Stock, $.01 Par Value; 500,000,000 Shares Authorized, 191,400,910 Issued and Outstanding at June 30, 2022; 203,531,320 Issued and Outstanding at December 31, 2021 | 1,918 | 2,039 | ||
| Capital in Excess of Par Value | 2,665,440 | 2,834,863 | ||
| Preferred Stock, 15,000,000 shares authorized, None issued and outstanding | — | — | ||
| (Accumulated Deficit) Retained Earnings | (116,081) | 877,894 | ||
| Accumulated Other Comprehensive Loss | (14,253) | (14,523) | ||
| TOTAL STOCKHOLDERS' EQUITY | 2,537,024 | 3,700,273 | ||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 8,695,890 | $ | 8,100,751 |
The accompanying notes are an integral part of these financial statements.
CNX RESOURCES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
| (Dollars in thousands)<br>(Unaudited) | Common<br>Stock | Capital in<br>Excess<br>of Par<br>Value | (Accumulated Deficit) Retained Earnings | Accumulated<br>Other<br>Comprehensive<br>Loss | Total<br>Equity | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| March 31, 2022 | $ | 1,955 | $ | 2,691,950 | $ | (110,005) | $ | (14,388) | $ | 2,569,512 |
| Net Income | — | — | 33,357 | — | 33,357 | |||||
| Issuance of Common Stock | 1 | 374 | — | — | 375 | |||||
| Purchase and Retirement of Common Stock | (38) | (30,606) | (39,350) | — | (69,994) | |||||
| Shares Withheld for Taxes | — | — | (83) | — | (83) | |||||
| Amortization of Stock-Based Compensation Awards | — | 3,722 | — | — | 3,722 | |||||
| Other Comprehensive Income | — | — | — | 135 | 135 | |||||
| June 30, 2022 | $ | 1,918 | $ | 2,665,440 | $ | (116,081) | $ | (14,253) | $ | 2,537,024 |
| (Dollars in thousands)<br>(Unaudited) | ||||||||||
| March 31, 2021 | $ | 2,207 | $ | 2,959,934 | $ | 1,563,318 | $ | (15,049) | $ | 4,510,410 |
| Net Loss | — | — | (354,059) | — | (354,059) | |||||
| Issuance of Common Stock | — | 2 | — | — | 2 | |||||
| Purchase and Retirement of Common Stock | (17) | (13,030) | (9,644) | — | (22,691) | |||||
| Shares Withheld for Taxes | — | — | (45) | — | (45) | |||||
| Amortization of Stock-Based Compensation Awards | 1 | 3,177 | — | — | 3,178 | |||||
| Other Comprehensive Income | — | — | — | 136 | 136 | |||||
| June 30, 2021 | $ | 2,191 | $ | 2,950,083 | $ | 1,199,570 | $ | (14,913) | $ | 4,136,931 |
The accompanying notes are an integral part of these financial statements.
CNX RESOURCES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
| (Dollars in thousands) | Common Stock | Capital in<br>Excess<br>of Par<br>Value | Retained Earnings | Accumulated Other Comprehensive Loss | Total Equity | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2021 | $ | 2,039 | $ | 2,834,863 | $ | 877,894 | $ | (14,523) | $ | 3,700,273 |
| (Unaudited) | ||||||||||
| Net Loss | — | — | (889,585) | — | (889,585) | |||||
| Issuance of Common Stock | 2 | 981 | — | — | 983 | |||||
| Purchase and Retirement of Common Stock | (129) | (103,167) | (117,672) | — | (220,968) | |||||
| Shares Withheld for Taxes | — | — | (5,665) | — | (5,665) | |||||
| Amortization of Stock-Based Compensation Awards | 6 | 11,047 | — | — | 11,053 | |||||
| Other Comprehensive Income | — | — | — | 270 | 270 | |||||
| Cumulative Effect of Adoption of New Accounting Standard | — | (78,284) | 18,947 | — | (59,337) | |||||
| June 30, 2022 | $ | 1,918 | $ | 2,665,440 | $ | (116,081) | $ | (14,253) | $ | 2,537,024 |
| (Dollars in thousands) | ||||||||||
| December 31, 2020 | $ | 2,208 | $ | 2,959,357 | $ | 1,476,056 | $ | (15,184) | $ | 4,422,437 |
| (Unaudited) | ||||||||||
| Net Loss | — | — | (256,034) | — | (256,034) | |||||
| Issuance of Common Stock | 7 | 4,794 | — | — | 4,801 | |||||
| Purchase and Retirement of Common Stock | (31) | (24,731) | (15,916) | — | (40,678) | |||||
| Shares Withheld for Taxes | — | — | (4,536) | — | (4,536) | |||||
| Amortization of Stock-Based Compensation Awards | 7 | 10,696 | — | — | 10,703 | |||||
| Equity Component of Convertible Senior Notes, net of Issuance Costs | — | (33) | — | — | (33) | |||||
| Other Comprehensive Income | — | — | — | 271 | 271 | |||||
| June 30, 2021 | $ | 2,191 | $ | 2,950,083 | $ | 1,199,570 | $ | (14,913) | $ | 4,136,931 |
The accompanying notes are an integral part of these financial statements.
CNX RESOURCES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
| (Unaudited) | Six Months Ended | |||
|---|---|---|---|---|
| Dollars in Thousands | June 30, | |||
| Cash Flows from Operating Activities: | 2022 | 2021 | ||
| Net Loss | $ | (889,585) | $ | (256,034) |
| Adjustments to Reconcile Net Loss to Net Cash Provided by Operating Activities: | ||||
| Depreciation, Depletion and Amortization | 234,803 | 251,551 | ||
| Amortization of Deferred Financing Costs | 4,115 | 12,156 | ||
| Stock-Based Compensation | 11,053 | 10,703 | ||
| Gain on Asset Sales and Abandonments, net | (19,634) | (10,060) | ||
| Loss on Debt Extinguishment | 12,981 | — | ||
| Loss on Commodity Derivative Instruments | 2,379,036 | 505,445 | ||
| Gain on Other Derivative Instruments | (7,353) | (4,659) | ||
| Net Cash Paid in Settlement of Commodity Derivative Instruments | (800,971) | (7,954) | ||
| Deferred Income Taxes | (319,814) | (54,970) | ||
| Other | 2,323 | (704) | ||
| Changes in Operating Assets: | ||||
| Accounts and Notes Receivable | (118,619) | (18,191) | ||
| Recoverable Income Taxes | 72 | 88 | ||
| Supplies Inventories | (8,343) | 1,936 | ||
| Prepaid Expenses | 3,407 | 586 | ||
| Changes in Other Assets | 1,843 | (1,084) | ||
| Changes in Operating Liabilities: | ||||
| Accounts Payable | 28,508 | 14,701 | ||
| Accrued Interest | (1,466) | 14,762 | ||
| Other Operating Liabilities | 16,820 | 720 | ||
| Changes in Other Liabilities | (814) | (117) | ||
| Net Cash Provided by Operating Activities | 528,362 | 458,875 | ||
| Cash Flows from Investing Activities: | ||||
| Capital Expenditures | (258,984) | (252,387) | ||
| Proceeds from Asset Sales | 26,530 | 11,969 | ||
| Net Cash Used in Investing Activities | (232,454) | (240,418) | ||
| Cash Flows from Financing Activities: | ||||
| Payments on Long-Term Notes | (26,969) | — | ||
| Net Proceeds from (Payments on) CNXM Revolving Credit Facility | 3,300 | (131,000) | ||
| Net Payments on CNX Revolving Credit Facility | (58,350) | (800) | ||
| Net Payments on CSG Non-Revolving Credit Facilities | — | (13,113) | ||
| Net Payments on Other Debt | (311) | (2,526) | ||
| Proceeds from Issuance of Common Stock | 983 | 4,801 | ||
| Shares Withheld for Taxes | (5,665) | (4,536) | ||
| Purchases of Common Stock | (211,967) | (46,678) | ||
| Debt Issuance and Financing Fees | (256) | (1,320) | ||
| Net Cash Used in Financing Activities | (299,235) | (195,172) | ||
| Net (Decrease) Increase in Cash, Cash Equivalents and Restricted Cash | (3,327) | 23,285 | ||
| Cash, Cash Equivalents, and Restricted Cash at Beginning of Period | 3,565 | 21,599 | ||
| Cash, Cash Equivalents, and Restricted Cash at End of Period | $ | 238 | $ | 44,884 |
The accompanying notes are an integral part of these financial statements.
CNX RESOURCES CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
NOTE 1—BASIS OF PRESENTATION:
The accompanying Unaudited Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for future periods.
The Consolidated Balance Sheet at December 31, 2021 has been derived from the Audited Consolidated Financial Statements at that date but does not include all the notes required by generally accepted accounting principles for complete financial statements. For further information, refer to the Consolidated Financial Statements and related notes for the year ended December 31, 2021 included in CNX Resources Corporation's ("CNX," "CNX Resources," the "Company," "we," "us," or "our") Annual Report on Form 10-K as filed with the Securities and Exchange Commission (SEC) on February 10, 2022.
Certain amounts in prior periods have been reclassified to conform to the current period presentation.
Cash, Cash Equivalents, and Restricted Cash
The following table provides a reconciliation of cash, cash equivalents, and restricted cash to amounts shown in the statement of cash flows:
| June 30, | ||||
|---|---|---|---|---|
| 2022 | 2021 | |||
| Cash and Cash Equivalents | $ | 238 | $ | 39,365 |
| Restricted Cash, Current Portion | — | 768 | ||
| Restricted Cash, Less Current Portion | — | 4,751 | ||
| Total Cash, Cash Equivalents, and Restricted Cash | $ | 238 | $ | 44,884 |
Restricted cash at June 30, 2021 consisted of cash that the Company was contractually obligated to maintain in accordance with the terms of the Cardinal States Gathering LLC and CSG Holdings II LLC Credit Agreement, each dated March 13, 2020. In August 2021, CNX repaid in full the outstanding principal on both of these non-revolving credit facilities and terminated the Credit Agreements.
Receivables
As of June 30, 2022 and December 31, 2021, Accounts Receivable - Trade were $447,464 and $330,122, respectively, and Other Receivables were $6,010 and $8,924, respectively.
The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. Management records an allowance for credit losses related to the collectability of third-party customers' receivables using the historical aging of the customer receivable balance. The collectability is determined based on past events, including historical experience, customer credit rating, as well as current market conditions. CNX monitors customer ratings and collectability on an on-going basis. Account balances will be charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.
The following represents activity related to the allowance for credit losses for the six months ended:
| June 30, | ||||
|---|---|---|---|---|
| 2022 | 2021 | |||
| Allowance for Credit Losses - Trade, Beginning of Year | $ | 84 | $ | 84 |
| Provision for Expected Credit Losses | — | — | ||
| Allowance for Credit Losses - Trade, End of Period | $ | 84 | $ | 84 |
| Allowance for Credit Losses - Other Receivables, Beginning of Year | $ | 3,322 | $ | 3,248 |
| Provision for Expected Credit Losses | (376) | (55) | ||
| Write-off of Uncollectible Accounts | (178) | (15) | ||
| Allowance for Credit Losses - Other Receivables, End of Period | $ | 2,768 | $ | 3,178 |
NOTE 2—EARNINGS PER SHARE:
Basic earnings per share is computed by dividing net income or net loss by the weighted average shares outstanding during the reporting period. Diluted earnings per share is computed similarly to basic earnings per share, except that the weighted average shares outstanding are increased to include, if dilutive, additional shares from stock options, restricted stock units, performance share units and shares issuable upon conversion of CNX's outstanding 2.25% convertible senior notes due May 2026 (the "Convertible Notes") (See Note 9 – Long-Term Debt). The number of additional shares is calculated by assuming that outstanding stock options were exercised, that outstanding restricted stock units and performance share units were released, that the shares that are issuable from the conversion of the Convertible Notes are issued (subject to the considerations discussed further in the paragraph below), and that the proceeds from such activities were used to acquire shares of common stock at the average market price during the reporting period. In periods when CNX recognizes a net loss, the impact of outstanding stock awards and the potential share settlement impact related to CNX's Convertible Notes are excluded from the diluted loss per share calculation as their inclusion would have an anti-dilutive effect.
The table below sets forth the share-based awards that have been excluded from the computation of diluted earnings per share because their effect would be anti-dilutive:
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||
|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |
| Anti-Dilutive Options | 6,796 | 3,029,168 | 2,303,516 | 3,029,168 |
| Anti-Dilutive Restricted Stock Units | 57,050 | 2,484,443 | 2,524,803 | 2,484,443 |
| Anti-Dilutive Performance Share Units | — | 1,011,443 | 2,119,458 | 1,011,443 |
| 63,846 | 6,525,054 | 6,947,777 | 6,525,054 |
The Convertible Notes, if converted by the holder, may be settled in cash, shares of the Company's common stock or a combination thereof, at the Company's election. The Company expects to settle the principal amount of the Convertible Notes in cash. ASU 2020-06 amends the diluted earnings per share calculation for convertible instruments by requiring the use of the if-converted method (See Note 9 – Long-Term Debt for more information). The if-converted method assumes the conversion of convertible instruments occurs at the beginning of the reporting period and diluted weighted average shares outstanding includes the common shares issuable upon conversion of the convertible instruments. The conversion spread has a dilutive impact on diluted earnings per share when the average market price of the Company's common stock for a given period exceeds the initial conversion price of $12.84 per share for the Convertible Notes. In connection with the Convertible Notes' issuance, the Company entered into privately negotiated capped call transactions with certain counterparties (the "Capped Calls" and "Capped Call Transactions"), which were not included in calculating the number of diluted shares outstanding, as their effect would have been anti-dilutive.
The table below sets forth the share-based awards that have been exercised or released:
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||
|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |
| Options | 53,180 | 205 | 136,604 | 656,573 |
| Restricted Stock Units | 43,241 | 34,056 | 959,162 | 735,813 |
| Performance Share Units | — | — | 72,353 | 291,653 |
| 96,421 | 34,261 | 1,168,119 | 1,684,039 |
The computations for basic and diluted earnings (loss) per share are as follows:
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||
| Net Income (Loss) | $ | 33,357 | $ | (354,059) | $ | (889,585) | $ | (256,034) |
| Basic Earnings Available to Shareholders | $ | 33,357 | $ | (354,059) | $ | (889,585) | $ | (256,034) |
| Effect of Dilutive Securities: | ||||||||
| Add Back Interest on Convertible Notes (Net of Tax) | $ | 1,376 | $ | — | $ | — | $ | — |
| Diluted Earnings Available to Shareholders | $ | 34,733 | $ | (354,059) | $ | (889,585) | $ | (256,034) |
| Weighted-Average Shares of Common Stock Outstanding | 194,021,639 | 219,897,242 | 196,921,836 | 219,910,365 | ||||
| Effect of Diluted Shares:* | ||||||||
| Options | 1,349,984 | — | — | — | ||||
| Restricted Stock Units | 1,603,876 | — | — | — | ||||
| Performance Share Units | 1,681,326 | — | — | — | ||||
| Convertible Notes | 25,751,869 | — | — | — | ||||
| Weighted-Average Diluted Shares of Common Stock Outstanding | 224,408,694 | 219,897,242 | 196,921,836 | 219,910,365 | ||||
| Earnings (Loss) per Share: | ||||||||
| Basic | $ | 0.17 | $ | (1.61) | $ | (4.52) | $ | (1.16) |
| Diluted | $ | 0.15 | $ | (1.61) | $ | (4.52) | $ | (1.16) |
*During periods in which the Company incurs a net loss, diluted weighted average shares outstanding are equal to basic weighted average shares outstanding because the effect of all equity awards and the potential share settlement impact related to CNX's Convertible Notes are antidilutive.
NOTE 3—REVENUE FROM CONTRACTS WITH CUSTOMERS:
Revenues are recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company has elected to exclude all taxes from the measurement of transaction price.
For natural gas, NGL and oil, and purchased gas revenue, the Company generally considers the delivery of each unit (MMBtu or Bbl) to be a separate performance obligation that is satisfied upon delivery. Payment terms for these contracts typically require payment within 25 days of the end of the calendar month in which the hydrocarbons are delivered. A significant number of these contracts contain variable consideration because the payment terms refer to market prices at future delivery dates. In these situations, the Company has not identified a standalone selling price because the terms of the variable payments relate specifically to the Company’s efforts to satisfy the performance obligations. A portion of the contracts contain fixed consideration (i.e. fixed price contracts or contracts with a fixed differential to NYMEX or index prices). The fixed consideration is allocated to each performance obligation on a relative standalone selling price basis, which requires judgment from management. For these contracts, the Company generally concludes that the fixed price or fixed differentials in the contracts are representative of the standalone selling price. Revenue associated with natural gas, NGL and oil as presented on the accompanying Consolidated Statements of Income represent the Company’s share of revenues net of royalties and excluding revenue interests owned by others. When selling natural gas, NGL and oil on behalf of royalty owners or working interest owners, the Company is acting as an agent and thus reports the revenue on a net basis.
Included in Other Revenue and Operating Income in the Consolidated Statements of Income and in the below table are revenues generated from natural gas gathering services provided to third-parties. The gas gathering services are interruptible in nature and include charges for the volume of gas actually gathered and do not guarantee access to the system. Volumetric based fees are based on actual volumes gathered. The Company generally considers the interruptible gathering of each unit (MMBtu) of natural gas as a separate performance obligation. Payment terms for these contracts typically require payment within 25 days of the end of the calendar month in which the hydrocarbons are gathered.
Disaggregation of Revenue
The following table is a disaggregation of revenue by major source:
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||||||
| Revenue from Contracts with Customers: | ||||||||||||
| Natural Gas Revenue | $ | 934,127 | $ | 320,982 | $ | 1,609,401 | $ | 668,358 | ||||
| NGL Revenue | 63,774 | 41,521 | 128,569 | 73,384 | ||||||||
| Oil/Condensate Revenue | 5,505 | 6,946 | 10,060 | 8,932 | ||||||||
| Total Natural Gas, NGL and Oil Revenue | 1,003,406 | 369,449 | 1,748,030 | 750,674 | ||||||||
| Purchased Gas Revenue | 46,552 | 16,706 | 92,393 | 50,190 | ||||||||
| Other Sources of Revenue and Other Operating Income (Loss): | ||||||||||||
| Loss on Commodity Derivative Instruments | (652,643) | (538,859) | (2,379,036) | (505,445) | ||||||||
| Other Revenue and Operating Income | 23,103 | 25,494 | 45,933 | 50,445 | ||||||||
| Total Revenue and Other Operating Income (Loss) | $ | 420,418 | $ | (127,210) | $ | (492,680) | $ | 345,864 |
The disaggregated revenue information corresponds with the Company’s segment reporting found in Note 13 – Segment Information.
Contract Balances
CNX invoices its customers once a performance obligation has been satisfied, at which point payment is unconditional. Accordingly, CNX's contracts with customers do not give rise to material contract assets or liabilities under ASC 606. The Company has no contract assets recognized from the costs to obtain or fulfill a contract with a customer.
Transaction Price Allocated to Remaining Performance Obligations
ASC 606 requires that the Company disclose the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied. However, the guidance provides certain practical expedients that limit this requirement, including when variable consideration is allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct good or service that forms part of a series.
A significant portion of CNX's natural gas, NGL and oil and purchased gas revenue is short-term in nature with a contract term of one year or less. For those contracts, CNX has utilized the practical expedient in ASC 606-10-50-14 exempting the Company from disclosure of the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less.
For revenue associated with contract terms greater than one year, a significant portion of the consideration in those contracts is variable in nature and the Company allocates the variable consideration in its contract entirely to each specific performance obligation to which it relates. Therefore, any remaining variable consideration in the transaction price is allocated entirely to wholly unsatisfied performance obligations. As such, the Company has not disclosed the value of unsatisfied performance obligations pursuant to the practical expedient.
For natural gas, NGL and oil revenue associated with contract terms greater than one year with a fixed price component, the aggregate amount of the transaction price allocated to remaining performance obligations was $38,605 as of June 30, 2022.
The Company expects to recognize net revenue of $18,121 in the next 12 months and $12,750 over the following 12 months, with the remainder recognized thereafter.
For revenue associated with CNX's midstream contracts, which also have terms greater than one year, the interruptible gathering of each unit of natural gas represents a separate performance obligation; therefore, future volumes are wholly unsatisfied, and disclosure of the transaction price allocated to remaining performance obligations is not required.
Prior-Period Performance Obligations
CNX records revenue in the month production is delivered to the purchaser. However, settlement statements for certain natural gas, NGL and oil revenue may not be received for 30 to 90 days after the date production is delivered, and as a result, the Company is required to estimate the amount of production delivered to the purchaser and the price that will be received for the sale of the product. CNX records the differences between the estimate and the actual amounts received in the month that payment is received from the purchaser. The Company has existing internal controls for its revenue estimation process and the related accruals, and any identified differences between its revenue estimates and the actual revenue received historically have not been significant. For the three and six months ended June 30, 2022 and 2021, revenue recognized in the current reporting period related to performance obligations satisfied in a prior reporting period was not material.
NOTE 4—INCOME TAXES:
The effective tax rates for the three and six months ended June 30, 2022 were 28.9% and 26.0%, respectively. The effective tax rates for the three and six months ended June 30, 2021 were 20.6% and 17.6%, respectively. The effective tax rate for the three and six months ended June 30, 2022 differs from the U.S. federal statutory rate of 21.0% primarily due to the impact of certain permanent differences related to the repurchase of the Convertible Notes (see Note 9 – Long-Term Debt for more information), equity compensation and state taxes. The effective tax rate for the three and six months ended June 30, 2021 differs from the U.S. federal statutory rate of 21.0% primarily due to the impact of equity compensation and state taxes.
The total amount of uncertain tax positions at June 30, 2022 and December 31, 2021 was $67,805. If these uncertain tax positions were recognized, approximately $67,805 would affect CNX's effective tax rate at June 30, 2022 and December 31, 2021. There was no change to the unrecognized tax benefits during the three and six months ended June 30, 2022.
CNX recognizes accrued interest and penalties related to uncertain tax positions in interest expense and income tax expense, respectively. As of June 30, 2022 and December 31, 2021, CNX had no accrued liabilities for interest and penalties related to uncertain tax positions.
CNX and its subsidiaries file federal income tax returns with the United States and tax returns within various states. With few exceptions, the Company is no longer subject to United States federal, state, local, or non-U.S. income tax examinations by tax authorities for the years before 2018.
NOTE 5—PROPERTY, PLANT AND EQUIPMENT:
| June 30,<br>2022 | December 31,<br>2021 | |||
|---|---|---|---|---|
| Intangible Drilling Cost | $ | 5,395,180 | $ | 5,247,800 |
| Gas Gathering Equipment | 2,512,621 | 2,483,561 | ||
| Proved Gas Properties | 1,321,653 | 1,312,706 | ||
| Gas Wells and Related Equipment | 1,260,268 | 1,202,731 | ||
| Unproved Gas Properties | 735,831 | 730,400 | ||
| Surface Land and Other Equipment | 193,085 | 194,655 | ||
| Other | 187,450 | 190,249 | ||
| Total Property, Plant and Equipment | 11,606,088 | 11,362,102 | ||
| Less: Accumulated Depreciation, Depletion and Amortization | 4,593,364 | 4,372,619 | ||
| Total Property, Plant and Equipment - Net | $ | 7,012,724 | $ | 6,989,483 |
NOTE 6—GOODWILL AND OTHER INTANGIBLE ASSETS:
In December 2017, CNX Gas entered into a purchase agreement with Noble Energy, LLC ("Noble") pursuant to which it acquired Noble’s 50% membership interest in CNX Gathering, LLC (then named CONE Gathering LLC) ("CNX Gathering"), for a cash purchase price of $305,000 (the "Midstream Acquisition").
Prior to the Midstream Acquisition, the Company accounted for its 50% interest in CNX Gathering as an equity method investment as the Company had the ability to exercise significant influence, but not control, over the operating and financial policies of the midstream operations. In conjunction with the Midstream Acquisition, the Company obtained a controlling interest in CNX Gathering and control over CNX Midstream Partners, LP ("CNXM"). Accordingly, the Midstream Acquisition was accounted for as a business combination using the acquisition method of accounting pursuant to ASC Topic 805, Business Combinations, or ASC 805. ASC 805 requires that, in circumstances where a business combination is achieved in stages (or step acquisition), previously held equity interests are remeasured at fair value. The fair value assigned to the previously held equity interest in CNX Gathering and CNXM was $799,033 and was determined using the income approach, based on a discounted cash flow methodology.
As part of the allocation of purchase price and in connection with the fair value of consideration transferred at closing on January 3, 2018, CNX recorded $796,359 of goodwill and $128,781 of other intangible assets which are comprised of customer relationships.
The accumulated impairment losses on goodwill was $473,045, resulting in a carrying value of $323,314, at both June 30, 2022 and December 31, 2021.
The carrying amount and accumulated amortization of other intangible assets consist of the following:
| June 30,<br>2022 | December 31,<br>2021 | |||
|---|---|---|---|---|
| Other Intangible Assets: | ||||
| Gross Amortizable Asset - Customer Relationships | $ | 109,752 | $ | 109,752 |
| Less: Accumulated Amortization - Customer Relationships | 29,486 | 26,209 | ||
| Total Other Intangible Assets, net | $ | 80,266 | $ | 83,543 |
The customer relationship intangible asset is being amortized on a straight-line basis over approximately 17 years. Amortization expense related to other intangible assets for the three and six months ended June 30, 2022 was $1,638 and 3,277, respectively. Amortization expense related to other intangible assets for the three and six months ended June 30, 2021 was $1,638 and $3,276, respectively. The estimated annual amortization expense is expected to approximate $6,552 per year for each of the next five years.
NOTE 7—REVOLVING CREDIT FACILITIES:
CNX:
On May 5, 2022, CNX amended its Third Amended and Restated Credit Agreement dated October 6, 2021, which provides for a senior secured revolving credit facility (as amended, the "CNX Credit Agreement"). Revisions were made to replace LIBOR as a benchmark interest rate with SOFR, or the secured overnight financing rate. Following the amendment, CNX remains the borrower and certain of its subsidiaries (not including CNXM) as guarantor loan parties on CNX Credit Agreement. The CNX Credit Agreement replaced the prior CNX revolving credit facility and remains subject to semi-annual redetermination. The CNX Credit Agreement has a $2,250,000 borrowing base and $1,300,000 in elected commitments, including borrowings and letters of credit. The CNX Credit Agreement matures on October 6, 2026, provided that if at any time on or after January 30, 2026, if any of the Company’s Convertible Notes are outstanding and (a) availability under the CNX Credit Agreement minus (b) the aggregate principal amount of all such outstanding Convertible Senior Notes is less than 20% of the aggregate commitments under the CNX Credit Agreement (the first such date, the "Springing Maturity Date"), then the CNX Credit Agreement will mature on the Springing Maturity Date.
In addition to refinancing all outstanding amounts under the prior CNX revolving credit facility, borrowings under the CNX Credit Agreement may be used by CNX for general corporate purposes.
Under the terms of the CNX Credit Agreement, borrowings will bear interest at CNX's option at either:
•the highest of (i) PNC Bank, National Association’s prime rate, (ii) the federal funds open rate plus 0.50%, and (iii) the one-month SOFR rate plus 1.0%, in each case, plus a margin ranging from 0.75% to 1.75%; or
•the SOFR rate plus a margin ranging from 1.85% to 2.85%.
The availability under the CNX Credit Agreement, including availability for letters of credit, is generally limited to a borrowing base, which is determined by the required number of lenders in good faith by calculating a loan value of the Company’s proved reserves.
The CNX Credit Agreement also requires that CNX maintain a maximum net leverage ratio of no greater than 3.50 to 1.00, which is calculated as the ratio of debt less cash on hand to consolidated EBITDA, measured quarterly. CNX must also maintain a minimum current ratio of no less than 1.00 to 1.00, which is calculated as the ratio of current assets, plus revolver availability, to current liabilities, excluding derivative asset/liability position, and convertible note liability until one year prior to maturity, and borrowings under the revolver, measured quarterly. The calculation of all of the ratios exclude CNXM. CNX was in compliance with all financial covenants as of June 30, 2022.
At June 30, 2022, the CNX Credit Agreement had $133,650 of borrowings outstanding and $172,965 of letters of credit outstanding, leaving $993,385 of unused capacity. At December 31, 2021, the CNX Credit Agreement had $192,000 of borrowings outstanding and $184,131 of letters of credit outstanding, leaving $923,869 of unused capacity.
CNX Midstream Partners LP (CNXM):
On May 5, 2022 CNXM amended its Amended and Restated Credit Agreement dated October 6, 2021, which provides for a $600,000 senior secured revolving credit facility (as amended, the "CNXM Credit Agreement") that matures on October 6, 2026. Revisions were made to replace LIBOR as a benchmark interest rate with SOFR, or the secured overnight financing rate. CNXM remains the borrower and certain of its subsidiaries remain as guarantor loan parties on the Amended and Restated Credit Agreement. The CNXM Credit Agreement replaced the prior CNXM revolving credit facility and is not subject to semi-annual redetermination. CNX is not a guarantor under the CNXM Credit Agreement.
In addition to refinancing all outstanding amounts under the prior CNXM revolving credit facility, borrowings under the CNXM Credit Agreement may be used by CNXM for general corporate purposes.
Interest on outstanding indebtedness under the CNXM Credit Agreement currently accrues, at CNXM's option, at a rate based on either:
•the highest of (i) PNC Bank, National Association’s prime rate, (ii) the federal funds open rate plus 0.50%, and (iii) the one-month SOFR rate plus 1.0%, in each case, plus a margin ranging from 1.00% to 2.00%; or
•the SOFR rate plus a margin ranging from 2.10% to 3.10%.
In addition, CNXM is obligated to maintain at the end of each fiscal quarter (x) a maximum net leverage ratio of no greater than between 5.00 to 1.00 ranging to no greater than 5.25 to 1.00 in certain circumstances; (y) a maximum secured leverage ratio of no greater than 3.25 to 1.00 and (z) a minimum interest coverage ratio of no less than 2.50 to 1.00; in each case as calculated in accordance with the terms and definitions determining such ratios contained in the CNXM Credit Agreement. CNXM was in compliance with all financial covenants as of June 30, 2022.
At June 30, 2022, the CNXM Credit Agreement had $188,300 of borrowings outstanding and $30 of letters of credit outstanding, leaving $411,670 of unused capacity. At December 31, 2021, the CNXM Credit Agreement had $185,000 of borrowings outstanding and $30 of letters of credit outstanding, leaving $414,970 of unused capacity.
NOTE 8—OTHER ACCRUED LIABILITIES:
| June 30,<br>2022 | December 31,<br>2021 | |||
|---|---|---|---|---|
| Royalties | $ | 184,769 | $ | 152,498 |
| Accrued Interest | 34,568 | 36,035 | ||
| Deferred Revenue | 15,724 | 18,984 | ||
| Transportation Charges | 14,705 | 15,808 | ||
| Accrued Other Taxes | 13,553 | 12,681 | ||
| Short-Term Incentive Compensation | 6,114 | 19,591 | ||
| Accrued Payroll & Benefits | 5,868 | 5,747 | ||
| Litigation Contingency | 5,683 | 1,200 | ||
| Purchased Gas Payable | 1,257 | 757 | ||
| Other | 10,950 | 15,435 | ||
| Current Portion of Long-Term Liabilities: | ||||
| Asset Retirement Obligations | 7,529 | 7,154 | ||
| Salary Retirement | 1,879 | 1,842 | ||
| Total Other Accrued Liabilities | $ | 302,599 | $ | 287,732 |
NOTE 9—LONG-TERM DEBT:
| June 30,<br>2022 | December 31,<br>2021 | |||
|---|---|---|---|---|
| Senior Notes due March 2027 at 7.25% (Principal of $700,000 plus Unamortized Premium of $5,070 and $5,609, respectively) | $ | 705,070 | $ | 705,609 |
| Senior Notes due January 2029 at 6.00%, Issued at Par Value | 500,000 | 500,000 | ||
| CNX Midstream Partners LP Senior Notes due April 2030 at 4.75% (Principal of $400,000 less Unamortized Discount of $4,519 and $4,808, respectively )* | 395,481 | 395,192 | ||
| Convertible Senior Notes due May 2026 at 2.25% (Principal of $330,654 and $345,000 less Unamortized Discount and Issuance Costs of $7,377 and $91,284, respectively) | 323,277 | 253,716 | ||
| CNX Midstream Partners LP Revolving Credit Facility* | 188,300 | 185,000 | ||
| CNX Revolving Credit Facility | 133,650 | 192,000 | ||
| Less: Unamortized Debt Issuance Costs | 16,082 | 17,396 | ||
| 2,229,696 | 2,214,121 | |||
| Less: Current Portion | 322,622 | — | ||
| Long-Term Debt | $ | 1,907,074 | $ | 2,214,121 |
*CNX is not a guarantor of CNXM's 4.75% Senior Notes due April 2030 or CNXM's Credit Facility.
In April 2020, CNX issued $345,000 in aggregate principal amount of Convertible Notes in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended, including $45,000 aggregate principal amount of Convertible Notes issued pursuant to the exercise in full of the initial purchasers’ option to purchase additional Convertible Notes. The Convertible Notes are senior, unsecured obligations of the Company. The Convertible Notes bear interest at a fixed rate of 2.25% per annum, payable semi-annually in arrears on May 1 and November 1 of each year, commencing on November 1, 2020. Proceeds from the issuance of the Convertible Notes totaled $334,650, net of initial purchaser discounts and issuance costs. The Convertible Notes are guaranteed by most of CNX's subsidiaries but does not include CNXM (or its subsidiaries or general partner).
The initial conversion rate is 77.8816 shares of CNX's common stock per $1,000 principal amount of Convertible Notes, which represents an initial conversion price of approximately $12.84 per share, subject to adjustment upon the occurrence of specified events.
The Convertible Notes will mature on May 1, 2026, unless earlier repurchased, redeemed or converted. Before February 1, 2026, note holders will have the right to convert their Convertible Notes only upon the occurrence of the following events:
•during any calendar quarter (and only during such calendar quarter) commencing after June 30, 2020, if the Last Reported Sale Price per share of Common Stock exceeds one hundred and thirty percent (130%) of the Conversion
Price for each of at least twenty (20) Trading Days (whether or not consecutive) during the thirty (30) consecutive Trading Days ending on, and including, the last Trading Day of the immediately preceding calendar quarter;
•during the five (5) consecutive Business Days immediately after any ten (10) consecutive trading day period (such ten (10) consecutive Trading Day period, the "Measurement Period") if the trading Price per $1,000 principal amount of Notes, as determined following a request by a Holder in accordance with the procedures set forth below, for each trading day of the Measurement Period was less than ninety eight percent (98%) of the product of the last reported sale price per share of common stock on such trading day and the conversion rate on such trading day;
•if CNX calls any or all of the Convertible Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or
•upon the occurrence of certain specified corporate events as set forth in the indenture governing the Convertible Notes.
From and after February 1, 2026, note holders may convert their Convertible Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date.
Upon conversion, the Company may satisfy its conversion obligation by paying and/or delivering, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election, in the manner and subject to the terms and conditions provided in the indenture governing the Convertible Notes. The conversion rate is subject to adjustment under certain circumstances in accordance with the terms of the indenture governing the Convertible Notes. In addition, following certain corporate events, as described in the indenture governing the Convertible Notes, that occur prior to the maturity date, the Company will increase the conversion rate, in certain circumstances, for a holder who elects to convert its Convertible Notes in connection with such a corporate event.
The Company will settle conversions by paying or delivering, as applicable, cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company’s election. The Company’s current intent is to settle the principal amount of the Convertible Notes in cash upon conversion.
If certain corporate events that constitute a "Fundamental Change" (as defined in the indenture governing the Convertible Notes) occur, then noteholders may require the Company to repurchase their Convertible Notes at a cash repurchase price equal to the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. The definition of Fundamental Change includes certain business combination transactions involving the Company and certain de-listing events with respect to the Company’s common stock.
Pursuant to the terms of the Convertible Notes indenture, the Sale Price per share of Common Stock condition for conversion of the Convertible Notes was satisfied as of June 30, 2022, and, accordingly, holders of Convertible Notes are permitted to convert any of their Convertible Notes, at their option, at any time during the quarter beginning on July 1, 2022 and ending on September 30, 2022, subject to all terms and conditions set forth in the Convertible Notes indenture. Therefore, as of June 30, 2022, the net carrying value of the Convertible Notes was classified as current in the Consolidated Balance Sheet.
On January 1, 2022, the Company adopted Accounting Standards Update (ASU) 2020-06 - Accounting for Convertible Instruments and Contracts in an Entity's Own Equity using the modified transition approach with the cumulative effect recognized as an adjustment to the opening balance of retained earnings. This guidance is applicable to the Convertible Senior Notes due May 2026 ("Convertible Notes") that were issued in April 2020, for which the embedded conversion option was required to be separately accounted for as a component of stockholders’ equity. Upon adoption on January 1, 2022, long-term debt increased by $82,327 representing the net impact of two adjustments: (1) the $107,260 value of the embedded conversion, which is net of allocated offering costs, previously classified in additional paid-in-capital in stockholders’ equity, and (2) a $24,933 increase to retained earnings for the cumulative effect of adoption primarily related to the non-cash interest expense recorded for the amortization of the portion of the Convertible Notes allocated to stockholders’ equity. In addition, there was a decrease of $22,990 to deferred income taxes, a $5,986 decrease to retained earnings, and a $78,284 decrease in stockholders equity in the Consolidated Balance Sheet. Prospectively, the reported interest expense for the Convertible Notes will no longer include the non-cash interest expense of the equity component as required under prior accounting standards and will be equal to the 2.25% cash coupon rate. Also, as required by the new accounting guidance, the Company will use the if-converted method instead of the treasury stock method for the assumed conversion of the Convertible Notes on a prospective basis when calculating earnings per share.
Prior to the adoption of ASU 2020-06 - Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, the Convertible Notes were separated into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar debt instrument that does not have an associated conversion feature. The fair value was based on market data available for publicly traded, senior, unsecured corporate bonds with similar maturity, which represent Level 2 observable inputs. The carrying amount of the equity component, representing the conversion option, was
determined by deducting the fair value of the liability component from the principal value of the Convertible Notes and was recorded in Capital in Excess of Par Value in the Consolidated Statement of Stockholders Equity and was not remeasured as long as it continued to meet the conditions for equity classification. The excess of the principal amount of the Convertible Notes over the liability component and the debt issuance costs was amortized to interest expense over the contractual term of the Convertible Notes using the effective interest method. In accounting for the debt issuance costs of $10,350, the Company allocated the total amount incurred to the liability and equity components using the same proportions as the proceeds of the Convertible Notes. Issuance costs attributable to the liability component were $7,024 and were being amortized to interest expense using the effective interest method over the contractual term of the Convertible Notes. Issuance costs attributable to the equity component were $3,326 and were netted with the equity component in Capital in Excess of Par Value in the Consolidated Statement of Stockholders Equity.
The net carrying amount of the liability and equity components of the Convertible Notes was as follows:
| June 30,<br>2022 | December 31,<br>2021 | |||
|---|---|---|---|---|
| Liability Component: | ||||
| Principal | $ | 330,654 | $ | 345,000 |
| Unamortized Discount | — | (85,950) | ||
| Unamortized Issuance Costs | (7,377) | (5,334) | ||
| Net Carrying Amount | $ | 323,277 | $ | 253,716 |
| Fair Value | $ | 501,767 | $ | 453,765 |
| Fair Value Hierarchy | Level 2 | Level 2 | ||
| Equity Component, net of Purchase Discounts and Issuance Costs | $ | — | $ | 78,284 |
Interest expense related to the Convertible Notes is as follows:
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||
| Contractual Interest Expense | $ | 1,918 | $ | 1,941 | $ | 3,857 | $ | 3,881 |
| Amortization of Debt Discount | — | 3,809 | — | 7,531 | ||||
| Amortization of Issuance Costs | 483 | 256 | 954 | 509 | ||||
| Total Interest Expense | $ | 2,401 | $ | 6,006 | $ | 4,811 | $ | 11,921 |
In connection with the offering of the Convertible Notes, the Company entered into privately negotiated capped call transactions with certain counterparties (the "Capped Calls"). The Capped Calls each have an initial strike price of $12.84 per share, subject to certain adjustments, which correspond to the initial conversion price of the Convertible Notes. The Capped Calls have an initial cap price of $18.19 per share, subject to certain adjustments. The Capped Calls cover, subject to anti-dilution adjustments, the aggregate number of shares of the Company’s common stock that initially underlie the Convertible Notes, and are expected generally to reduce potential dilution to the Company’s common stock upon any conversion of Convertible Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted Convertible Notes, as the case may be, with such reduction and/or offset subject to a cap, based on the cap price of the Capped Call Transactions. The conditions that cause adjustments to the initial strike price of the Capped Calls mirror the conditions that result in corresponding adjustments for the Convertible Notes. For accounting purposes, the Capped Calls are separate transactions, and not part of the terms of the Convertible Notes. As these transactions meet certain accounting criteria, the Capped Calls are recorded in stockholders’ equity and are not accounted for as derivatives. The cost of $35,673 incurred in connection with the Capped Calls was recorded as a reduction to Capital in Excess of Par Value.
During the three months ended June 30, 2022, CNX purchased $14,346 of its outstanding Convertible Notes. As part of this transaction, a loss of $12,981 was included in Loss on Debt Extinguishment in the Consolidated Statements of Income during the three and six months ended June 30, 2022.
NOTE 10—COMMITMENTS AND CONTINGENT LIABILITIES:
CNX and its subsidiaries are subject to various lawsuits and claims with respect to such matters as personal injury, royalty accounting, damage to property, climate change, governmental regulations including environmental violations and remediation, employment and contract disputes and other claims and actions arising out of the normal course of business. CNX accrues the estimated loss for these lawsuits and claims when the loss is probable and can be estimated. The Company's current estimated accruals related to these pending claims, individually and in the aggregate, are immaterial to the financial position, results of operations or cash flows of CNX. It is possible that the aggregate loss in the future with respect to these lawsuits and claims could ultimately be material to the financial position, results of operations or cash flows of CNX; however, such amounts cannot be reasonably estimated.
The 1992 Coal Industry Retiree Health Benefit Act ("Coal Act"), in Section 9711, requires coal companies that were providing health benefits to United Mine Workers of America ("UMWA") retirees as of February 1993 to continue providing health benefits to such individuals, in substantially the same coverages, for as long as the last signatory operator remains in business. Section 9711 also requires any "related person" to be joint and severally liable for the provision of these health benefits. On May 1, 2020, the court in the Murray Energy Corporation ("Murray") bankruptcy proceedings approved a settlement agreement between Murray and the UMWA that transferred to the UMWA 1992 Benefit Plan the Coal Act liabilities for retirees in Murray’s Section 9711 plan. The retirees transferred by Murray to the 1992 Benefit Plan include approximately 2,159 retirees allegedly traced to the December 2013 sale by CONSOL Energy Inc. to Murray Energy of the following possible last signatory operators: Consolidation Coal Company, McElroy Coal Company, Southern Ohio Coal Company, Central Ohio Coal Company, Keystone Coal Mining Corp., and Eight-Four Coal Mining Company (the "Sold Subsidiaries"). On May 2, 2020, the Trustees of the UMWA 1992 Benefit Plan sued CNX and CONSOL Energy Inc. ("CONSOL'") in federal court contending that the Sold Subsidiaries were last signatory operators and that CNX and CONSOL are related persons to the Sold Subsidiaries and, as such, CNX and CONSOL are jointly and severally liable for the Coal Act health benefits allegedly owed to the eligible retirees traced to the Sold Subsidiaries. The 1992 Plan seeks, among other relief, a declaration that CNX and CONSOL are obligated to enroll the eligible retirees attributed to the Sold Subsidiaries in a Section 9711 Plan; that CNX and CONSOL are liable to post the security required by Section 9712; and, that CNX and CONSOL are liable to pay per beneficiary premiums until the eligible retirees are enrolled in a Section 9711 plan, and other fees, costs and disbursements under the Coal Act. On March 29, 2022, the Court denied the Defendants’ Motions to Dismiss and we are now defending this action on the merits. Further, under the Separation and Distribution Agreement that was entered into at the time we spun-out our coal business in 2017, CONSOL agreed to indemnify CNX for all coal-related liabilities, including this lawsuit. With respect to this matter, although a loss is possible, it is not probable, and accordingly no accrual has been recognized.
On July 22, 2021, CNX received a letter from the UMWA 1974 Pension Plan requesting information related to the facts and circumstances surrounding the 2013 sale of certain of its coal subsidiaries to Murray Energy. The letter indicates that litigation related to potential withdrawal liabilities from the plan created by the 2019 bankruptcy of Murray Energy is reasonably foreseeable. At this time, no liability has been assessed. Under the Separation and Distribution Agreement that was entered into at the time we spun-out our coal business in 2017, CONSOL agreed to indemnify CNX for all coal-related liabilities including any potential withdrawal liabilities.
At June 30, 2022, CNX has provided the following financial guarantees, unconditional purchase obligations, and letters of credit to certain third-parties as described by major category in the following tables. These amounts represent the maximum potential of total future payments that the Company could be required to make under these instruments. These amounts have not been reduced for potential recoveries under recourse or collateralization provisions. Generally, recoveries under reclamation bonds would be limited to the extent of the work performed at the time of the default. No amounts related to these unconditional purchase obligations and letters of credit are recorded as liabilities in the financial statements. CNX management believes that the commitments in the following table will expire without being funded, and therefore will not have a material adverse effect on CNX's financial condition.
| Amount of Commitment Expiration Per Period | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Total<br>Amounts<br>Committed | Less Than<br>1 Year | 1-3 Years | 3-5 Years | Beyond<br>5 Years | ||||||
| Letters of Credit: | ||||||||||
| Firm Transportation | $ | 169,908 | $ | 169,908 | $ | — | $ | — | $ | — |
| Other | 3,087 | 3,087 | — | — | — | |||||
| Total Letters of Credit | 172,995 | 172,995 | — | — | — | |||||
| Surety Bonds: | ||||||||||
| Employee-Related | 2,600 | 2,600 | — | — | — | |||||
| Environmental | 12,054 | 5,884 | 6,170 | — | — | |||||
| Financial Guarantees | 81,270 | 81,270 | — | — | — | |||||
| Other | 8,791 | 7,223 | 1,568 | — | — | |||||
| Total Surety Bonds | 104,715 | 96,977 | 7,738 | — | — | |||||
| Total Commitments | $ | 277,710 | $ | 269,972 | $ | 7,738 | $ | — | $ | — |
Excluded from the above table are commitments and guarantees entered into in conjunction with the spin-off of the Company's coal business in November 2017. Although CONSOL has agreed to indemnify CNX to the extent that CNX would be called upon to pay any of these liabilities, there is no assurance that CONSOL will satisfy its obligations to indemnify CNX in the event that CNX is so called upon (See "Item 1A. Risk Factors" in CNX's 2021 Annual Report on Form 10-K and in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 for additional information).
CNX enters into long-term unconditional purchase obligations to procure major equipment purchases, natural gas firm transportation, gas drilling services and other operating goods and services. These purchase obligations are not recorded in the Consolidated Balance Sheets. As of June 30, 2022, the purchase obligations for each of the next five years and beyond are as follows:
| Obligations Due | Amount | |
|---|---|---|
| Less than 1 year | $ | 253,598 |
| 1 - 3 years | 446,421 | |
| 3 - 5 years | 385,865 | |
| More than 5 years | 826,383 | |
| Total Purchase Obligations | $ | 1,912,267 |
NOTE 11—DERIVATIVE INSTRUMENTS:
CNX enters into interest rate swap agreements to manage its exposure to interest rate volatility. These swaps change the variable-rate cash flow exposure on the debt obligations to fixed cash flows. The change in fair value of the interest rate swap agreements is accounted for on a mark-to-market basis with the changes in fair value recorded in current period earnings.
In March 2020, CNX entered into interest rate swaps related to $175,000 of borrowings under the Cardinal States Facility and CSG Holdings Facility. In order to manage exposure to interest rate volatility, each respective entity entered into an interest rate swap for the full outstanding principal amounts inclusive of a put option at 25 basis points. The underlying notional for each swap and put option reduced over time based upon the expected amortization profile for each respective credit facility. In addition, CSG Holdings entered into a call option commencing March 31, 2023. In August 2021, these swaps were terminated in conjunction with the repayment and termination of both the Cardinal States Facility and the CSG Holdings Facility.
In June 2019, CNX entered into an interest rate swap agreement related to $160,000 of borrowings under the CNX Credit Facility which has the economic effect of modifying the variable-interest obligation into a fixed-interest obligation over a three-year period. In March 2020, this swap was terminated and replaced via a new interest rate swap, effective immediately, into a new four-year interest rate swap inclusive of a put option at zero basis points.
In March 2020, CNX entered into a four-year interest rate swap related to an additional $250,000 of borrowings under the CNX Credit Facility, inclusive of a put option at zero basis points, effective April 3, 2020. In December 2020, CNX executed an offsetting $250,000 interest rate swap, effective immediately, which expires in April 2024. Consistent with the previous interest rate swap agreements, the $250,000 interest rate swaps were entered into to manage CNX's exposure to interest rate volatility.
CNX enters into financial derivative instruments (over-the-counter swaps) to manage its exposure to natural gas price fluctuations. Typically, CNX "sells" swaps under which it receives a fixed price from counterparties and pays a floating market price. In order to lock in certain margins while balancing its basis hedges, during the first quarter of 2022, CNX purchased, rather than sold, financial swaps for the period April through October of 2022. In order to enhance production flexibility, during the first quarter of 2021, CNX purchased, rather than sold, financial swaps for the period April through October of 2021. Under these purchased financial swaps, CNX pays a fixed price to and receive a floating price from its hedge counterparties. Purchased swaps have the effect of reducing total hedged volumes for the period of the swap. Natural gas commodity hedges are accounted for on a mark-to-market basis with changes in fair value recorded in current period earnings.
CNX is exposed to credit risk in the event of non-performance by counterparties. The creditworthiness of counterparties is subject to continuing review. The Company has not experienced any issues of non-performance by derivative counterparties.
None of the Company's counterparty master agreements currently require CNX to post collateral for any of its positions. However, as stated in the applicable counterparty master agreements, if CNX's obligations with one of its counterparties cease to be secured on the same basis as similar obligations with the other lenders under the credit facility, CNX would have to post collateral for instruments in a liability position in excess of defined thresholds. All of the Company's derivative instruments are subject to master netting arrangements with our counterparties. CNX recognizes all financial derivative instruments as either assets or liabilities at fair value in the Consolidated Balance Sheets on a gross basis.
Each of the Company's counterparty master agreements allows, in the event of default, the ability to elect early termination of outstanding contracts. If early termination is elected, CNX and the applicable counterparty would net settle all open hedge positions.
The total notional amounts of CNX's derivative instruments were as follows:
| June 30, | December 31, | Forecasted to | ||||
|---|---|---|---|---|---|---|
| 2022 | 2021 | Settle Through | ||||
| Natural Gas Commodity Swaps (Bcf) | 1,715.6 | 1,686.1 | 2027 | |||
| Natural Gas Basis Swaps (Bcf) | 1,259.5 | * | 1,233.3 | 2027 | ||
| Interest Rate Swaps | $ | 410,000 | $ | 410,000 | 2024 |
*Net of purchased natural gas basis swaps of 9.0 Bcf.
The gross fair value of CNX's derivative instruments was as follows:
| June 30, | December 31, | |||
|---|---|---|---|---|
| 2022 | 2021 | |||
| Current Assets: | ||||
| Commodity Derivative Instruments: | ||||
| Commodity Swaps | $ | 3,974 | $ | 92 |
| Basis Only Swaps | 125,654 | 94,682 | ||
| Interest Rate Swaps | 7,864 | 228 | ||
| Total Current Assets | $ | 137,492 | $ | 95,002 |
| Other Non-Current Assets: | ||||
| Commodity Derivative Instruments: | ||||
| Commodity Swaps | $ | 26,444 | $ | 12,419 |
| Basis Only Swaps | 387,508 | 119,077 | ||
| Interest Rate Swaps | 6,339 | 498 | ||
| Total Other Non-Current Assets | $ | 420,291 | $ | 131,994 |
| Current Liabilities: | ||||
| Commodity Derivative Instruments: | ||||
| Commodity Swaps | $ | 1,152,278 | $ | 505,460 |
| Basis Only Swaps | 51,463 | 13,206 | ||
| Interest Rate Swaps | 6,974 | 2,932 | ||
| Total Current Liabilities | $ | 1,210,715 | $ | 521,598 |
| Non-Current Liabilities: | ||||
| Commodity Derivative Instruments: | ||||
| Commodity Swaps | $ | 1,864,954 | $ | 642,442 |
| Basis Only Swaps | 29,121 | 41,332 | ||
| Interest Rate Swaps | 5,661 | 3,580 | ||
| Total Non-Current Liabilities | $ | 1,899,736 | $ | 687,354 |
The effect of commodity derivative instruments on the Company's Consolidated Statements of Income was as follows:
| For the Three Months Ended | For the Six Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| June 30, | June 30, | |||||||
| 2022 | 2021 | 2022 | 2021 | |||||
| Cash (Paid) Received in Settlement of Commodity Derivative Instruments: | ||||||||
| Natural Gas: | ||||||||
| Commodity Swaps | $ | (558,374) | $ | (16,492) | $ | (830,193) | $ | (9,942) |
| Basis Swaps | 27,983 | 6,133 | 28,961 | 1,988 | ||||
| Total Cash Paid in Settlement of Commodity Derivative Instruments | (530,391) | (10,359) | (801,232) | (7,954) | ||||
| Unrealized (Loss) Gain on Commodity Derivative Instruments: | ||||||||
| Natural Gas: | ||||||||
| Commodity Swaps | (197,309) | (629,688) | (1,851,422) | (727,147) | ||||
| Basis Swaps | 75,057 | 101,188 | 273,618 | 229,656 | ||||
| Total Unrealized Loss on Commodity Derivative Instruments | (122,252) | (528,500) | (1,577,804) | (497,491) | ||||
| (Loss) Gain on Commodity Derivative Instruments: | ||||||||
| Natural Gas: | ||||||||
| Commodity Swaps | (755,683) | (646,180) | (2,681,615) | (737,089) | ||||
| Basis Swaps | 103,040 | 107,321 | 302,579 | 231,644 | ||||
| Total Loss on Commodity Derivative Instruments | $ | (652,643) | $ | (538,859) | $ | (2,379,036) | $ | (505,445) |
The effect of interest rate swaps on Interest Expense in the Company's Consolidated Statements of Income was as follows:
| For the Three Months Ended | For the Six Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| June 30, | June 30, | |||||||
| 2022 | 2021 | 2022 | 2021 | |||||
| Cash Paid in Settlement of Interest Rate Swaps | $ | (763) | $ | (1,240) | $ | (1,700) | $ | (2,467) |
| Unrealized Gain on Interest Rate Swaps | 2,131 | 465 | 7,353 | 4,659 | ||||
| Gain (Loss) on Interest Rate Swaps | $ | 1,368 | $ | (775) | $ | 5,653 | $ | 2,192 |
The Company also enters into fixed price natural gas sales agreements that are satisfied by physical delivery. These physical commodity contracts qualify for the normal purchases and normal sales exception and are not subject to derivative instrument accounting.
NOTE 12—FAIR VALUE OF FINANCIAL INSTRUMENTS:
CNX determines the fair value of assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The fair values are based on assumptions that market participants would use when pricing an asset or liability, including assumptions about risk and the risks inherent in valuation techniques and the inputs to valuations. The fair value hierarchy is based on whether the inputs to valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources (including NYMEX forward curves, LIBOR and SOFR-based discount rates and basis forward curves), while unobservable inputs reflect the Company's own assumptions of what market participants would use.
The fair value hierarchy includes three levels of inputs that may be used to measure fair value as described below:
Level 1 - Quoted prices for identical instruments in active markets.
Level 2 - The fair value of the assets and liabilities included in Level 2 are based on standard industry income approach
models that use significant observable inputs, including NYMEX forward curves, LIBOR and SOFR-based discount rates and basis forward curves.
Level 3 - Unobservable inputs significant to the fair value measurement supported by little or no market activity.
In those cases when the inputs used to measure fair value meet the definition of more than one level of the fair value hierarchy, the lowest level input that is significant to the fair value measurement in its totality determines the applicable level in the fair value hierarchy.
The financial instrument measured at fair value on a recurring basis is summarized below:
| Fair Value Measurements at June 30, 2022 | Fair Value Measurements at December 31, 2021 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Description | Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 | ||||||
| Gas Derivatives | $ | — | $ | (2,553,974) | $ | — | $ | — | $ | (976,170) | $ | — |
| Interest Rate Swaps | $ | — | $ | 1,568 | $ | — | $ | — | $ | (5,786) | $ | — |
The carrying amounts and fair values of financial instruments for which the fair value option was not elected are as follows:
| June 30, 2022 | December 31, 2021 | |||||||
|---|---|---|---|---|---|---|---|---|
| Carrying<br>Amount | Fair<br>Value | Carrying<br>Amount | Fair<br>Value | |||||
| Cash and Cash Equivalents | $ | 238 | $ | 238 | $ | 3,565 | $ | 3,565 |
| Long-Term Debt (Excluding Debt Issuance Costs)* | $ | 2,245,778 | $ | 2,292,108 | $ | 2,231,517 | $ | 2,483,019 |
Cash and cash equivalents represent highly-liquid instruments and constitute Level 1 fair value measurements. Certain of the Company’s debt is actively traded on a public market and, as a result, constitute Level 1 fair value measurements. The portion of the Company’s debt obligations that is not actively traded is valued through reference to the applicable underlying benchmark rate and, as a result, constitute Level 2 fair value measurements.
*On January 1, 2022, the Company adopted ASU 2020-06 - Accounting for Convertible Instruments and Contracts in an Entity's Own Equity using the modified transition approach with the cumulative effect recognized as an adjustment to the opening balance of retained earnings (See Note 9 – Long-Term Debt for more information).
NOTE 13—SEGMENT INFORMATION:
The Company reports segment information based on the "management" approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable segments.
The Company evaluates the performance of its reportable segments based on total revenue and other operating income, and operating expenses directly attributable to that segment. Certain expenses are managed outside the reportable segments and therefore are not allocated. These expenses include, but are not limited to, interest expense and other corporate expenses such as selling, general and administrative costs.
CNX's principal activity is to produce pipeline quality natural gas for sale primarily to gas wholesalers and the Company has two reportable segments that conducts those operations: Shale and Coalbed Methane. The Other Segment includes nominal shallow oil and gas production which is not significant to the Company. It also includes the Company's purchased gas activities, unrealized gain or loss on commodity derivative instruments, exploration and production related other costs, as well as various other expenses that are managed outside the reportable segments as discussed above. Operating profit for each segment is based on sales less identifiable operating and non-operating expenses.
Industry segment results for the three months ended June 30, 2022 are:
| Shale | Coalbed Methane | Other | Consolidated | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Natural Gas, NGLs and Oil Revenue | $ | 923,269 | $ | 79,583 | $ | 554 | $ | 1,003,406 | (A) |
| Purchased Gas Revenue | — | — | 46,552 | 46,552 | |||||
| Loss on Commodity Derivative Instruments | (489,026) | (41,222) | (122,395) | (652,643) | |||||
| Other Revenue and Operating Income | 17,990 | — | 5,113 | 23,103 | (B) | ||||
| Total Revenue and Other Operating Income (Loss) | $ | 452,233 | $ | 38,361 | $ | (70,176) | $ | 420,418 | |
| Total Operating Expense | $ | 189,884 | $ | 31,470 | $ | 109,169 | $ | 330,523 | |
| Earnings (Loss) Before Income Tax | $ | 262,349 | $ | 6,891 | $ | (222,316) | $ | 46,924 | |
| Segment Assets | $ | 6,417,552 | $ | 969,944 | $ | 1,308,394 | $ | 8,695,890 | (C) |
| Depreciation, Depletion and Amortization | $ | 95,910 | $ | 13,037 | $ | 7,233 | $ | 116,180 | |
| Capital Expenditures | $ | 131,279 | $ | 3,526 | $ | 1,863 | $ | 136,668 |
(A) Included in Total Natural Gas, NGLs and Oil Revenue are sales of $117,460 to Direct Energy Business Marketing LLC, which comprises over 10% of revenue from contracts with external customers for the period.
(B) Includes midstream revenue of $17,990 and equity in earnings of unconsolidated affiliates of $1,377 for Shale and Other, respectively.
(C) Includes investments in unconsolidated equity affiliates of $14,978.
Industry segment results for the three months ended June 30, 2021 are:
| Shale | Coalbed Methane | Other | Consolidated | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Natural Gas, NGLs and Oil Revenue | $ | 332,659 | $ | 36,505 | $ | 285 | $ | 369,449 | (D) |
| Purchased Gas Revenue | — | — | 16,706 | 16,706 | |||||
| Loss on Commodity Derivative Instruments | (9,394) | (962) | (528,503) | (538,859) | |||||
| Other Revenue and Operating Income | 18,679 | — | 6,815 | 25,494 | (E) | ||||
| Total Revenue and Other Operating Income (Loss) | $ | 341,944 | $ | 35,543 | $ | (504,697) | $ | (127,210) | |
| Total Operating Expense | $ | 191,996 | $ | 28,204 | $ | 60,511 | $ | 280,711 | |
| Earnings (Loss) Before Income Tax | $ | 149,948 | $ | 7,339 | $ | (603,463) | $ | (446,176) | |
| Segment Assets | $ | 6,095,486 | $ | 1,069,470 | $ | 907,154 | $ | 8,072,110 | (F) |
| Depreciation, Depletion and Amortization | $ | 104,380 | $ | 14,264 | $ | 3,963 | $ | 122,607 | |
| Capital Expenditures | $ | 127,230 | $ | 1,502 | $ | 226 | $ | 128,958 |
(D) Included in Total Natural Gas, NGLs and Oil Revenue are sales of $60,162 to Citadel Energy Marketing LLC, which comprises over 10% of revenue from contracts with external customers for the period.
(E) Includes midstream revenue of $18,679 and equity in earnings of unconsolidated affiliates of $1,553 for Shale and Other, respectively.
(F) Includes investments in unconsolidated equity affiliates of $16,726.
Industry segment results for the six months ended June 30, 2022 are:
| Shale | Coalbed Methane | Other | Consolidated | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Natural Gas, NGLs and Oil Revenue | $ | 1,604,080 | $ | 142,955 | $ | 995 | $ | 1,748,030 | (A) |
| Purchased Gas Revenue | — | — | 92,393 | 92,393 | |||||
| Loss on Commodity Derivative Instruments | (738,484) | (62,501) | (1,578,051) | (2,379,036) | |||||
| Other Revenue and Operating Income | 35,647 | — | 10,286 | 45,933 | (B) | ||||
| Total Revenue and Other Operating Income (Loss) | $ | 901,243 | $ | 80,454 | $ | (1,474,377) | $ | (492,680) | |
| Total Operating Expense | $ | 387,313 | $ | 62,050 | $ | 203,630 | $ | 652,993 | |
| Earnings (Loss) Before Income Tax | $ | 513,930 | $ | 18,404 | $ | (1,733,916) | $ | (1,201,582) | |
| Segment Assets | $ | 6,417,552 | $ | 969,944 | $ | 1,308,394 | $ | 8,695,890 | (C) |
| Depreciation, Depletion and Amortization | $ | 197,354 | $ | 26,276 | $ | 11,173 | $ | 234,803 | |
| Capital Expenditures | $ | 250,079 | $ | 5,921 | $ | 2,984 | $ | 258,984 |
(A) Included in Total Natural Gas, NGLs and Oil Revenue are sales of $213,299 to Direct Energy Business Marketing LLC, which comprises over 10% of revenue from contracts with external customers for the period.
(B) Includes midstream revenue of $35,647 and equity in earnings of unconsolidated affiliates of $2,177 for Shale and Other, respectively.
(C) Includes investments in unconsolidated equity affiliates of $14,978.
Industry segment results for the six months ended June 30, 2021 are:
| Shale | Coalbed Methane | Other | Consolidated | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Natural Gas, NGLs and Oil Revenue | $ | 674,828 | $ | 75,409 | $ | 437 | $ | 750,674 | (D) |
| Purchased Gas Revenue | — | — | 50,190 | 50,190 | |||||
| Loss on Commodity Derivative Instruments | (7,212) | (740) | (497,493) | (505,445) | |||||
| Other Revenue and Operating Income | 37,745 | — | 12,700 | 50,445 | (E) | ||||
| Total Revenue and Other Operating Income (Loss) | $ | 705,361 | $ | 74,669 | $ | (434,166) | $ | 345,864 | |
| Total Operating Expense | $ | 380,707 | $ | 56,759 | $ | 143,050 | $ | 580,516 | |
| Earnings (Loss) Before Income Tax | $ | 324,654 | $ | 17,910 | $ | (653,335) | $ | (310,771) | |
| Segment Assets | $ | 6,095,486 | $ | 1,069,470 | $ | 907,154 | $ | 8,072,110 | (F) |
| Depreciation, Depletion and Amortization | $ | 213,886 | $ | 29,747 | $ | 7,918 | $ | 251,551 | |
| Capital Expenditures | $ | 248,348 | $ | 3,644 | $ | 395 | $ | 252,387 |
(D) Included in Total Natural Gas, NGLs and Oil Revenue are sales of $100,465 to Citadel Energy marketing LLC and $80,189 to Direct Energy Business Marketing LLC, each of which comprises over 10% of revenue from contracts with external customers for the period.
(E) Includes midstream revenue of $37,745 and equity in earnings of unconsolidated affiliates of $2,504 for Shale and Other, respectively.
(F) Includes investments in unconsolidated equity affiliates of $16,726.
Reconciliation of Segment Information to Consolidated Amounts:
Revenue and Other Operating Income (Loss)
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||||||
| Total Segment Revenue from Contracts with External Customers | $ | 1,067,948 | $ | 404,834 | $ | 1,876,070 | $ | 838,609 | ||||
| Loss on Commodity Derivative Instruments | (652,643) | (538,859) | (2,379,036) | (505,445) | ||||||||
| Other Operating Income | 5,113 | 6,815 | 10,286 | 12,700 | ||||||||
| Total Consolidated Revenue and Other Operating Income (Loss) | $ | 420,418 | $ | (127,210) | $ | (492,680) | $ | 345,864 |
NOTE 14—STOCK REPURCHASE:
On January 26, 2021, the Company’s Board of Directors approved an increase in the aggregate amount of the previous $750,000 stock repurchase program plan to $900,000, and on October 25, 2021, the Board of Directors approved an additional increase in the aggregate amount of the stock repurchase program plan to $1,900,000. As of June 30, 2022 the amount available under the stock repurchase program is $793,696, and is not subject to an expiration date. The repurchases may be effected from time-to-time through open market purchases, privately negotiated transactions, Rule 10b5-1 plans, accelerated stock repurchases, block trades, derivative contracts or otherwise in compliance with Rule 10b-18. The timing of any repurchases will be based on a number of factors, including available liquidity, the Company's stock price, the Company's financial outlook, and alternative investment options. The stock repurchase program does not obligate the Company to repurchase any dollar amount or number of shares and the Board may modify, suspend, or discontinue its authorization of the program at any time. The Board of Directors will continue to evaluate the size of the stock repurchase program based on CNX's free cash flow position, leverage ratio, and capital plans.
During the six months ended June 30, 2022, 12,912,070 shares were repurchased and retired at an average price of $17.09 per share for a total cost of $220,968. During the six months ended June 30, 2021, 3,095,241 shares were repurchased and retired at an average price of 13.12 per share for a total cost of $40,678.
NOTE 15—RECENT ACCOUNTING PRONOUNCEMENTS:
See Note 9 – Long-Term Debt for the impact of adoption of ASU 2020-06 - Accounting for Convertible Instruments and Contracts in an Entity's Own Equity.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the Consolidated Financial Statements and related notes included elsewhere in this Form 10-Q. The information provided below supplements, but does not form part of, CNX's financial statements. This discussion contains forward-looking statements that are based on the current views and beliefs of management, as well as assumptions and estimates made by management. Actual results could differ materially from any such forward-looking statements as a result of various risk factors, including those that may not be in the control of management. For further information on items that could impact future operating performance or financial condition, please see "Part II. Item 1A. Risk Factors" and the section entitled "Forward-Looking Statements" and the "Risk Factors" contained in our Annual Report on Form 10-K for the year ended December 31, 2021, which we filed with the SEC on February 10, 2022. CNX does not undertake any obligation to publicly update any forward-looking statements except as otherwise required by applicable law.
General
CNX continually monitors factors that could cause actual results of operations to differ from historical results or current expectations. Examples include the conflict between Russia and Ukraine that has had an impact on global commodity prices. These and other factors could affect the Company’s operations, earnings and cash flows for any period and could cause such results to not be comparable to those of the same period in previous years. The results presented in this Form 10-Q are not necessarily indicative of future operating results.
COVID-19 Pandemic:
Although CNX did not incur significant disruptions to operations during the three or six months ended June 30, 2022 or 2021 as a direct result of the COVID-19 pandemic, CNX is unable to predict the full extent of the future impact that the COVID-19 pandemic could have on the Company, including our financial position, operating results, liquidity and ability to obtain financing in future reporting periods, due to numerous uncertainties outside of the Company’s control.
Inflation
Heightened levels of inflation, primarily related to steel, diesel fuel and labor, continue to present risk for CNX and the broader natural gas industry. CNX experienced higher capital costs from inflation in the first half of 2022, if inflation continues to increase, and CNX is unable to successfully mitigate the impact, our costs could increase further, having a greater impact on our financial position. Rising interest rates could also increase our borrowing costs on new debt and could affect the fair value of our investments. CNX remains committed to our ongoing efforts to increase the efficiency of our operations and improve costs, which may, in part, offset cost increases from inflation.
Hedging Update:
Total hedged natural gas production in the third quarter of 2022 is 118.6(1) Bcf. The annual gas hedge position is shown in the table below:
| 2022 | 2023 | |
|---|---|---|
| Volumes Hedged (Bcf), as of 7/7/22 | 473.9(1)(2) | 417.2 |
1Net of purchased swaps.
2Includes actual settlements of 265.5 Bcf.
CNX's hedged gas volumes include a combination of NYMEX financial hedges, index (NYMEX and basis) financial hedges, and physical fixed price sales. In addition, to protect the NYMEX hedge volumes from basis exposure, CNX enters into basis-only financial hedges and physical sales with fixed basis at certain sales points. For further information see Item 3 Quantitative and Qualitative Disclosures About Market Risk.
Results of Operations - Three Months Ended June 30, 2022 Compared with Three Months Ended June 30, 2021
Net Income (Loss)
CNX reported net income of $33 million, or earnings per diluted share of $0.15, for the three months ended June 30, 2022, compared to a net loss of $354 million, or a loss per diluted share of $1.61, for the three months ended June 30, 2021.
Included in the earnings for the three months ended June 30, 2022 was an unrealized loss on commodity derivative instruments of $122 million. Included in the loss for the three months ended June 30, 2021 was an unrealized loss on commodity derivative instruments of $529 million.
Non-GAAP Financial Measures
CNX's management uses certain non-GAAP financial measures for planning, forecasting and evaluating business and financial performance, and believes that they are useful for investors in analyzing the company. Although these are not measures of performance calculated in accordance with generally accepted accounting principles (GAAP), management believes that these financial measures are useful to an investor in evaluating CNX because these metrics are widely used to evaluate a natural gas company’s operating performance. Sales of Natural Gas, NGL and Oil, including cash settlements excludes the impacts of changes in the fair value of commodity derivative instruments prior to settlement, which are often volatile, and only includes the impact of settled commodity derivative instruments. Sales of Natural Gas, NGL and Oil, including cash settlements also excludes purchased gas revenue and other revenue and operating income, which are not directly related to CNX’s natural gas producing activities. Natural Gas, NGL and Oil Production Costs excludes certain expenses that are not directly related to CNX’s natural gas producing activities and are managed outside our production operations (See Note 13 – Segment Information in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information). These expenses include, but are not limited to, interest expense, other operating expense and other corporate expenses such as selling, general and administrative costs. We believe that Sales of Natural Gas, NGL and Oil, including cash settlements, Natural Gas, NGL and Oil Production Costs and Natural Gas, NGL and Oil Production Margin (which is derived by subtracting Natural Gas, NGL and Oil Production Costs from Sales of Natural Gas, NGL and Oil, including cash settlements) provide useful information to investors for evaluating period-to-period comparisons of earnings trends. These metrics should not be viewed as a substitute for measures of performance that are calculated in accordance with GAAP. In addition, because all companies do not calculate these measures identically, these measures may not be comparable to similarly titled measures of other companies.
Non-GAAP Financial Measures Reconciliation
| For the Three Months Ended June 30, | ||||
|---|---|---|---|---|
| (Dollars in millions) | 2022 | 2021 | ||
| Total Revenue and Other Operating Income (Loss) | $ | 420 | $ | (127) |
| Add (Deduct): | ||||
| Purchased Gas Revenue | (46) | (17) | ||
| Loss on Commodity Derivative Instruments | 122 | 529 | ||
| Other Revenue and Operating Income | (23) | (26) | ||
| Sales of Natural Gas, NGL and Oil, including Cash Settlements, a Non-GAAP Financial Measure | $ | 473 | $ | 359 |
| Total Operating Expense | $ | 330 | $ | 281 |
| Add (Deduct): | ||||
| Depreciation, Depletion and Amortization (DD&A) - Corporate | (2) | (3) | ||
| Exploration and Production Related Other Costs | (5) | (3) | ||
| Purchased Gas Costs | (46) | (15) | ||
| Selling, General and Administrative Costs | (30) | (24) | ||
| Other Operating Expense | (21) | (15) | ||
| Natural Gas, NGL and Oil Production Costs, a Non-GAAP Financial Measure1 | $ | 226 | $ | 221 |
1 Natural Gas, NGL and Oil production costs consists primarily of lease operating expense, production ad valorem and other fees, transportation, gathering and compression and production related depreciation, depletion and amortization.
Selected Natural Gas, NGL and Oil Production Financial Data
The following table presents a summary of our total sales volumes, sales of natural gas, NGL and oil including cash settlements, natural gas, NGL and oil production costs and natural gas, NGL and oil production margin related to our production operations on a total company basis (See Non-GAAP Financial Measures Reconciliation for the reconciliation to the most directly comparable financial measures calculated and presented in accordance with GAAP):
| For the Three Months Ended June 30, | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | Variance | ||||||||||
| in Millions | Per Mcfe | in Millions | Per Mcfe | in Millions | Per Mcfe | |||||||
| Total Sales Volumes (Bcfe)* | 142.3 | 137.9 | 4.4 | |||||||||
| Natural Gas, NGL and Oil Revenue | $ | 1,003 | $ | 7.30 | $ | 369 | $ | 2.68 | $ | 634 | $ | 4.62 |
| Loss on Commodity Derivative Instruments - Cash Settlement - Gas | (530) | (3.98) | (10) | (0.08) | (520) | (3.90) | ||||||
| Sales of Natural Gas, NGL and Oil, including Cash Settlements, a Non-GAAP Financial Measure | 473 | 3.32 | 359 | 2.60 | 114 | 0.72 | ||||||
| Lease Operating Expense | 14 | 0.10 | 10 | 0.07 | 4 | 0.03 | ||||||
| Production, Ad Valorem, and Other Fees | 10 | 0.07 | 7 | 0.05 | 3 | 0.02 | ||||||
| Transportation, Gathering and Compression | 88 | 0.62 | 84 | 0.61 | 4 | 0.01 | ||||||
| Depreciation, Depletion and Amortization (DD&A) | 114 | 0.79 | 120 | 0.87 | (6) | (0.08) | ||||||
| Natural Gas, NGL and Oil Production Costs, a Non-GAAP Financial Measure | 226 | 1.58 | 221 | 1.60 | 5 | (0.02) | ||||||
| Natural Gas, NGL and Oil Production Margin, a Non-GAAP Financial Measure | $ | 247 | $ | 1.74 | $ | 138 | $ | 1.00 | $ | 109 | $ | 0.74 |
*NGLs and Oil/Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of NGL, condensate, and natural gas prices.
The 4.4 Bcfe increase in total sales volumes in the period-to-period comparison was primarily due to the turn-in-line of new wells throughout 2021 and in the second quarter of 2022, offset in part by normal production declines.
Changes in the average costs per Mcfe were primarily related to the following items:
•Lease operating expense increased on a per unit basis primarily as a result of an increase in repairs and maintenance expense, including both routine and water impoundment maintenance, as well as an increase in water disposal costs.
•Production, ad valorem and other fees increased on a per unit basis as a result of increased realized prices on natural gas and natural gas liquids.
•Transportation, Gathering and Compression increased primarily due to an increase in gathering system repairs and maintenance expense and an increase in electrical compression expense.
•Depreciation, depletion and amortization expense decreased on a per unit basis due to a lower annual depletion rate primarily resulting from lower cost reserve additions from development during the 2021 period.
Average Realized Price Reconciliation
The following table presents a breakout of liquids and natural gas sales information and settled derivative information to assist in the understanding of the Company’s natural gas production and sales portfolio and information regarding settled commodity derivatives:
| For the Three Months Ended June 30, | ||||||||
|---|---|---|---|---|---|---|---|---|
| in thousands (unless noted) | 2022 | 2021 | Variance | Percent Change | ||||
| LIQUIDS | ||||||||
| NGL: | ||||||||
| Sales Volume (MMcfe) | 8,845 | 9,469 | (624) | (6.6) | % | |||
| Sales Volume (Mbbls) | 1,474 | 1,578 | (104) | (6.6) | % | |||
| Gross Price ($/Bbl) | $ | 43.26 | $ | 26.28 | $ | 16.98 | 64.6 | % |
| Gross NGL Revenue | $ | 63,774 | $ | 41,521 | $ | 22,253 | 53.6 | % |
| Oil/Condensate: | ||||||||
| Sales Volume (MMcfe) | 343 | 785 | (442) | (56.3) | % | |||
| Sales Volume (Mbbls) | 57 | 131 | (74) | (56.5) | % | |||
| Gross Price ($/Bbl) | $ | 96.24 | $ | 53.11 | $ | 43.13 | 81.2 | % |
| Gross Oil/Condensate Revenue | $ | 5,505 | $ | 6,946 | $ | (1,441) | (20.7) | % |
| NATURAL GAS | ||||||||
| Sales Volume (MMcf) | 133,143 | 127,666 | 5,477 | 4.3 | % | |||
| Sales Price ($/Mcf) | $ | 7.02 | $ | 2.51 | $ | 4.51 | 179.7 | % |
| Gross Natural Gas Revenue | $ | 934,127 | $ | 320,982 | $ | 613,145 | 191.0 | % |
| Hedging Impact ($/Mcf) | $ | (3.98) | $ | (0.08) | $ | (3.90) | (4,875.0) | % |
| Loss on Commodity Derivative Instruments - Cash Settlement | $ | (530,391) | $ | (10,359) | $ | (520,032) | 5,020.1 | % |
The increase in gross revenue was primarily the result of the $4.51 per Mcf increase in natural gas prices, when excluding the impact of hedging, the $16.98 per Bbl increase in NGL prices and the 4.4 Bcfe increase in sales volumes. These increases were offset, in-part, by the impact of the change in the realized loss on commodity derivative instruments related to the Company's hedging program.
SEGMENT ANALYSIS for the three months ended June 30, 2022 compared to the three months ended June 30, 2021:
| For the Three Months Ended | Difference to Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, 2022 | June 30, 2021 | |||||||||||||||
| (in millions) | Shale | CBM | Other | Total | Shale | CBM | Other | Total | ||||||||
| Natural Gas, NGLs and Oil Revenue | $ | 923 | $ | 79 | $ | 1 | $ | 1,003 | $ | 591 | $ | 43 | $ | — | $ | 634 |
| Loss on Commodity Derivative Instruments | (489) | (41) | (122) | (652) | (480) | (40) | 407 | (113) | ||||||||
| Purchased Gas Revenue | — | — | 46 | 46 | — | — | 29 | 29 | ||||||||
| Other Revenue and Operating Income | 18 | — | 5 | 23 | (1) | — | (2) | (3) | ||||||||
| Total Revenue and Other Operating Income (Loss) | 452 | 38 | (70) | 420 | 110 | 3 | 434 | 547 | ||||||||
| Lease Operating Expense | 10 | 4 | — | 14 | 3 | 1 | — | 4 | ||||||||
| Production, Ad Valorem, and Other Fees | 8 | 2 | — | 10 | 1 | 1 | 1 | 3 | ||||||||
| Transportation, Gathering and Compression | 76 | 12 | — | 88 | 2 | 2 | — | 4 | ||||||||
| Depreciation, Depletion and Amortization | 96 | 13 | 7 | 116 | (8) | (1) | 2 | (7) | ||||||||
| Exploration and Production Related Other Costs | — | — | 5 | 5 | — | — | 2 | 2 | ||||||||
| Purchased Gas Costs | — | — | 46 | 46 | — | — | 31 | 31 | ||||||||
| Selling, General and Administrative Costs | — | — | 30 | 30 | — | — | 6 | 6 | ||||||||
| Other Operating Expense | — | — | 21 | 21 | — | — | 6 | 6 | ||||||||
| Total Operating Expense | 190 | 31 | 109 | 330 | (2) | 3 | 48 | 49 | ||||||||
| Other Expense | — | — | 5 | 5 | — | — | (1) | (1) | ||||||||
| Gain on Asset Sales and Abandonments, net | — | — | (6) | (6) | — | — | 1 | 1 | ||||||||
| Loss on Debt Extinguishment | — | — | 13 | 13 | — | — | 13 | 13 | ||||||||
| Interest Expense | — | — | 31 | 31 | — | — | (8) | (8) | ||||||||
| Total Other Expense | — | — | 43 | 43 | — | — | 5 | 5 | ||||||||
| Total Costs and Expenses | 190 | 31 | 152 | 373 | (2) | 3 | 53 | 54 | ||||||||
| Earnings (Loss) Before Income Tax | $ | 262 | $ | 7 | $ | (222) | $ | 47 | $ | 112 | $ | — | $ | 381 | $ | 493 |
SHALE SEGMENT
The Shale segment had earnings before income tax of $262 million for the three months ended June 30, 2022 compared to earnings before income tax of $150 million for the three months ended June 30, 2021.
| For the Three Months Ended June 30, | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | Variance | Percent<br>Change | |||||
| Shale Gas Sales Volumes (Bcf) | 122.1 | 115.0 | 7.1 | 6.2 | % | |||
| NGLs Sales Volumes (Bcfe)* | 8.8 | 9.5 | (0.7) | (7.4) | % | |||
| Oil/Condensate Sales Volumes (Bcfe)* | 0.3 | 0.7 | (0.4) | (57.1) | % | |||
| Total Shale Sales Volumes (Bcfe)* | 131.2 | 125.2 | 6.0 | 4.8 | % | |||
| Average Sales Price - Natural Gas (per Mcf) | $ | 7.00 | $ | 2.47 | $ | 4.53 | 183.4 | % |
| Loss on Commodity Derivative Instruments - Cash Settlement - Gas (per Mcf) | $ | (4.01) | $ | (0.08) | $ | (3.93) | (4,912.5) | % |
| Average Sales Price - NGLs (per Mcfe)* | $ | 7.21 | $ | 4.38 | $ | 2.83 | 64.6 | % |
| Average Sales Price - Oil/Condensate (per Mcfe)* | $ | 16.03 | $ | 8.84 | $ | 7.19 | 81.3 | % |
| Total Average Shale Sales Price (per Mcfe) | $ | 3.31 | $ | 2.58 | $ | 0.73 | 28.3 | % |
| Average Shale Lease Operating Expenses (per Mcfe) | 0.08 | 0.06 | 0.02 | 33.3 | % | |||
| Average Shale Production, Ad Valorem and Other Fees (per Mcfe) | 0.05 | 0.05 | — | — | % | |||
| Average Shale Transportation, Gathering and Compression Costs (per Mcfe) | 0.58 | 0.59 | (0.01) | (1.7) | % | |||
| Average Shale Depreciation, Depletion and Amortization Costs (per Mcfe) | 0.74 | 0.83 | (0.09) | (10.8) | % | |||
| Total Average Shale Production Costs (per Mcfe) | $ | 1.45 | $ | 1.53 | $ | (0.08) | (5.2) | % |
| Total Average Shale Production Margin (per Mcfe) | $ | 1.86 | $ | 1.05 | $ | 0.81 | 77.1 | % |
* NGLs and Oil/Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGL, condensate, and natural gas prices.
The Shale segment had natural gas, NGLs and oil/condensate revenue of $923 million for the three months ended June 30, 2022 compared to $332 million for the three months ended June 30, 2021. The $591 million increase was due primarily to a 183.4% increase in the average sales price for natural gas, a 4.8% increase in total Shale sales volumes, and a 64.6% increase in the average sales price of NGLs. The increase in total Shale volumes was primarily due to the turn-in-line of new wells throughout 2021 and the first half of 2022, offset in part by normal production declines.
The increase in total average Shale sales price was primarily due to a $4.53 per Mcf increase in average gas sales price and a $2.83 per Mcfe increase in the average NGL sales price. These increases were offset in part by a $3.93 per Mcf change in the realized loss on commodity derivative instruments. The notional amounts associated with these financial hedges represented approximately 104.6 Bcf of the Company's produced Shale gas sales volumes for the three months ended June 30, 2022 at an average loss of $4.68 per Mcf hedged. For the three months ended June 30, 2021, these financial hedges represented approximately 99.1 Bcf at an average loss of $0.09 per Mcf hedged.
Total operating costs and expenses for the Shale segment were $190 million for the three months ended June 30, 2022 compared to $192 million for the three months ended June 30, 2021. The decrease in total dollars and decrease in unit costs for the Shale segment were due to the following items:
•Shale lease operating expenses were $10 million for the three months ended June 30, 2022 compared to $7 million for the three months ended June 30, 2021. The increases in total dollars and unit costs were primarily related to an increase in repairs and maintenance expense, including both routine and water impoundment maintenance, as well as an increase in water disposal costs.
•Shale production, ad valorem and other fees were $8 million for the three months ended June 30, 2022 compared to $7 million for the three months ended June 30, 2021. The increases in total dollars was primarily due to increased realized prices on natural gas and natural gas liquids.
•Shale transportation, gathering and compression costs were $76 million for the three months ended June 30, 2022 compared to $74 million for the three months ended June 30, 2021. The increase in total dollars was primarily related to an increase in total volumes as well as an increase in gathering systems repairs and maintenance expense.
•Depreciation, depletion and amortization costs attributable to the Shale segment were $96 million for the three months ended June 30, 2022 compared to $104 million for the three months ended June 30, 2021. These amounts included depletion on a units of production basis of $0.62 per Mcfe and $0.72 per Mcfe, respectively. The decrease in the units of production depreciation, depletion and amortization rate in the current period is primarily the result of a lower annual depletion rate related to low-cost reserve additions from development in the 2021 period. The remaining depreciation, depletion and amortization costs were either recorded on a straight-line basis or related to asset retirement obligations.
Total Shale other revenue and operating income relates to natural gas gathering services provided to third-parties. The Shale segment had other revenue and operating income of $18 million for the three months ended June 30, 2022 compared to $19 million for the three months ended June 30, 2021. The decrease in the period-to-period comparison was primarily due to lower third-party gathering volumes due to normal production declines.
COALBED METHANE (CBM) SEGMENT
The CBM segment had earnings before income tax of $7 million for both the three months ended June 30, 2022 and June 30, 2021.
| For the Three Months Ended June 30, | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | Variance | Percent<br>Change | |||||
| CBM Gas Sales Volumes (Bcf) | 11.0 | 12.6 | (1.6) | (12.7) | % | |||
| Average Sales Price - Gas (per Mcf) | $ | 7.23 | $ | 2.91 | $ | 4.32 | 148.5 | % |
| Loss on Commodity Derivative Instruments - Cash Settlement - Gas (per Mcf) | $ | (3.75) | $ | (0.08) | $ | (3.67) | (4,587.5) | % |
| Total Average CBM Sales Price (per Mcf) | $ | 3.49 | $ | 2.83 | $ | 0.66 | 23.3 | % |
| Average CBM Lease Operating Expenses (per Mcf) | 0.39 | 0.26 | 0.13 | 50.0 | % | |||
| Average CBM Production, Ad Valorem and Other Fees (per Mcf) | 0.22 | 0.05 | 0.17 | 340.0 | % | |||
| Average CBM Transportation, Gathering and Compression Costs (per Mcf) | 1.07 | 0.79 | 0.28 | 35.4 | % | |||
| Average CBM Depreciation, Depletion and Amortization Costs (per Mcf) | 1.18 | 1.15 | 0.03 | 2.6 | % | |||
| Total Average CBM Production Costs (per Mcf) | $ | 2.86 | $ | 2.25 | $ | 0.61 | 27.1 | % |
| Total Average CBM Production Margin (per Mcf) | $ | 0.63 | $ | 0.58 | $ | 0.05 | 8.6 | % |
The CBM segment had natural gas revenue of $79 million for the three months ended June 30, 2022 compared to $36 million for the three months ended June 30, 2021. The increase was due to a 148.5% increase in the average sales price for natural gas in the current period, offset in part by the 12.7% decrease in total CBM sales volumes. The decrease in CBM sales volumes was primarily due to normal production declines.
The total average CBM sales price increased $0.66 per Mcf due to a $4.32 per Mcf increase in average gas sales price, offset in part by a $3.67 per Mcf change in the realized loss on commodity derivative instruments resulting from the Company's hedging program. The notional amounts associated with these financial hedges represented approximately 8.9 Bcf of the Company's produced CBM sales volumes for the three months ended June 30, 2022 at an average loss of $4.64 per Mcf hedged. For the three months ended June 30, 2021, these financial hedges represented approximately 10.2 Bcf at an average loss of $0.07 per Mcf hedged.
Total operating costs and expenses for the CBM segment were $31 million for the three months ended June 30, 2022 compared to $28 million for the three months ended June 30, 2021. The increase in total dollars and increase in unit costs for the CBM segment were due to the following items:
•CBM lease operating expense was $4 million for the three months ended June 30, 2022 compared to $3 million for the three months ended June 30, 2021. The increases in total dollars and unit costs were primarily due to increases in repairs and maintenance expense.
•CBM production, ad valorem and other fees were $2 million for the three months ended June 30, 2022 compared to $1 million for the three months ended June 30, 2021. The increases in total dollars and unit costs were primarily due to increased realized prices on natural gas.
•CBM transportation, gathering and compression costs were $12 million for the three months ended June 30, 2022 compared to $10 million for the three months ended June 30, 2021. The increases in total dollars and unit costs were primarily due to increases in repairs and maintenance expense and electrical compression expense.
•Depreciation, depletion and amortization costs attributable to the CBM segment were $13 million for the three months ended June 30, 2022 compared to $14 million for the three months ended June 30, 2021. These amounts included depletion on a units of production basis of $0.64 per Mcfe and $0.66 per Mcfe, respectively. The decrease in the units of production depreciation, depletion and amortization rate in the current period was due to a lower annual depletion rate. The remaining depreciation, depletion and amortization costs were either recorded on a straight-line basis or related to asset retirement obligations.
OTHER SEGMENT
The Other Segment includes nominal shallow oil and gas production which is not significant to the Company. It also includes the Company's purchased gas activities, unrealized gain or loss on commodity derivative instruments, exploration and production related other costs, as well as various other expenses that are managed outside the Shale and CBM segments such as SG&A, interest expense and income taxes.
The Other Segment had a loss before income tax of $222 million for the three months ended June 30, 2022 compared to a loss before income tax of $603 million for the three months ended June 30, 2021. The increase in total dollars is discussed below.
| For the Three Months Ended June 30, | |||||
|---|---|---|---|---|---|
| 2022 | 2021 | Variance | Percent Change | ||
| Other Gas Sales Volumes (Bcf) | 0.1 | 0.1 | — | — | % |
Loss on Commodity Derivative Instruments
For the three months ended June 30, 2022, the Other Segment recognized an unrealized loss on commodity derivative instruments of $122 million. For the three months ended June 30, 2021, the Other Segment recognized an unrealized loss on commodity derivative instruments of $529 million. The unrealized loss on commodity derivative instruments represents changes in the fair value of all the Company's existing commodity hedges on a mark-to-market basis.
Purchased Gas
Purchased gas volumes represent volumes of natural gas purchased at market prices from third-parties and then resold in order to fulfill contracts with certain customers and to balance supply. Purchased gas revenue was $46 million for the three months ended June 30, 2022 compared to $17 million for the three months ended June 30, 2021. Purchased gas costs were $46 million for the three months ended June 30, 2022 compared to $15 million for the three months ended June 30, 2021. The period-to-period increase in purchased gas revenue was due to increases in the average sales price and purchased gas sales volumes.
| For the Three Months Ended June 30, | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | Variance | Percent Change | |||||
| Purchased Gas Sales Volumes (in Bcf) | 9.1 | 5.9 | 3.2 | 54.2 | % | |||
| Average Sales Price (per Mcf) | $ | 5.14 | $ | 2.82 | $ | 2.32 | 82.3 | % |
| Purchased Gas Average Cost (per Mcf) | $ | 5.08 | $ | 2.45 | $ | 2.63 | 107.3 | % |
Other Operating Income
| For the Three Months Ended June 30, | ||||||||
|---|---|---|---|---|---|---|---|---|
| (in millions) | 2022 | 2021 | Variance | Percent Change | ||||
| Equity Income from Affiliates | $ | 1 | $ | 2 | $ | (1) | (50.0) | % |
| Water Income | 1 | 2 | (1) | (50.0) | % | |||
| Excess Firm Transportation Income | 3 | 3 | — | — | % | |||
| Total Other Operating Income | $ | 5 | $ | 7 | $ | (2) | (28.6) | % |
•Equity income from affiliates primarily represents CNX's share of earnings from a 50% interest in a power plant located within CNX’s CBM field. Power generated from the facility is sold into wholesale electricity markets during times of peak energy consumption. Due to the plant consuming low carbon intensity coal mine methane gas, the plant qualifies for Pennsylvania Tier I Renewable Energy Credits.
•Excess firm transportation income represents revenue from the sale of excess firm transportation capacity to third-parties. The Company obtains firm pipeline transportation capacity to enable gas production to flow uninterrupted as sales volumes increase. In order to minimize this unutilized firm transportation expense, CNX is able to release (sell) unutilized firm transportation capacity to other parties when possible and when beneficial. The revenue from released capacity helps offset the unutilized firm transportation and processing fees in total other operating expense.
Exploration and Production Related Other Costs
| For the Three Months Ended June 30, | ||||||||
|---|---|---|---|---|---|---|---|---|
| (in millions) | 2022 | 2021 | Variance | Percent Change | ||||
| Seismic Activity | $ | 3 | $ | — | $ | 3 | 100.0 | % |
| Land Rentals | 1 | 1 | — | — | % | |||
| Lease Expiration Costs | 1 | 2 | (1) | (50.0) | % | |||
| Total Exploration and Production Related Other Costs | $ | 5 | $ | 3 | $ | 2 | 66.7 | % |
•Seismic activity expense for the current period primarily relates to the acquisition of three-dimensional seismic data.
•Lease expiration costs relate to leases where the primary term expired or will expire within the next 12 months.
Selling, General and Administrative ("SG&A")
SG&A costs include costs such as overhead, including employee labor and benefit costs, short-term incentive compensation, costs of maintaining our headquarters, audit and other professional fees, charitable contributions and legal compliance expenses. SG&A costs also include non-cash long-term equity-based compensation expense.
| For the Three Months Ended June 30, | ||||||||
|---|---|---|---|---|---|---|---|---|
| (in millions) | 2022 | 2021 | Variance | Percent Change | ||||
| Salaries, Wages and Employee Benefits | $ | 8 | $ | 6 | $ | 2 | 33.3 | % |
| Contributions and Advertising | 2 | — | 2 | 100.0 | % | |||
| Long-Term Equity-Based Compensation (Non-Cash) | 4 | 3 | 1 | 33.3 | % | |||
| Short-Term Incentive Compensation | 3 | 3 | — | — | % | |||
| Other | 13 | 12 | 1 | 8.3 | % | |||
| Total SG&A | $ | 30 | $ | 24 | $ | 6 | 25.0 | % |
•Salaries, wages and employee benefits increased in the period-to-period comparison primarily due to an increase in employee wages and employee benefit expense.
•Contributions and advertising increased in the period-to-period comparison primarily due to an increase in charitable contributions.
Other Operating Expense
| For the Three Months Ended June 30, | ||||||||
|---|---|---|---|---|---|---|---|---|
| (in millions) | 2022 | 2021 | Variance | Percent Change | ||||
| Unutilized Firm Transportation and Processing Fees | $ | 18 | $ | 14 | $ | 4 | 28.6 | % |
| Litigation Settlements | 2 | — | 2 | 100.0 | % | |||
| Insurance Expense | 1 | 1 | — | — | % | |||
| Total Other Operating Expense | $ | 21 | $ | 15 | $ | 6 | 40.0 | % |
•Unutilized firm transportation and processing fees represent pipeline transportation capacity obtained to enable gas production to flow uninterrupted as sales volumes increase, as well as additional processing capacity for NGLs. In some instances, the Company may have the opportunity to realize more favorable net pricing by strategically choosing to sell natural gas into a market or to a customer that does not require the use of the Company’s own firm transportation capacity. Such sales would result in an increase in unutilized firm transportation expense. The Company attempts to minimize this expense by releasing (selling) unutilized firm transportation capacity to other parties when possible and when beneficial. The revenue received when this capacity is released (sold) is included in Excess Firm Transportation Income above. The increase in the period-to-period comparison was primarily due to higher unutilized processing fees and a decrease in utilization of firm transportation capacity in the current period.
Other Expense
| For the Three Months Ended June 30, | ||||||||
|---|---|---|---|---|---|---|---|---|
| (in millions) | 2022 | 2021 | Variance | Percent Change | ||||
| Other Income | ||||||||
| Right-of-Way Sales | $ | — | $ | 1 | $ | (1) | (100.0) | % |
| Total Other Income | $ | — | $ | 1 | $ | (1) | (100.0) | % |
| Other Expense | ||||||||
| Professional Services | $ | 1 | $ | 3 | $ | (2) | (66.7) | % |
| Bank Fees | 3 | 3 | — | — | % | |||
| Other Corporate Expense | 1 | 1 | — | — | % | |||
| Total Other Expense | $ | 5 | $ | 7 | $ | (2) | (28.6) | % |
| Total Other Expense | $ | 5 | $ | 6 | $ | (1) | (16.7) | % |
•Professional services decreased in the period-to-period comparison primarily due to a decrease in legal fees.
Gain on Asset Sales and Abandonments, net
A gain on asset sales of $6 million related to the sale of various non-core assets (primarily rights-of-way, surface acreage and other non-core oil and gas interests) was recognized in the three months ended June 30, 2022 compared to a gain of $7 million in the three months ended June 30, 2021.
Loss on Debt Extinguishment
A loss on debt extinguishment of $13 million was recognized in the three months ended June 30, 2022 in connection with the purchase of a portion of the Convertible Notes due May 2026. See Note 9 – Long-Term Debt in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information.
Interest Expense
| For the Three Months Ended June 30, | ||||||||
|---|---|---|---|---|---|---|---|---|
| (in millions) | 2022 | 2021 | Variance | Percent Change | ||||
| Total Interest Expense | $ | 31 | $ | 39 | $ | (8) | (20.5) | % |
The $8 million decrease in total interest expense was partially due to the Company adopting Accounting Standards Update (ASU) 2020-06 - Accounting for Convertible Instruments and Contracts in an Entity's Own Equity on January 1, 2022. As part of the adoption, total interest expense no longer includes a non-cash interest expense component related to the Convertible Notes due May 2026. During the three months ended June 30, 2021, total interest expense included $4 million that was amortized as additional non-cash interest expense related to the equity component of the Convertible Notes due May 2026. The decrease was also due to the purchase of the $400 million 6.500% CNXM Senior Notes due March 2026 during the year ended December 31, 2021 offset, in part, by the $400 million of 4.750% CNXM Senior Notes due 2030 that were issued during the year ended December 31, 2021. See Note 9 – Long-Term Debt in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information.
Income Taxes
| For the Three Months Ended June 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (in millions) | 2022 | 2021 | Variance | Percent Change | |||||||
| Total Company Income (Loss) Before Income Tax | $ | 47 | $ | (446) | $ | 493 | 110.5 | % | |||
| Income Tax Expense (Benefit) | $ | 14 | $ | (92) | $ | 106 | 115.2 | % | |||
| Effective Income Tax Rate | 28.9 | % | 20.6 | % | 8.3 | % |
The effective income tax rate was 28.9% for the three months ended June 30, 2022 compared to 20.6% for the three months ended June 30, 2021. The effective rate for the three months ended June 30, 2022 differs from the U.S. federal statutory rate of 21% primarily due to the impact of the partial repurchase of the Convertible Notes, equity compensation and state income taxes. The effective rate for the three months ended June 30, 2021 differs from the U.S. federal statutory rate of 21% primarily due to the impact of equity compensation and state income taxes (See Note 4 – Income Taxes in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information).
Results of Operations - Six Months Ended June 30, 2022 Compared with Six Months Ended June 30, 2021
Net Loss
CNX reported a net loss of $890 million, or a loss per diluted share of $4.52, for the six months ended June 30, 2022, compared to a net loss of $256 million, or a loss per diluted share of $1.16, for the six months ended June 30, 2021.
Included in the loss for the six months ended June 30, 2022 was an unrealized loss on commodity derivative instruments of $1,578 million. Included in the loss for the six months ended June 30, 2021 was an unrealized loss on commodity derivative instruments of $497 million.
Non-GAAP Financial Measures
CNX's management uses certain non-GAAP financial measures for planning, forecasting and evaluating business and financial performance, and believes that they are useful for investors in analyzing the company. Although these are not measures of performance calculated in accordance with generally accepted accounting principles (GAAP), management believes that these financial measures are useful to an investor in evaluating CNX because these metrics are widely used to evaluate a natural gas company’s operating performance. Sales of Natural Gas, NGL and Oil, including cash settlements excludes the impacts of changes in the fair value of commodity derivative instruments prior to settlement, which are often volatile, and only includes the impact of settled commodity derivative instruments. Sales of Natural Gas, NGL and Oil, including cash settlements also excludes purchased gas revenue and other revenue and operating income, which are not directly related to CNX’s natural gas producing activities. Natural Gas, NGL and Oil Production Costs excludes certain expenses that are not directly related to CNX’s natural gas producing activities and are managed outside our production operations (See Note 13 – Segment Information in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information). These expenses include, but are not limited to, interest expense, other operating expense and other corporate expenses such as selling, general and administrative costs. We believe that Sales of Natural Gas, NGL and Oil, including cash settlements, Natural Gas, NGL and Oil Production Costs and Natural Gas, NGL and Oil Production Margin (which is derived by subtracting Natural Gas, NGL and Oil Production Costs from Sales of Natural Gas, NGL and Oil, including cash settlements) provide useful information to investors for evaluating period-to-period comparisons of earnings trends. These metrics should not be viewed as a substitute for measures of performance that are calculated in accordance with GAAP. In addition, because all companies do not calculate these measures identically, these measures may not be comparable to similarly titled measures of other companies.
Non-GAAP Financial Measures Reconciliation
| For the Six Months Ended June 30, | ||||
|---|---|---|---|---|
| (Dollars in millions) | 2022 | 2021 | ||
| Total Revenue and Other Operating (Loss) Income | $ | (493) | $ | 346 |
| Add (Deduct): | ||||
| Purchased Gas Revenue | (92) | (50) | ||
| Loss on Commodity Derivative Instruments | 1,578 | 497 | ||
| Other Revenue and Operating Income | (46) | (50) | ||
| Sales of Natural Gas, NGL and Oil, including Cash Settlements, a Non-GAAP Financial Measure | $ | 947 | $ | 743 |
| Total Operating Expense | $ | 653 | $ | 581 |
| Add (Deduct): | ||||
| Depreciation, Depletion and Amortization (DD&A) - Corporate | (7) | (6) | ||
| Exploration and Production Related Other Costs | (6) | (5) | ||
| Purchased Gas Costs | (91) | (47) | ||
| Selling, General and Administrative Costs | (62) | (52) | ||
| Other Operating Expense | (32) | (31) | ||
| Natural Gas, NGL and Oil Production Costs, a Non-GAAP Financial Measure1 | $ | 455 | $ | 440 |
1 Natural Gas, NGL and Oil production costs consists primarily of lease operating expense, production ad valorem and other fees, transportation, gathering and compression and production related depreciation, depletion and amortization.
Selected Natural Gas, NGL and Oil Production Financial Data
The following table presents a summary of our total sales volumes, sales of natural gas, NGL and oil including cash settlements, natural gas, NGL and oil production costs and natural gas, NGL and oil production margin related to our production operations on a total company basis (See Non-GAAP Financial Measures Reconciliation for the reconciliation to the most directly comparable financial measures calculated and presented in accordance with GAAP):
| For the Six Months Ended June 30, | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | Variance | ||||||||||
| in Millions | Per Mcfe | in Millions | Per Mcfe | in Millions | Per Mcfe | |||||||
| Total Sales Volumes (Bcfe)* | 293.2 | 278.5 | 14.7 | |||||||||
| Natural Gas, NGL and Oil Revenue | $ | 1,748 | $ | 6.14 | $ | 751 | $ | 2.70 | $ | 997 | $ | 3.44 |
| Loss on Commodity Derivative Instruments - Cash Settlement - Gas | (801) | (2.91) | (8) | (0.03) | (793) | (2.88) | ||||||
| Sales of Natural Gas, NGL and Oil, including Cash Settlements, a Non-GAAP Financial Measure | 947 | 3.23 | 743 | 2.67 | 204 | 0.56 | ||||||
| Lease Operating Expense | 30 | 0.10 | 20 | 0.07 | 10 | 0.03 | ||||||
| Production, Ad Valorem, and Other Fees | 20 | 0.07 | 13 | 0.05 | 7 | 0.02 | ||||||
| Transportation, Gathering and Compression | 177 | 0.60 | 161 | 0.58 | 16 | 0.02 | ||||||
| Depreciation, Depletion and Amortization (DD&A) | 228 | 0.78 | 246 | 0.88 | (18) | (0.10) | ||||||
| Natural Gas, NGL and Oil Production Costs, a Non-GAAP Financial Measure | 455 | 1.55 | 440 | 1.58 | 15 | (0.03) | ||||||
| Natural Gas, NGL and Oil Production Margin, a Non-GAAP Financial Measure | $ | 492 | $ | 1.68 | $ | 303 | $ | 1.09 | $ | 189 | $ | 0.59 |
*NGLs and Oil/Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of NGL, condensate, and natural gas prices.
The 14.7 Bcfe increase in volumes in the period-to-period comparison was primarily due to the turn-in-line of new wells throughout 2021 and the first half of 2022. The increases were offset in part by normal production declines.
Changes in the average costs per Mcfe were primarily related to the following items:
•Lease operating expense increased on a per unit basis as a result of an increase in repairs and maintenance expense and an increase in water disposal costs.
•Production, ad valorem and other fees increased on a per unit basis as a result of increased realized prices on natural gas and natural gas liquids.
•Transportation, Gathering and Compression increased primarily due to an increase in gathering system repairs and maintenance expense and an increase in electrical compression expense.
•Depreciation, depletion and amortization expense decreased on a per unit basis due to a lower annual depletion rate primarily resulting from low cost reserve additions from development during the 2021 period.
Average Realized Price Reconciliation
The following table presents a breakout of liquids and natural gas sales information and settled derivative information to assist in the understanding of the Company’s natural gas production and sales portfolio and information regarding settled commodity derivatives:
| For the Six Months Ended June 30, | ||||||||
|---|---|---|---|---|---|---|---|---|
| in thousands (unless noted) | 2022 | 2021 | Variance | Percent Change | ||||
| LIQUIDS | ||||||||
| NGL: | ||||||||
| Sales Volume (MMcfe) | 17,351 | 15,937 | 1,414 | 8.9 | % | |||
| Sales Volume (Mbbls) | 2,892 | 2,656 | 236 | 8.9 | % | |||
| Gross Price ($/Bbl) | $ | 44.46 | $ | 27.60 | $ | 16.86 | 61.1 | % |
| Gross NGL Revenue | $ | 128,570 | $ | 73,384 | $ | 55,186 | 75.2 | % |
| Oil/Condensate: | ||||||||
| Sales Volume (MMcfe) | 698 | 1,091 | (393) | (36.0) | % | |||
| Sales Volume (Mbbls) | 116 | 182 | (66) | (36.3) | % | |||
| Gross Price ($/Bbl) | $ | 86.46 | $ | 49.11 | $ | 37.35 | 76.1 | % |
| Gross Oil/Condensate Revenue | $ | 10,060 | $ | 8,932 | $ | 1,128 | 12.6 | % |
| NATURAL GAS | ||||||||
| Sales Volume (MMcf) | 275,144 | 261,515 | 13,629 | 5.2 | % | |||
| Sales Price ($/Mcf) | $ | 5.85 | $ | 2.56 | $ | 3.29 | 128.5 | % |
| Gross Natural Gas Revenue | $ | 1,609,401 | $ | 668,358 | $ | 941,043 | 140.8 | % |
| Hedging Impact ($/Mcf) | $ | (2.91) | $ | (0.03) | $ | (2.88) | (9,600.0) | % |
| Loss on Commodity Derivative Instruments - Cash Settlement | $ | (801,233) | $ | (7,954) | $ | (793,279) | (9,973.3) | % |
The increase in gross revenue was primarily the result of the $3.29 per Mcf increase in natural gas prices, when excluding the impact of hedging, the $16.86 per Bbl increase in NGL prices and the 14.7 Bcfe increase in sales volumes. These increases were offset, in-part, by the impact of the change in the realized loss on commodity derivative instruments related to the Company's hedging program.
SEGMENT ANALYSIS for the six months ended June 30, 2022 compared to the six months ended June 30, 2021:
| For the Six Months Ended | Difference to Six Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, 2022 | June 30, 2021 | |||||||||||||||
| (in millions) | Shale | CBM | Other | Total | Shale | CBM | Other | Total | ||||||||
| Natural Gas, NGLs and Oil Revenue | $ | 1,604 | $ | 143 | $ | 1 | $ | 1,748 | $ | 929 | $ | 68 | $ | — | $ | 997 |
| Loss on Commodity Derivative Instruments | (738) | (63) | (1,578) | (2,379) | (731) | (62) | (1,081) | (1,874) | ||||||||
| Purchased Gas Revenue | — | — | 92 | 92 | — | — | 42 | 42 | ||||||||
| Other Revenue and Operating Income | 35 | — | 11 | 46 | (3) | — | (1) | (4) | ||||||||
| Total Revenue and Other Operating Income (Loss) | 901 | 80 | (1,474) | (493) | 195 | 6 | (1,040) | (839) | ||||||||
| Lease Operating Expense | 22 | 8 | — | 30 | 9 | 2 | (1) | 10 | ||||||||
| Production, Ad Valorem, and Other Fees | 15 | 5 | — | 20 | 4 | 3 | — | 7 | ||||||||
| Transportation, Gathering and Compression | 153 | 23 | 1 | 177 | 10 | 5 | 1 | 16 | ||||||||
| Depreciation, Depletion and Amortization | 197 | 26 | 12 | 235 | (17) | (4) | 4 | (17) | ||||||||
| Exploration and Production Related Other Costs | — | — | 6 | 6 | — | — | 1 | 1 | ||||||||
| Purchased Gas Costs | — | — | 91 | 91 | — | — | 44 | 44 | ||||||||
| Selling, General and Administrative Costs | — | — | 62 | 62 | — | — | 10 | 10 | ||||||||
| Other Operating Expense | — | — | 32 | 32 | — | — | 1 | 1 | ||||||||
| Total Operating Expense | 387 | 62 | 204 | 653 | 6 | 6 | 60 | 72 | ||||||||
| Other Expense | — | — | 5 | 5 | — | — | (5) | (5) | ||||||||
| Gain on Asset Sales and Abandonments, net | — | — | (20) | (20) | — | — | (10) | (10) | ||||||||
| Loss on Debt Extinguishment | — | — | 13 | 13 | — | — | 13 | 13 | ||||||||
| Interest Expense | — | — | 58 | 58 | — | — | (18) | (18) | ||||||||
| Total Other Expense | — | — | 56 | 56 | — | — | (20) | (20) | ||||||||
| Total Costs and Expenses | 387 | 62 | 260 | 709 | 6 | 6 | 40 | 52 | ||||||||
| Earnings (Loss) Before Income Tax | $ | 514 | $ | 18 | $ | (1,734) | $ | (1,202) | $ | 189 | $ | — | $ | (1,080) | $ | (891) |
SHALE SEGMENT
The Shale segment had earnings before income tax of $514 million for the six months ended June 30, 2022 compared to earnings before income tax of $325 million for the six months ended June 30, 2021.
| For the Six Months Ended June 30, | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | Variance | Percent<br>Change | |||||
| Shale Gas Sales Volumes (Bcf) | 252.6 | 236.1 | 16.5 | 7.0 | % | |||
| NGLs Sales Volumes (Bcfe)* | 17.3 | 15.9 | 1.4 | 8.8 | % | |||
| Oil/Condensate Sales Volumes (Bcfe)* | 0.7 | 1.1 | (0.4) | (36.4) | % | |||
| Total Shale Sales Volumes (Bcfe)* | 270.6 | 253.1 | 17.5 | 6.9 | % | |||
| Average Sales Price - Natural Gas (per Mcf) | $ | 5.80 | $ | 2.51 | $ | 3.29 | 131.1 | % |
| Loss on Commodity Derivative Instruments - Cash Settlement - Gas (per Mcf) | $ | (2.92) | $ | (0.03) | $ | (2.89) | (9,633.3) | % |
| Average Sales Price - NGLs (per Mcfe)* | $ | 7.41 | $ | 4.60 | $ | 2.81 | 61.1 | % |
| Average Sales Price - Oil/Condensate (per Mcfe)* | $ | 14.40 | $ | 8.18 | $ | 6.22 | 76.0 | % |
| Total Average Shale Sales Price (per Mcfe) | $ | 3.20 | $ | 2.64 | $ | 0.56 | 21.2 | % |
| Average Shale Lease Operating Expenses (per Mcfe) | 0.08 | 0.05 | 0.03 | 60.0 | % | |||
| Average Shale Production, Ad Valorem and Other Fees (per Mcfe) | 0.05 | 0.05 | — | — | % | |||
| Average Shale Transportation, Gathering and Compression Costs (per Mcfe) | 0.57 | 0.56 | 0.01 | 1.8 | % | |||
| Average Shale Depreciation, Depletion and Amortization Costs (per Mcfe) | 0.73 | 0.85 | (0.12) | (14.1) | % | |||
| Total Average Shale Production Costs (per Mcfe) | $ | 1.43 | $ | 1.51 | $ | (0.08) | (5.3) | % |
| Total Average Shale Production Margin (per Mcfe) | $ | 1.77 | $ | 1.13 | $ | 0.64 | 56.6 | % |
* NGLs and Oil/Condensate are converted to Mcfe at the rate of one barrel equals six Mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship of oil, NGL, condensate, and natural gas prices.
The Shale segment had natural gas, NGLs and oil/condensate revenue of $1,604 million for the six months ended June 30, 2022 compared to $675 million for the six months ended June 30, 2021. The $929 million increase was due primarily to a 131.1% increase in the average sales price for natural gas, a 6.9% increase in total Shale sales volumes, and a 61.1% increase in the average sales price of NGLs. The increase in total Shale volumes was primarily due to the turn-in-line of new wells throughout 2021 and the first half of 2022, offset in part by normal production declines.
The increase in total average Shale sales price was primarily due to a $3.29 per Mcf increase in average natural gas sales price and a $2.81 per Mcfe increase in the average NGL sales price. These increases were offset in part by a $2.89 per Mcf change in the realized loss on commodity derivative instruments. The notional amounts associated with these financial hedges represented approximately 212.6 Bcf of the Company's produced Shale gas sales volumes for the six months ended June 30, 2022 at an average loss of $3.47 per Mcf hedged. For the six months ended June 30, 2021, these financial hedges represented approximately 209.4 Bcf at an average loss of $0.03 per Mcf hedged.
Total operating costs and expenses for the Shale segment were $387 million for the six months ended June 30, 2022 compared to $381 million for the six months ended June 30, 2021. The increase in total dollars and decrease in unit costs for the Shale segment were due to the following items:
•Shale lease operating expenses were $22 million for the six months ended June 30, 2022 compared to $13 million for the six months ended June 30, 2021. The increases in total dollars and unit costs were primarily related to an increase in repairs and maintenance expense and an increase in water disposal costs.
•Shale production, ad valorem and other fees were $15 million for the six months ended June 30, 2022 compared to $11 million for the six months ended June 30, 2021. The increase in total dollars was primarily due to increased realized prices on natural gas and natural gas liquids.
•Shale transportation, gathering and compression costs were $153 million for the six months ended June 30, 2022 compared to $143 million for the six months ended June 30, 2021. The increase in total dollars was primarily related to an increase in total volumes gathered as well as an increase in gathering systems repairs and maintenance expense.
•Depreciation, depletion and amortization costs attributable to the Shale segment were $197 million for the six months ended June 30, 2022 compared to $214 million for the six months ended June 30, 2021. These amounts included depletion on a unit of production basis of $0.63 per Mcfe and $0.74 per Mcfe, respectively. The decrease in the units of production depreciation, depletion and amortization rate in the current period is primarily the result of a lower annual depletion rate related to low-cost reserve additions from development in the 2021 period. The remaining depreciation, depletion and amortization costs were either recorded on a straight-line basis or related to asset retirement obligations.
Total Shale other revenue and operating income relates to natural gas gathering services provided to third-parties. The Shale segment had other revenue and operating income of $35 million for the six months ended June 30, 2022 compared to $38 million for the six months ended June 30, 2021. The decrease in the period-to-period comparison was primarily due to lower third-party gathering volumes due to normal production declines.
COALBED METHANE (CBM) SEGMENT
The CBM segment had earnings before income tax of $18 million for the both the six months ended June 30, 2022 and June 30, 2021.
| For the Six Months Ended June 30, | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | Variance | Percent<br>Change | |||||
| CBM Gas Sales Volumes (Bcf) | 22.5 | 25.3 | (2.8) | (11.1) | % | |||
| Average Sales Price - Natural Gas (per Mcf) | $ | 6.37 | $ | 2.98 | $ | 3.39 | 113.8 | % |
| Loss on Commodity Derivative Instruments - Cash Settlement - Gas (per Mcf) | $ | (2.78) | $ | (0.03) | $ | (2.75) | (9,166.7) | % |
| Total Average CBM Sales Price (per Mcf) | $ | 3.58 | $ | 2.95 | $ | 0.63 | 21.4 | % |
| Average CBM Lease Operating Expenses (per Mcf) | 0.36 | 0.24 | 0.12 | 50.0 | % | |||
| Average CBM Production, Ad Valorem and Other Fees (per Mcf) | 0.23 | 0.10 | 0.13 | 130.0 | % | |||
| Average CBM Transportation, Gathering and Compression Costs (per Mcf) | 1.01 | 0.72 | 0.29 | 40.3 | % | |||
| Average CBM Depreciation, Depletion and Amortization Costs (per Mcf) | 1.16 | 1.18 | (0.02) | (1.7) | % | |||
| Total Average CBM Production Costs (per Mcf) | $ | 2.76 | $ | 2.24 | $ | 0.52 | 23.2 | % |
| Total Average CBM Production Margin (per Mcf) | $ | 0.82 | $ | 0.71 | $ | 0.11 | 15.5 | % |
The CBM segment had natural gas revenue of $143 million for the six months ended June 30, 2022 compared to $75 million for the six months ended June 30, 2021. The $68 million increase was primarily due to a 113.8% increase in the average sales price for natural gas in the current period. The natural gas price increases were partially offset by the 11.1% decrease in CBM sales volumes due to normal production declines.
The total average CBM sales price increased $0.63 per Mcf due to a $3.39 per Mcf increase in average natural gas sales price, offset in part by a $2.75 per Mcf change in the realized loss on commodity derivative instruments resulting from the Company's hedging program. The notional amounts associated with these financial hedges represented approximately 18.0 Bcf of the Company's produced CBM sales volumes for the six months ended June 30, 2022 at an average loss of $3.46 per Mcf hedged. For the six months ended June 30, 2021, these financial hedges represented approximately 21.5 Bcf at an average loss of $0.03 per Mcf hedged.
Total operating costs and expenses for the CBM segment were $62 million for the six months ended June 30, 2022 compared to $56 million for the six months ended June 30, 2021. The increases in total dollars and unit costs for the CBM segment were due to the following items:
•CBM lease operating expense was $8 million for the six months ended June 30, 2022 compared to $6 million for the six months ended June 30, 2021. The increases in total dollars and unit costs were primarily due to increases in repairs and maintenance expense.
•CBM production, ad valorem and other fees were $5 million for the six months ended June 30, 2022 compared to $2 million for the six months ended June 30, 2021. The increases in total dollars and unit costs were primarily due to increased realized prices on natural gas.
•CBM transportation, gathering and compression costs were $23 million for the six months ended June 30, 2022 compared to $18 million for the six months ended June 30, 2021. The increases in total dollars and unit costs were primarily due to increases in repairs and maintenance expense and electrical compression expense.
•Depreciation, depletion and amortization costs attributable to the CBM segment were $26 million for the six months ended June 30, 2022 compared to $30 million for the six months ended June 30, 2021. These amounts included depletion on a unit of production basis of $0.64 per Mcfe and $0.66 per Mcfe, respectively. The decrease in the units of production depreciation, depletion and amortization rate was due to a lower annual depletion rate. The remaining depreciation, depletion and amortization costs were either recorded on a straight-line basis or related to asset retirement obligations.
OTHER SEGMENT
The Other Segment includes nominal shallow oil and gas production which is not significant to the Company. It also includes the Company's purchased gas activities, unrealized gain or loss on commodity derivative instruments, exploration and production related other costs, as well as various other expenses that are managed outside the Shale and CBM segments such as SG&A, interest expense and income taxes.
The Other Segment had a loss before income tax of $1,734 million for the six months ended June 30, 2022 compared to a loss before income tax of $654 million for the six months ended June 30, 2021. The decrease in total dollars is discussed below.
| For the Six Months Ended June 30, | |||||
|---|---|---|---|---|---|
| 2022 | 2021 | Variance | Percent Change | ||
| Other Gas Sales Volumes (Bcf) | 0.1 | 0.1 | — | — | % |
Loss on Commodity Derivative Instruments
For the six months ended June 30, 2022, the Other Segment recognized an unrealized loss on commodity derivative instruments of $1,578 million. For the six months ended June 30, 2021, the Other Segment recognized an unrealized loss on commodity derivative instruments of $497 million. The unrealized loss or gain on commodity derivative instruments represents changes in the fair value of all the Company's existing commodity hedges on a mark-to-market basis.
Purchased Gas
Purchased gas volumes represent volumes of natural gas purchased at market prices from third-parties and then resold in order to fulfill contracts with certain customers and to balance supply. Purchased gas revenue was $92 million for the six months ended June 30, 2022 compared to $50 million for the six months ended June 30, 2021. Purchased gas costs were $91 million for the six months ended June 30, 2022 compared to $47 million for the six months ended June 30, 2021. The period-to-period increase in purchased gas revenue was due to an increase in averages sales price, offset in part by a decrease in purchased gas sales volumes.
| For the Six Months Ended June 30, | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | Variance | Percent Change | |||||
| Purchased Gas Sales Volumes (in Bcf) | 15.3 | 16.7 | (1.4) | (8.4) | % | |||
| Average Sales Price (per Mcf) | $ | 6.03 | $ | 3.01 | $ | 3.02 | 100.3 | % |
| Purchased Gas Average Cost (per Mcf) | $ | 5.93 | $ | 2.81 | $ | 3.12 | 111.0 | % |
Other Operating Income
| For the Six Months Ended June 30, | ||||||||
|---|---|---|---|---|---|---|---|---|
| (in millions) | 2022 | 2021 | Variance | Percent Change | ||||
| Water Income | $ | 3 | $ | 4 | $ | (1) | (25.0) | % |
| Excess Firm Transportation Income | 6 | 6 | — | — | % | |||
| Equity Income from Affiliates | 2 | 2 | — | — | % | |||
| Total Other Operating Income | $ | 11 | $ | 12 | $ | (1) | (8.3) | % |
•Excess firm transportation income represents revenue from the sale of excess firm transportation capacity to third-parties. The Company obtains firm pipeline transportation capacity to enable gas production to flow uninterrupted as sales volumes increase. In order to minimize this unutilized firm transportation expense, CNX is able to release (sell) unutilized firm transportation capacity to other parties when possible and when beneficial. The revenue from released capacity helps offset the Unutilized Firm Transportation and Processing Fees in Total Other Operating Expense.
•Equity income from affiliates primarily consists of CNX's share of earnings from a 50% interest in a power plant located within CNX’s CBM field. Power generated from the facility is sold into wholesale electricity markets during times of peak energy consumption. Due to the plant consuming low carbon intensity coal mine methane gas, the plant qualifies for Pennsylvania Tier I Renewable Energy Credits.
Exploration and Production Related Other Costs
| For the Six Months Ended June 30, | ||||||||
|---|---|---|---|---|---|---|---|---|
| (in millions) | 2022 | 2021 | Variance | Percent Change | ||||
| Seismic Activity | $ | 3 | $ | — | $ | 3 | 100.0 | % |
| Land Rentals | $ | 2 | $ | 1 | $ | 1 | 100.0 | % |
| Permitting Expense | $ | — | $ | 1 | $ | (1) | (100.0) | % |
| Lease Expiration Costs | 1 | 3 | (2) | (66.7) | % | |||
| Total Exploration and Production Related Other Costs | $ | 6 | $ | 5 | $ | 1 | 20.0 | % |
•Seismic activity expense for the current period primarily relates to the acquisition of three-dimensional seismic data.
•Lease expiration costs relate to leases where the primary term expired or will expire within the next 12 months.
Selling, General and Administrative ("SG&A")
SG&A costs include costs such as overhead, including employee labor and benefit costs, short-term incentive compensation, costs of maintaining our headquarters, audit and other professional fees, charitable contributions and legal compliance expenses. SG&A costs also include non-cash long-term equity-based compensation expense.
| For the Six Months Ended June 30, | ||||||||
|---|---|---|---|---|---|---|---|---|
| (in millions) | 2022 | 2021 | Variance | Percent Change | ||||
| Contributions and Advertising | $ | 4 | $ | 1 | $ | 3 | 300.0 | % |
| Short-Term Incentive Compensation | 7 | 5 | 2 | 40.0 | % | |||
| Salaries, Wages and Employee Benefits | 15 | 13 | 2 | 15.4 | % | |||
| Long-Term Equity-Based Compensation (Non-Cash) | 11 | 11 | — | — | % | |||
| Other | 25 | 22 | 3 | 13.6 | % | |||
| Total SG&A | $ | 62 | $ | 52 | $ | 10 | 19.2 | % |
•Contributions and advertising increased in the period-to-period comparison primarily due to an increase in charitable contributions.
•Short-term incentive compensation increased in the period-to-period comparison primarily due to an increase in expected payout.
•Salaries, wages and employee benefits increased in the period-to-period comparison primarily due an increase in employee wages and employee benefit expense.
•Other increased in the period-to-period comparison primarily due to an increase in professional services and consulting fees related to cyber security, legal matters and regulatory reporting.
Other Operating Expense
| For the Six Months Ended June 30, | ||||||||
|---|---|---|---|---|---|---|---|---|
| (in millions) | 2022 | 2021 | Variance | Percent Change | ||||
| Litigation Settlements | $ | 3 | $ | — | $ | 3 | 100.0 | % |
| Insurance Expense | 1 | 1 | — | — | % | |||
| Unutilized Firm Transportation and Processing Fees | 27 | 28 | (1) | (3.6) | % | |||
| Other | 1 | 2 | (1) | (50.0) | % | |||
| Total Other Operating Expense | $ | 32 | $ | 31 | $ | 1 | 3.2 | % |
•Unutilized firm transportation and processing fees represent pipeline transportation capacity obtained to enable gas production to flow uninterrupted as sales volumes increase, as well as additional processing capacity for NGLs. In some instances, the Company may have the opportunity to realize more favorable net pricing by strategically choosing to sell natural gas into a market or to a customer that does not require the use of the Company’s own firm transportation capacity. Such sales would result in an increase in unutilized firm transportation expense. The Company attempts to minimize this expense by releasing (selling) unutilized firm transportation capacity to other parties when possible and when beneficial. The revenue received when this capacity is released (sold) is included in Excess Firm Transportation Income in Total Other Operating Income. The decrease in the period-to-period comparison was primarily due to an increase in utilization of firm transportation capacity in the current year due to production increases in 2022 compared to 2021.
Other Expense
| For the Six Months Ended June 30, | ||||||||
|---|---|---|---|---|---|---|---|---|
| (in millions) | 2022 | 2021 | Variance | Percent Change | ||||
| Other Income | ||||||||
| Right-of-Way Sales | $ | 2 | $ | 1 | $ | 1 | 100.0 | % |
| Other | 4 | 1 | 3 | 300.0 | % | |||
| Total Other Income | $ | 6 | $ | 2 | $ | 4 | 200.0 | % |
| Other Expense | ||||||||
| Bank Fees | $ | 5 | $ | 6 | $ | (1) | (16.7) | % |
| Professional Services | 3 | 3 | — | — | % | |||
| Other Corporate Expense | 3 | 3 | — | — | % | |||
| Total Other Expense | $ | 11 | $ | 12 | $ | (1) | (8.3) | % |
| Total Other Expense | $ | 5 | $ | 10 | $ | (5) | (50.0) | % |
•Total other income increased in the period-to-period comparison primarily due to increased right-of-way sales and various other one-time items.
Gain on Asset Sales and Abandonments, net
A gain on asset sales of $20 million related to the sale of various non-core assets (primarily rights-of-way, surface acreage and other non-core oil and gas interests) was recognized in the six months ended June 30, 2022 compared to a gain of $10 million in the six months ended June 30, 2021.
Loss on Debt Extinguishment
A loss on debt extinguishment of $13 million was recognized in the six months ended June 30, 2022 in connection with the purchase of a portion of the Convertible Notes due May 2026. See Note 9 – Long-Term Debt in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information.
Interest Expense
| For the Six Months Ended June 30, | ||||||||
|---|---|---|---|---|---|---|---|---|
| (in millions) | 2022 | 2021 | Variance | Percent Change | ||||
| Total Interest Expense | $ | 58 | $ | 76 | $ | (18) | (23.7) | % |
The $18 million decrease in total interest expense was primarily due to the purchase of the $400 million 6.500% CNXM Senior Notes due March 2026 during the year ended December 31, 2021 offset, in part, by the $400 million of 4.750% CNXM Senior Notes due 2030 that were issued during the year ended December 31, 2021. The decrease was also due to the Company adopting Accounting Standards Update (ASU) 2020-06 - Accounting for Convertible Instruments and Contracts in an Entity's Own Equity on January 1, 2022. As part of the adoption, total interest expense no longer includes a non-cash interest expense component related to the Convertible Notes due May 2026. During the six months ended June 30, 2021, total interest expense included $8 million that was amortized as additional non-cash interest expense related to the equity component of the Convertible Notes due May 2026. See Note 9 – Long-Term Debt in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information.
Income Taxes
| For the Six Months Ended June 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (in millions) | 2022 | 2021 | Variance | Percent Change | |||||||
| Total Company Loss Before Income Tax | $ | (1,202) | $ | (311) | $ | (891) | 286.5 | % | |||
| Income Tax Benefit | $ | (312) | $ | (55) | $ | (257) | 467.3 | % | |||
| Effective Income Tax Rate | 26.0 | % | 17.6 | % | 8.4 | % |
The effective income tax rate was 26.0% for the six months ended June 30, 2022 compared to 17.6% for the six months ended June 30, 2021. The effective rate for the six months ended June 30, 2022 differs from the U.S. federal statutory rate of 21% primarily due to the impact of the partial repurchase of the Convertible Notes, equity compensation and state income taxes. The effective rate for the six months ended June 30, 2021 differs from the U.S. federal statutory rate of 21% primarily due to the impact of equity compensation and state income taxes. See Note 4 – Income Taxes in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information.
Liquidity and Capital Resources
Overview, Sources and Uses
CNX generally has satisfied its working capital requirements and funded its capital expenditures and debt service obligations with cash generated from operations and proceeds from borrowings. CNX currently believes that cash generated from operations, asset sales and the Company's borrowing capacity will be sufficient to meet the Company's working capital requirements, anticipated capital expenditures (other than major acquisitions), scheduled debt payments, anticipated dividend payments, if any, and to provide required letters of credit for the current fiscal year. Nevertheless, the ability of CNX to satisfy its working capital requirements, to service its debt obligations, to fund planned capital expenditures, or to pay dividends will depend upon future operating performance, which will be affected by prevailing economic conditions in the natural gas industry and other financial and business factors, including the current COVID-19 pandemic, some of which are beyond CNX’s control.
From time to time, CNX is required to post financial assurances to satisfy contractual and other requirements generated in the normal course of business. Some of these assurances are posted to comply with federal, state or other government agencies' statutes and regulations. CNX sometimes uses letters of credit to satisfy these requirements and these letters of credit reduce the Company's borrowing facility capacity.
CNX continuously reviews its liquidity and capital resources. If market conditions were to change, for instance due to a significant decline in commodity prices and our revenue were reduced significantly or operating costs were to increase significantly, our cash flows and liquidity could be reduced.
As of June 30, 2022, CNX was in compliance with all of its debt covenants. After considering the potential effect of a significant decline in commodity prices, CNX currently expects to remain in compliance with its debt covenants.
CNX frequently evaluates potential acquisitions. CNX has historically funded acquisitions with cash generated from operations and a variety of other sources, depending on the size of the transaction, including debt and equity financing. There can be no assurance that additional capital resources, including debt and equity financing, will be available to CNX on terms which CNX finds acceptable, or at all.
Factors that may Impact our Liquidity
•The Company’s cash on hand and access to additional liquidity. Cash and cash equivalents as of June 30, 2022 and December 31, 2021 were $0.2 million and $3.6 million, respectively.
•Accounts and notes receivable - trade as of June 30, 2022 and December 31, 2021 were $447.5 million and $330.1 million, respectively. Our accounts and notes receivable balance may fluctuate as of any balance sheet date depending on the prices we receive for our natural gas and NGLs and the volumes sold.
•Capital expenditures are expected to range between $550.0 million to $590.0 million for the year ended December 31, 2022. For the six months ended June 30, 2022, CNX had capital expenditures of $259.0 million. Accelerated levels of inflation may lead to price increases beyond CNX’s control that could lead to CNX incurring an increase in costs in the future.
•Production volumes are expected to range between 575.0 Bcfe and 605.0 Bcfe for the year ended December 31, 2022. For the six months ended June 30, 2022, CNX had production volumes of 293.2 Bcfe.
•Prices for natural gas and NGLs are volatile, and an extended decline in the prices we receive for our natural gas and NGLs will adversely affect our financial condition and cash flows.
•In order to manage the market risk exposure of volatile natural gas prices in the future, CNX enters into various physical natural gas supply transactions with both gas marketers and end users for terms varying in length. CNX also enters into various financial natural gas swap transactions to manage the market risk exposure to in-basin and out-of-basin pricing. The fair value of these contracts was a net liability of $2,554 million at June 30, 2022 and a net liability of $976 million at December 31, 2021. The Company has not experienced any issues of non-performance by derivative counterparties. See Item 3, "Quantitative and Qualitative Disclosures About Market Risk" of this Form 10-Q for further discussion of our commodity risk management.
Cash Flows (in millions)
| For the Six Months Ended June 30, | ||||||
|---|---|---|---|---|---|---|
| 2022 | 2021 | Change | ||||
| Cash Provided by Operating Activities | $ | 528 | $ | 459 | $ | 69 |
| Cash Used in Investing Activities | $ | (232) | $ | (240) | $ | 8 |
| Cash Used in Financing Activities | $ | (299) | $ | (195) | $ | (104) |
Cash flows from operating activities changed in the period-to-period comparison primarily due to the following items:
•Net loss increased $634 million in the period-to-period comparison.
•Adjustments to reconcile net loss to cash provided by operating activities primarily consisted of a $265 million change in deferred income taxes, a $1,081 million net change in commodity derivative instruments, and various other changes in working capital.
Cash flows from investing activities changed in the period-to-period comparison primarily due to the following items:
•Capital expenditures increased $7 million primarily due to an overall increase in costs related to inflation and an increase in midstream expenditures.
•Proceeds from asset sales increased $15 million primarily due to increased sales of non-core surface and oil and gas interests in the six months ended June 30, 2022.
Cash flows from financing activities changed in the period-to-period comparison primarily due to the following items:
•In the six months ended June 30, 2022, CNX paid $27 million to repurchase $14 million of the 2026 Convertible Notes at an average price of 188.0% of the principal.
•In the six months ended June 30, 2022, there were $3 million of net proceeds from the CNXM Credit Facility compared to $131 million of net payments during the six months ended June 30, 2021.
•In the six months ended June 30, 2022, there were $58 million of net payments on the CNX Credit Facility compared to $1 million of net payments during the six months ended June 30, 2021.
•In the six months ended June 30, 2021, there were $13 million of net payments on the Cardinal States Facility. See Note 9 – Long-Term Debt in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional information.
•During the six months ended June 30, 2022, CNX repurchased $212 million of its common stock on the open market compared to $47 million during the six months ended June 30, 2021.
The following is a summary of the Company's significant contractual obligations at June 30, 2022 (in thousands):
| Payments due by Year | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Less Than<br>1 Year | 1-3 Years | 3-5 Years | More Than<br>5 Years | Total | ||||||
| Purchase Order Firm Commitments | $ | 646 | $ | — | $ | — | $ | — | $ | 646 |
| Gas Firm Transportation and Processing | 252,952 | 446,421 | 385,865 | 826,383 | 1,911,621 | |||||
| Long-Term Debt | 323,277 | — | 1,027,020 | 895,481 | 2,245,778 | |||||
| Interest on Long-Term Debt | 117,653 | 235,306 | 218,780 | 117,844 | 689,583 | |||||
| Finance Lease Obligations | 637 | 878 | 397 | 67 | 1,979 | |||||
| Interest on Finance Lease Obligations | 67 | 108 | 65 | 16 | 256 | |||||
| Operating Lease Obligations | 40,951 | 77,688 | 39,563 | 22,177 | 180,379 | |||||
| Interest on Operating Lease Obligations | 7,457 | 9,720 | 3,434 | 2,379 | 22,990 | |||||
| Long-Term Liabilities—Employee Related (a) | 2,941 | 4,355 | 4,711 | 32,797 | 44,804 | |||||
| Other Long-Term Liabilities (b) | 249,630 | 10,000 | 10,000 | 68,463 | 338,093 | |||||
| Total Contractual Obligations (c) | $ | 996,211 | $ | 784,476 | $ | 1,689,835 | $ | 1,965,607 | $ | 5,436,129 |
_________________________
(a)Employee related long-term liabilities include salaried retirement contributions and work-related injuries and illnesses.
(b)Other long-term liabilities include royalties and other long-term liability costs.
(c)The table above does not include obligations to taxing authorities due to the uncertainty surrounding the ultimate settlement of amounts and timing of these obligations.
Debt
At June 30, 2022, CNX had total long-term debt of $2,246 million, including the current portion of long-term debt of $324 million and excluding unamortized debt issuance costs. This long-term debt consisted of:
•An aggregate principal amount of $700 million of 7.25% Senior Notes due March 2027 plus $5 million of unamortized bond premium. Interest on the notes is payable March 14 and September 14 of each year. Payment of the principal and interest on the notes is guaranteed by most of CNX's subsidiaries but does not include CNXM (or its subsidiaries or general partner).
•An aggregate principal amount of $500 million of 6.00% Senior Notes due January 2029. Interest on the notes is payable January 15 and July 15 of each year. Payment of the principal and interest on the notes is guaranteed by most of CNX's subsidiaries but does not include CNXM (or its subsidiaries or general partner).
•An aggregate principal amount of $400 million of 4.75% Senior Notes due April 2030 issued by CNXM, less $5 million of unamortized bond discount. Interest on the notes is payable April 15 and October 15 of each year. Payment of the principal and interest on the notes is guaranteed by certain of CNXM's subsidiaries. CNX is not a guarantor of these notes.
•An aggregate principal amount of $331 million of 2.25% Convertible Senior Notes due May 2026, unless earlier redeemed, repurchased, or converted, less $7 million of unamortized bond discount and issuance costs. Interest on the notes is payable May 1 and November 1 of each year. Payment of the principal and interest on the notes is guaranteed by most of CNX's subsidiaries but does not include CNXM (or its subsidiaries or general partner).
•An aggregate principal amount of $188 million in outstanding borrowings under the CNXM Credit Facility. Payment of the principal and interest on the CNXM Credit Facility is guaranteed by certain of CNXM's subsidiaries. CNX is not a guarantor of the CNXM Facility.
•An aggregate principal amount of $134 million in outstanding borrowings under the CNX Credit Facility. Payment of the principal and interest on the CNX Credit Facility is guaranteed by most of CNX's subsidiaries but does not include CNXM (or its subsidiaries or general partner).
Total Equity and Dividends
CNX had total equity of $2,537 million at June 30, 2022 compared to $3,700 million at December 31, 2021. See the Consolidated Statements of Stockholders' Equity in Item 1 of this Form 10-Q for additional details.
The declaration and payment of dividends by CNX is subject to the discretion of CNX's Board of Directors, and no assurance can be given that CNX will pay dividends in the future. CNX has not paid dividends on its common stock since 2016. The determination to pay dividends in the future will depend upon, among other things, general business conditions, CNX's financial results, contractual and legal restrictions regarding the payment of dividends by CNX, planned investments by CNX, and such other factors as the Board of Directors deems relevant. CNX's revolving credit facility limits its ability to pay
dividends in excess of an annual rate of $0.10 per share when the Company's net leverage ratio exceeds 3.00 to 1.00 and is subject to availability under CNX's revolving credit facility of at least 20% of the aggregate commitments and there being no borrowing base deficiency. CNX's revolving credit facility does not permit such dividend payments when an event of default has occurred and is continuing. The indentures to the 7.25% Senior Notes due March 2027 and the 6.00% Senior Notes due January 2029 limit dividends to $0.50 per share annually unless several conditions are met. These conditions include no defaults, ability to incur additional debt and other payment limitations under the indentures. There were no defaults in the six months ended June 30, 2022.
Off-Balance Sheet Transactions
CNX does not maintain off-balance sheet transactions, arrangements, obligations or other relationships with unconsolidated entities or others that are reasonably likely to have a material current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources which are not disclosed in the Notes to the Unaudited Consolidated Financial Statements. CNX uses a combination of surety bonds, corporate guarantees and letters of credit to secure the Company's financial obligations for employee-related, environmental, performance and various other items which are not reflected in the Consolidated Balance Sheet at June 30, 2022. Management believes these items will expire without being funded. See Note 10 – Commitments and Contingent Liabilities in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for additional details of the various financial guarantees that have been issued by CNX.
Critical Accounting Policies and Estimates
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. The preceding discussion and analysis of our consolidated results of operations and financial condition should be read in conjunction with our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. The 2021 financial statements, as part of our Form 10-K filed with the SEC, includes additional information about us, our operations, our financial condition, our critical accounting policies and accounting estimates, and should be read in conjunction with this Quarterly Report on Form 10-Q. Our significant accounting policies are described in Note 1—Significant Accounting Policies in the Notes to the Audited Consolidated Financial Statements in Item 8 of CNX's 2021 Form 10-K
Forward-Looking Statements
We are including the following cautionary statement in this Quarterly Report on Form 10-Q to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for any forward-looking statements made by, or on behalf of us. With the exception of historical matters, the matters discussed in this Quarterly Report on Form 10-Q are forward-looking statements (as defined in Section 21E of the Exchange Act) that involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. The forward-looking statements may include projections and estimates concerning the timing and success of specific projects and our future production, revenues, income and capital spending. When we use the words "believe," "intend," "expect," "may," "should," "anticipate," "could," "estimate," "plan," "predict," "project," "will," or their negatives, or other similar expressions, the statements which include those words are usually forward-looking statements. When we describe a strategy that involves risks or uncertainties, we are making forward-looking statements. The forward-looking statements in this Quarterly Report on Form 10-Q speak only as of the date of this Quarterly Report on Form 10-Q; we disclaim any obligation to update these statements unless required by securities law, and we caution you not to rely on them unduly. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following:
•prices for natural gas and NGLs are volatile and can fluctuate widely based upon a number of factors beyond our control including oversupply relative to the demand for our products, weather and the price and availability of alternative fuels;
•unsuccessful drilling efforts or continued natural gas price decreases requiring write downs of our proved natural gas properties, or changes in assumptions impacting management’s estimates of future financial results as well as other assumptions such as movement in our stock price, weighted-average cost of capital, terminal growth rates and industry
multiples, could cause goodwill and other intangible assets we hold to become impaired and result in material non-cash charges to earnings;
•a loss of our competitive position because of the competitive nature of the natural gas industry, consolidation within the industry or overcapacity in the industry adversely affecting our ability to sell our products and midstream services;
•deterioration in the economic conditions in any of the industries in which our customers operate, a domestic or worldwide financial downturn, inflationary pressures, or negative credit market conditions;
•hedging activities may prevent us from benefiting from price increases and may expose us to other risks;
•negative public perception regarding our Company or industry;
•events beyond our control, including a global or domestic health crisis, or political or economic instability or armed conflict in oil and gas producing regions;
•increasing attention to environmental, social and governance matters;
•dependence on gathering, processing and transportation facilities and other midstream facilities owned by others, and disruption of, capacity constraints in, or proximity to pipeline systems, and any decrease in availability of pipelines or other midstream facilities;
•uncertainties in estimating our economically recoverable natural gas reserves and inaccuracies in our estimates;
•the high-risk nature of drilling, developing and operating natural gas wells;
•our identified drilling locations are scheduled out over multiple years, making them susceptible to uncertainties that could materially alter the occurrence or timing of their development or drilling;
•the substantial capital expenditures required for, and commensurate risks associated with, our development and exploration projects, as well as midstream system development;
•decreases in the availability of, or increases in the price of, required personnel, services, equipment, parts and raw materials in sufficient quantities or at reasonable costs to support our operations;
•our ability to find adequate water sources for our use in shale gas drilling and production operations, or our ability to dispose of, transport or recycle water used or removed in connection with our gas operations at a reasonable cost and within applicable environmental rules;
•failure to successfully estimate the rate of decline of existing reserves or to find or acquire economically recoverable natural gas reserves to replace our current natural gas reserves;
•losses incurred as a result of title defects in the properties in which we invest or the loss of certain leasehold or other rights related to our midstream activities;
•the impact of climate change legislation, litigation and potential, as well as any adopted, environmental regulations, including those relating to greenhouse gas emissions;
•environmental regulations can increase costs and introduce uncertainty that could adversely impact the market for natural gas with potential short and long-term liabilities;
•existing and future governmental laws, regulations and other legal requirements and judicial decisions that govern our business may increase our costs of doing business and may restrict our operations;
•significant costs and liabilities may be incurred as a result of pipeline operations and related increase in the regulation of natural gas gathering pipelines;
•changes in federal or state income tax laws or rates focused on natural gas exploration and development;
•the outcomes of various legal proceedings, including those which are more fully described in our reports filed under the Exchange Act;
•risks associated with our current long-term debt obligations;
•a decrease in our borrowing base, which could decrease for a variety of reasons including lower natural gas prices, declines in natural gas proved reserves, asset sales and lending requirements or regulations;
•Risks associated with our Convertible Notes, including the potential impact that the Convertible Notes may have on our reported financial results, potential dilution, our ability to raise funds to repurchase the Convertible Notes, and that provisions of the Convertible Notes could delay or prevent a beneficial takeover of the Company;
•the potential impact of the capped call transaction undertaken in tandem with the Convertible Notes issuance, including counterparty risk;
•challenges associated with strategic determinations, including the allocation of capital and other resources to strategic opportunities;
•inability to complete acquisitions and divestitures, or failure to produce anticipated benefits of the transaction;
•there is no guarantee that we will continue to repurchase shares of our common stock under our current or any future share repurchase program at levels undertaken previously or at all;
•we may operate a portion of our business with one or more joint venture partners or in circumstances where we are not the operator, which may restrict our operational and corporate flexibility and we may not realize the benefits we expect to realize from a joint venture;
•CONSOL Energy may not be able to satisfy its indemnification obligations in the future and such indemnities may not be sufficient to hold us harmless from the full amount of liabilities for which CONSOL Energy may be allocated responsibility;
•cyber-incidents could have a material adverse effect on our business, financial condition or results of operations;
•our success depends on key members of our management and our ability to attract and retain experienced technical and other professional personnel;
•terrorist activities could materially adversely affect our business and results of operations; and
•certain other factors addressed in this report and in our 2021 Form 10-K under "Risk Factors".
Although forward-looking statements reflect our good faith beliefs at the time they are made, they involve known and unknown risks, uncertainties and other factors. For more information concerning factors that could cause actual results to differ materially from those conveyed in the forward-looking statements, including, among others, that our business plans may change as circumstances warrant, please refer to the "Risk Factors" and "Forward-Looking Statements" sections of our Annual Report 2021 Form 10-K and subsequent Quarterly Reports on Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, unless required by law.
ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In addition to the risks inherent in operations, CNX is exposed to financial, market, political and economic risks. The following discussion provides additional detail regarding CNX's exposure to the risks of changing commodity prices, interest rates and foreign exchange rates.
CNX is exposed to market price risk in the normal course of selling natural gas and liquids. CNX uses fixed-price contracts, options and derivative commodity instruments (over-the-counter swaps) to minimize exposure to market price volatility in the sale of natural gas. Under our risk management policy, it is not our intent to engage in derivative activities for speculative purposes. Typically, CNX "sells" swaps under which it receives a fixed price from counterparties and pays a floating market price. In order to lock in certain margins while balancing its basis hedges, during the first quarter of 2022 CNX purchased, rather than sold, financial swaps for the period April through October of 2022. In order to enhance production flexibility, during the first quarter of 2021, CNX purchased, rather than sold, financial swaps for the period April through October of 2021. Under these purchased financial swaps, CNX will pay a fixed price to and receive a floating price from its hedge counterparties.
CNX has established risk management policies and procedures to strengthen the internal control environment of the marketing of commodities produced from its asset base. All of the derivative instruments without other risk assessment procedures are held for purposes other than trading. They are used primarily to mitigate uncertainty and volatility and cover underlying exposures. The Company's market risk strategy incorporates fundamental risk management tools to assess market price risk and establish a framework in which management can maintain a portfolio of transactions within predefined risk parameters.
CNX believes that the use of derivative instruments, along with our risk assessment procedures and internal controls, mitigates our exposure to material risks. The use of derivative instruments without other risk assessment procedures could materially affect the Company's results of operations depending on market prices; however, we believe that use of these instruments will not have a material adverse effect on our financial position or liquidity due to our risk assessment procedures and internal controls.
For a summary of accounting policies related to derivative instruments, see Note 1—Significant Accounting Policies in the Notes to the Audited Consolidated Financial Statements in Item 8 of CNX's 2021 Form 10-K.
CNX's open gas derivative instruments can cause earnings volatility relative to changes in market prices until the derivative contracts are either settled or are monetized prior to settlement. At June 30, 2022 and December 31, 2021 our open gas derivative instruments were in net liability positions with fair values of $2,554 million and $976 million, respectively. A sensitivity analysis has been performed to determine the incremental effect on future earnings related to open derivative instruments at June 30, 2022 and December 31, 2021. A hypothetical 10 percent increase in future natural gas prices would have decreased the fair value by $1,004 million and $625 million at June 30, 2022 and December 31, 2021, respectively. A hypothetical 10 percent decrease in future natural gas prices would have increased the fair value by $765 million and $607 million at June 30, 2022 and December 31, 2021, respectively.
CNX's interest expense is sensitive to changes in the general level of interest rates in the United States. The Company uses derivative instruments to manage risk related to interest rates. These instruments change the variable-rate cash flow exposure on the debt obligations to fixed cash flows. At June 30, 2022 and December 31, 2021, CNX had $1,910 million and $1,839 million, respectively, aggregate principal amount of debt outstanding under fixed-rate instruments, including
unamortized debt issuance costs of $15 million each. At June 30, 2022 and December 31, 2021, CNX had $322 million and $377 million, respectively, of debt outstanding under variable-rate instruments. CNX’s primary exposure to market risk for changes in interest rates relates to CNX's revolving credit facility, under which there were $134 million of borrowings at June 30, 2022 and $192 million at December 31, 2021, and CNXM's revolving credit facility, under which there were $188 million of borrowings at June 30, 2022 and $185 million at December 31, 2021. A hypothetical 100 basis-point increase in the average rate for CNX's variable-rate instruments would decrease pre-tax future earnings as of June 30, 2022 and December 31, 2021 by $3 million and $4 million, respectively, on an annualized basis.
All of the Company’s transactions are denominated in U.S. dollars and, as a result, it does not have material exposure to currency exchange-rate risks.
Natural Gas Hedging Volumes
As of July 7, 2022, the Company's hedged volumes for the periods indicated are as follows:
| For the Three Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| March 31, | June 30, | September 30, | December 31, | Total Year | ||||||
| 2022 Fixed Price Volumes* | ||||||||||
| Hedged Bcf | N/A | N/A | 125.3 | 118.0 | 243.3 | |||||
| Weighted Average Hedge Price per Mcf | N/A | N/A | $ | 2.34 | $ | 2.41 | $ | 2.37 | ||
| 2023 Fixed Price Volumes | ||||||||||
| Hedged Bcf | 100.0 | 111.3 | 112.5 | 112.5 | 417.2** | |||||
| Weighted Average Hedge Price per Mcf | $ | 2.66 | $ | 2.44 | $ | 2.44 | $ | 2.48 | $ | 2.47 |
| 2024 Fixed Price Volumes | ||||||||||
| Hedged Bcf | 94.5 | 92.1 | 93.1 | 93.1 | 368.4** | |||||
| Weighted Average Hedge Price per Mcf | $ | 2.32 | $ | 2.33 | $ | 2.33 | $ | 2.33 | $ | 2.32 |
| 2025 Fixed Price Volumes | ||||||||||
| Hedged Bcf | 85.2 | 91.0 | 92.0 | 92.0 | 354.1** | |||||
| Weighted Average Hedge Price per Mcf | $ | 2.39 | $ | 2.44 | $ | 2.44 | $ | 2.44 | $ | 2.41 |
| 2026 Fixed Price Volumes | ||||||||||
| Hedged Bcf | 67.2 | 77.3 | 78.0 | 78.0 | 300.5 | |||||
| Weighted Average Hedge Price per Mcf | $ | 2.61 | $ | 2.68 | $ | 2.68 | $ | 2.68 | $ | 2.66 |
| 2027 Fixed Price Volumes | ||||||||||
| Hedged Bcf | 17.3 | 17.5 | 17.6 | 17.6 | 70.0 | |||||
| Weighted Average Hedge Price per Mcf | $ | 3.34 | $ | 3.34 | $ | 3.34 | $ | 3.34 | $ | 3.34 |
*Excludes purchased swaps. The Company's purchased swaps are as follows:
| For the Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| September 30, | December 31, | |||||
| Purchased Basis Swaps | 2022 | 2022 | Total Year | |||
| Hedged Bcf | $ | 6.7 | 2.3 | 9.0 | ||
| Weighted Average Fixed Price per Mcf | $ | (1.13) | $ | (1.13) | $ | (1.13) |
**Quarterly volumes do not add to annual volumes inasmuch as a discrete condition in individual quarters, where basis hedge volumes exceed NYMEX hedge volumes, does not exist for the year taken as a whole.
ITEM 4.CONTROLS AND PROCEDURES
Disclosure controls and procedures. CNX, under the supervision and with the participation of its management, including CNX’s principal executive officer and principal financial officer, evaluated the effectiveness of the Company’s "disclosure controls and procedures," as such term is defined in Rule 13a-15(e) under the Exchange Act, as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, CNX’s principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures are effective as of June 30, 2022 to ensure that information required to be disclosed by CNX in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and includes controls and procedures designed to ensure that information required to be disclosed by CNX in such reports is
accumulated and communicated to CNX’s management, including CNX’s principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in internal controls over financial reporting. There were no changes in the Company's internal controls over financial reporting that occurred during the fiscal quarter covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II: OTHER INFORMATION
ITEM 1.LEGAL PROCEEDINGS
The first through the third paragraphs of Note 10 – Commitments and Contingent Liabilities in the Notes to the Unaudited Consolidated Financial Statements included in Item 1 of this Form 10-Q are incorporated herein by reference.
From time to time, CNX and federal, state, and local regulatory agencies that oversee CNX’s activities enter into agreements regarding notices of noncompliance. CNX is currently not aware of any significant legal or governmental proceedings contemplated to be brought against us, under the various environmental protection statutes to which the Company is subject to, that would have a material effect on future financial results.
ITEM 1A. RISK FACTORS
The financial conditions and operating results of the Company can be affected by a number of factors, whether currently known or unknown, including but not limited to those described in "Item 1A. Risk Factors" in CNX's 2021 Form 10-K. The risks described could materially and adversely affect CNX's business, financial condition, cash flows, and results of operations. CNX may experience additional risks and uncertainties not currently known; or, as a result of developments occurring in the future, conditions that are currently deemed to be immaterial may also materially and adversely affect CNX's business, financial condition, cash flows, and results of operations. There have been no material changes to the Company’s risk factors since the 2021 Form 10-K was filed.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table sets forth repurchases of our common stock during the three months ended June 30, 2022:
| ISSUER PURCHASES OF EQUITY SECURITIES | ||||||
|---|---|---|---|---|---|---|
| Period | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (000's omitted) | ||
| April 1, 2022-<br>April 30, 2022 | 236,981 | $ | 21.33 | 234,195 | $ | 858,637 |
| May 1, 2022-<br>May 31, 2022 | 1,496,370 | $ | 19.38 | 1,495,159 | $ | 829,661 |
| June 1, 2022-<br>June 30, 2022 | 2,101,320 | $ | 17.12 | 2,101,320 | $ | 793,696 |
| Total | 3,834,671 | 3,830,674 |
(1) Includes shares withheld from employees to satisfy minimum tax withholding obligations associated with the vesting of restricted stock during the period.
(2) Shares repurchased as part of the Company's current $1,900 million share repurchase program authorized by the Board of Directors, which is not subject to an expiration date. See Note 14 – Stock Repurchase in the Notes to the Unaudited Consolidated Financial Statements in Item 1 of this Form 10-Q for more information.
ITEM 6.EXHIBITS
* Filed herewith
In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are being furnished and not filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Dated: July 28, 2022
| CNX RESOURCES CORPORATION | ||
|---|---|---|
| By: | /S/ NICHOLAS J. DEIULIIS | |
| Nicholas J. DeIuliis | ||
| Director, Chief Executive Officer and President<br>(Duly Authorized Officer and Principal Executive Officer) | ||
| By: | /S/ ALAN K. SHEPARD | |
| Alan K. Shepard | ||
| Chief Financial Officer<br>(Duly Authorized Officer and Principal Financial and Accounting Officer) | ||
| By: | /S/ JASON L. MUMFORD | |
| Jason L. Mumford | ||
| Vice President and Controller |
1
58
Document
Execution Version
AMENDMENT NO. 1
This AMENDMENT NO. 1, dated as of May 5, 2022 (this “Amendment”), amends the Third Amended and Restated Credit Agreement, dated as of October 6, 2021 (as amended, restated, supplemented or otherwise modified from time to time prior to the date hereof, the “Credit Agreement”), by and among CNX Resources Corporation (the “Borrower”), the guarantors party thereto, the lenders party thereto, and PNC Bank, National Association, as administrative agent for the Lenders (the “Administrative Agent”) and as collateral agent (the “Collateral Agent” and, together with the Administrative Agent, the “Agents”). Capitalized terms used but not defined herein shall have the meanings given them in the Credit Agreement as amended by this Amendment.
WITNESSETH
WHEREAS, the Borrower desires to amend the Credit Agreement on the terms set forth herein;
WHEREAS, PNC Capital Markets LLC is acting as lead arranger and joint bookrunner for this Amendment.
NOW, THEREFORE, the parties hereto, in consideration of the mutual covenants and agreements herein contained and intending to be legally bound hereby, covenant and agree as follows:
1.Redetermination. From and after the Redetermination Effective Date (as defined below) to the date of the next redetermination of the Borrowing Base pursuant to Section 2.9 of the Credit Agreement, the Borrowing Base shall be $2,250,000,000.
2.Credit Agreement Amendments. Effective as of the Amendment No. 1 Effective Date, (a) the Credit Agreement is hereby amended to be as set forth in the conformed copy of the Credit Agreement attached as Exhibit A hereto and (b) Exhibit 2.5.1 to the Credit Agreement is hereby amended to be as set forth in the conformed copy of such exhibit attached as Exhibit B hereto.
3.Conditions Precedent.
(a)Redetermination Effective Date. Section 1 of this Amendment shall be effective upon receipt by the Administrative Agent of consents to the redetermination of the Borrowing Base, in a form reasonably satisfactory to the Administrative Agent, from the Required Increasing Borrowing Base Lenders (the date of such effectiveness, the “Redetermination Effective Date”).
(b)Amendment No. 1 Effective Date. Section 2 of this Amendment shall be effective upon satisfaction of each of the following conditions (the date of such effectiveness, the “Amendment No. 1 Effective Date”):
(i)Execution and Delivery of Amendment. The Borrower, the Guarantors and the Agents shall have executed and delivered this Amendment and (ii) the Administrative Agent shall have received consents to this Amendment, in a form reasonably satisfactory to the Administrative Agent, executed and delivered by all Lenders.
(ii)Officer’s Certificate. The representations and warranties of each of the Loan Parties contained in the Loan Documents shall be true and correct in all material respects on and as of the Amendment No. 1 Effective Date with the same effect as though such representations and warranties had been made on and as of such date (except (i) that any representation and warranty that is already qualified as to materiality shall be true and correct in all respects as so qualified and (ii) representations and warranties which expressly relate solely to an earlier date or time, which representations and warranties shall be true and correct on and as of the specific dates or times referred to therein); no Event of Default or Potential Default shall have occurred and be continuing; since December 31, 2021, there shall not have occurred any event or condition that has had or could be reasonably expected, either individually or in the aggregate, to constitute a Material Adverse Change; and there shall be delivered to the Administrative Agent for the benefit of each Lender a certificate of the Borrower, dated the Amendment No. 1 Effective Date and signed by a Responsible Officer or Authorized Officer of the Borrower, to each such effect.
(iii)Secretary's Certificate. The Administrative Agent shall have received one or more certificates dated the Amendment No. 1 Effective Date and signed by an Authorized Officer of each of the Loan Parties, certifying (A) that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors of such Loan Party (or its managing general partner, managing member or equivalent) authorizing the execution, delivery and performance of this Amendment and the other Loan Documents to be executed and delivered in connection herewith, and that such resolutions have not been modified, rescinded or amended and are in full force and effect on the Amendment No. 1 Effective Date; (B) the names of the officer or officers authorized to sign this Amendment and the other Loan Documents to be executed and delivered in connection herewith and the true signatures of such officer or officers and specifying the Authorized Officers permitted to act on behalf of such Loan Party for purposes of this Amendment and such other Loan Documents and the true signatures of such officers, on which the Administrative Agent, the Issuing Lenders, and each Lender may conclusively rely; and (C) copies of its organizational documents, including its certificate of incorporation, bylaws, certificate of limited partnership, partnership agreement, certificate of formation, and limited liability company agreement as in effect on the Amendment No. 1 Effective Date, recently certified by the appropriate state official where such documents are filed in a state office (or, in the alternative, certifying that such organizational documents have not been amended since the latest delivery of such organizational documents pursuant to Section 7.1.1(b)(iii) of the Credit Agreement or pursuant to a condition precedent to effectiveness of an amendment to the Credit Agreement, and that such organizational documents are in full force and effect), together with recently dated certificates from the appropriate state officials as to the continued existence and good standing of such Loan Party in each state where organized.
(iv)Fees and Expenses. All fees and expenses payable on or before the Amendment No. 1 Effective Date by the Borrower to the Administrative Agent (or its Affiliates) in connection with this Amendment shall have been paid, including the reasonable fees, charges and disbursements of counsel for the Administrative Agent.
4.Full Force and Effect; Reaffirmation. All of the terms, conditions, representations, warranties and covenants contained in the Loan Documents shall continue in full
-2-
force and effect, in each case, as expressly modified by this Amendment. This Amendment shall constitute a Loan Document for purposes of the Credit Agreement (as amended by this Amendment) and the other Loan Documents. All references to the Credit Agreement in any Loan Document, unless expressly provided otherwise, shall mean and be a reference to the Credit Agreement as amended by this Amendment. Each Loan Party, by its signature below, hereby affirms and confirms that, after giving effect to this Amendment, (i) its obligations under each of the Loan Documents to which it is a party and (ii) its guarantee of the Obligations and the pledge of and/or grant of a security interest in its assets as Collateral to secure the Obligations, and acknowledges and agrees that such guarantee, pledge and/or grant continue in full force and effect in respect of, and to secure, the Obligations. The amendment of the Credit Agreement pursuant to this Amendment and all other Loan Documents amended and/or executed and delivered in connection herewith is not intended to, and shall not, constitute a novation of the Credit Agreement or any of the other Loan Documents as in effect immediately prior to the Amendment No. 1 Effective Date.
5.Counterparts. This Amendment may be executed by different parties hereto in any number of separate counterparts, each of which, when so executed and delivered shall be an original and all such counterparts shall together constitute one and the same instrument. Delivery of an executed counterpart of this Amendment by telecopy or e-mail shall be effective as delivery of a manually executed counterpart of this Amendment.
6.Severability. If any term of this Amendment or any application thereof shall be held to be invalid, illegal or unenforceable, the validity of other terms of this Amendment or any other application of such term shall in no way be affected thereby.
7.Entire Agreement. This Amendment sets forth the entire agreement and understanding of the parties with respect to the subject matter hereof and supersedes all prior understandings and agreements, whether written or oral, among the parties hereto relating to such subject matter. For the avoidance of doubt, there are no unwritten oral agreements among the parties hereto. No representation, promise, inducement or statement of intention has been made by any party that is not embodied in this Amendment, and no party shall be bound by or liable for any alleged representation, promise, inducement or statement of intention not set forth herein.
8.Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of New York. The provisions of Section 11.11.2 through 11.11.5 of the Credit Agreement shall apply to this Amendment mutatis mutandis.
[SIGNATURE PAGES FOLLOW]
-3-
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly authorized, have executed this Amendment as of the day and year first above written.
CNX RESOURCES CORPORATION
By:
Name:
Title:
GUARANTORS:
CARDINAL STATES GATHERING COMPANY LLC
CNX GAS COMPANY LLC
CNX GAS HOLDINGS, INC.
CNX GAS LLC
CNX GATHERING LLC
CNX LAND LLC
CNX RESOURCE HOLDINGS LLC
CNX WATER ASSETS LLC
CSG HOLDINGS I LLC
CSG HOLDINGS II LLC
CSG HOLDINGS III LLC
POCAHONTAS GAS LLC
By:
Name:
Title:
[Signature Page to Amendment No. 1 to CNX Credit Agreement]
PNC BANK, NATIONAL ASSOCIATION, as Administrative Agent, Collateral Agent and as a Lender
By:
Name:
Title:
[Signature Page to Amendment No. 1 to CNX Credit Agreement]
Exhibit A
Conformed Credit Agreement
(see attached)
Exhibit B
Conformed Form of Loan Notice; Rate Request
(see attached)
Exhibit A to Amendment No. 1
DEAL CUSIP #12653FAA9
REVOLVING CREDIT FACILITY CUSIP #12653FAB7
REVOLVING CREDIT FACILITY
THIRD AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of October 6, 2021, as amended as of May 5, 2022,
by and among
CNX RESOURCES CORPORATION
and
THE GUARANTORS PARTY HERETO FROM TIME TO TIME
and
THE LENDERS PARTY HERETO FROM TIME TO TIME
and
PNC BANK, NATIONAL ASSOCIATION, as the Administrative Agent and the Collateral Agent
_________________
BANK OF AMERICA, N.A., CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK BRANCH, CITIBANK, N.A., JPMORGAN CHASE BANK, N.A., MUFG BANK, LTD., TD SECURITIES (USA) LLC, TRUIST BANK and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Co-Syndication Agents
PNC CAPITAL MARKETS LLC, BOFA SECURITIES, INC., CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK BRANCH, CITIBANK, N.A., JPMORGAN CHASE BANK, N.A., MUFG BANK, LTD., TD SECURITIES (USA) LLC, TRUIST SECURITIES, INC. and WELLS FARGO SECURITIES, LLC, as Joint Lead Arrangers and Joint Bookrunners
TABLE OF CONTENTS
Page
| 1. CERTAIN DEFINITIONS | |
|---|---|
| 1.1 Certain Definitions. | 1 |
| 1.2 Construction. | 54 |
| 1.3 Accounting Principles. | 55 |
| 1.4 Valuations. | 55 |
| 1.5 Letter of Credit Amounts. | 56 |
| 1.6 Interest Rates. | 56 |
| 2. REVOLVING CREDIT AND SWING LOAN FACILITIES | |
| 2.1 Commitments. | 56 |
| 2.1.1 Revolving Credit Loans. | 56 |
| 2.1.2 Swing Loans. | 58 |
| 2.2 Nature of Lenders’ Obligations with Respect to Revolving Credit Loans. | 58 |
| 2.3 Commitment Fees. | 58 |
| 2.4 Commitment Reduction. | 59 |
| 2.4.1 Voluntary. | 59 |
| 2.4.2 Mandatory. | 59 |
| 2.4.3 Effect of Commitment Reduction. | 59 |
| 2.5 Loan Requests. | 60 |
| 2.5.1 Revolving Credit Loan Requests. | 60 |
| 2.5.2 Swing Loan Requests. | 60 |
| 2.6 Making and Repayment of Loans. | 60 |
| 2.6.1 Making Revolving Credit Loans. | 60 |
| 2.6.2 Presumptions by the Administrative Agent. | 61 |
| 2.6.3 Making Swing Loans. | 61 |
| 2.6.4 Repayment of Loans. | 61 |
| 2.7 Notes. | 61 |
| 2.7.1 Revolving Credit Notes. | 61 |
| 2.7.2 Swing Loan Note. | 62 |
| 2.8 Use of Proceeds. | 62 |
| 2.9 Borrowing Base. | 62 |
| 2.10 Letters of Credit. | 64 |
| 2.10.1 Issuance of Letters of Credit. | 64 |
| 2.10.2 Letter of Credit Fees. | 65 |
| 2.10.3 Participations, Disbursements, Reimbursement. | 66 |
| 2.10.4 Repayment of Participation Advances. | 67 |
| 2.10.5 Documentation. | 67 |
| 2.10.6 Determinations to Honor Drawing Requests. | 68 |
| 2.10.7 Nature of Participation and Reimbursement Obligations. | 68 |
| 2.10.8 Indemnity. | 69 |
| 2.10.9 Liability for Acts and Omissions. | 69 |
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| 2.10.10 Cash Collateral Prior to the Expiration Date. | 71 |
|---|---|
| 2.10.11 Issuing Lender Reporting Requirements. | 71 |
| 2.11 Borrowings to Repay Swing Loans. | 71 |
| 2.12 Increase in Revolving Credit Commitments. | 72 |
| 2.13 Defaulting Lenders. | 74 |
| 3. [RESERVED] | |
| 4. INTEREST RATES | |
| 4.1 Interest Rate Options. | 75 |
| 4.1.1 Interest Rate Options; Swing Line Interest Rate. | 75 |
| 4.1.2 Rate Quotations. | 76 |
| 4.1.3 Conforming Changes Relating to Term SOFR Rate. | 76 |
| 4.2 Interest Periods. | 76 |
| 4.3 Interest After Default. | 77 |
| 4.4 Term SOFR Rate Unascertainable; Illegality; Increased Costs. | 77 |
| 4.4.1 Unascertainable. | 77 |
| 4.4.2 Illegality; Increased Costs. | 77 |
| 4.4.3 Administrative Agent’s and Lender’s Rights. | 78 |
| 4.5 Selection of Interest Rate Options. | 78 |
| 4.6 Benchmark Replacement Setting. | 78 |
| 5. PAYMENTS | |
| 5.1 Payments. | 82 |
| 5.2 Pro Rata Treatment of Lenders. | 83 |
| 5.3 Sharing of Payments by Lenders. | 83 |
| 5.4 Presumptions by Administrative Agent. | 84 |
| 5.5 Interest Payment Dates. | 84 |
| 5.6 Prepayments. | 84 |
| 5.6.1 Right to Prepay. | 84 |
| 5.6.2 Replacement of a Lender. | 85 |
| 5.6.3 Designation of a Different Lending Office. | 86 |
| 5.6.4 Mandatory Prepayments. | 86 |
| 5.7 Increased Costs. | 87 |
| 5.7.1 Increased Costs Generally. | 87 |
| 5.7.2 Capital Requirements. | 87 |
| 5.7.3 Certificates for Reimbursement; Repayment of Outstanding Loans; Borrowing of New Loans. | 88 |
| 5.7.4 Delay in Requests. | 88 |
| 5.8 Taxes. | 88 |
| 5.8.1 Payments Free of Taxes. | 88 |
| 5.8.2 Payment of Other Taxes by the Borrower. | 89 |
| 5.8.3 Indemnification by the Borrower. | 89 |
| 5.8.4 Evidence of Payments. | 89 |
| 5.8.5 Status of Lenders. | 89 |
| 5.8.6 Refunds. | 91 |
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| 5.8.7 Definition of Lender. | 91 |
|---|---|
| 5.8.8 Administrative Agent Forms. | 91 |
| 5.9 Indemnity. | 91 |
| 5.10 Settlement Date Procedures. | 92 |
| 5.11 Borrowing Base Deficiency. | 93 |
| 6. REPRESENTATIONS AND WARRANTIES | |
| 6.1 Organization and Qualification. | 93 |
| 6.2 EEA Financial Institutions. | 94 |
| 6.3 Subsidiaries. | 94 |
| 6.4 Power and Authority. | 94 |
| 6.5 Validity and Binding Effect. | 94 |
| 6.6 No Conflict. | 94 |
| 6.7 Litigation. | 95 |
| 6.8 Title to Properties. | 95 |
| 6.9 Financial Statements. | 95 |
| 6.10 Use of Proceeds. | 96 |
| 6.11 Liens in the Collateral. | 96 |
| 6.12 Full Disclosure. | 97 |
| 6.13 Taxes. | 97 |
| 6.14 Consents and Approvals. | 98 |
| 6.15 No Event of Default; Compliance with Instruments. | 98 |
| 6.16 Patents, Trademarks, Copyrights, Licenses, Permits, Etc. | 98 |
| 6.17 Solvency. | 98 |
| 6.18 Producing Wells. | 98 |
| 6.19 Insurance. | 99 |
| 6.20 Compliance with Laws. | 99 |
| 6.21 Material Contracts; Burdensome Restrictions. | 99 |
| 6.22 Investment Companies; Regulated Entities. | 99 |
| 6.23 ERISA Compliance. | 99 |
| 6.24 Employment Matters. | 100 |
| 6.25 Environmental Matters. | 100 |
| 6.26 Anti-Terrorism Laws | 101 |
| 6.27 Gas Imbalances. | 101 |
| 7. CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT | |
| 7.1 First Loans and Letters of Credit. | 101 |
| 7.1.1 Deliveries. | 101 |
| 7.1.2 Payment of Fees. | 104 |
| 7.1.3 USA PATRIOT Act. | 104 |
| 7.2 Each Additional Loan or Letter of Credit. | 104 |
| 8. COVENANTS | |
| 8.1 Affirmative Covenants. | 105 |
| 8.1.1 Preservation of Existence, Etc. | 105 |
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| 8.1.2 Payment of Liabilities, Including Taxes, Etc. | 105 |
|---|---|
| 8.1.3 Maintenance of Insurance. | 105 |
| 8.1.4 Maintenance of Properties and Equipment. | 106 |
| 8.1.5 Maintenance of Patents, Trademarks, Etc. | 106 |
| 8.1.6 Visitation Rights. | 107 |
| 8.1.7 Keeping of Records and Books of Account. | 107 |
| 8.1.8 Further Assurances. | 107 |
| 8.1.9 Additional Guarantors. | 107 |
| 8.1.10 Compliance with Laws. | 108 |
| 8.1.11 Use of Proceeds. | 108 |
| 8.1.12 Subordination of Intercompany Loans. | 108 |
| 8.1.13 Anti-Terrorism Laws; Anti-Corruption Laws. | 108 |
| 8.1.14 Compliance with Certain Contracts. | 109 |
| 8.1.15 Certain Additional Assurances Regarding Maintenance and Operations of Properties. | 109 |
| 8.1.16 [Reserved]. | 110 |
| 8.1.17 Collateral. | 110 |
| 8.1.18 Title Information. | 113 |
| 8.1.19 Maintenance of Permits. | 113 |
| 8.1.20 Post-Closing Matters. | 113 |
| 8.1.21 Accounts. | 114 |
| 8.2 Negative Covenants. | 114 |
| 8.2.1 Indebtedness. | 114 |
| 8.2.2 Liens. | 116 |
| 8.2.3 Designation of Unrestricted Subsidiaries. | 116 |
| 8.2.4 Loans and Investments. | 117 |
| 8.2.5 Restricted Payments. | 119 |
| 8.2.6 Liquidations, Mergers, Consolidations, Acquisitions. | 120 |
| 8.2.7 Dispositions. | 121 |
| 8.2.8 Affiliate Transactions. | 123 |
| 8.2.9 Change in Business. | 125 |
| 8.2.10 Fiscal Year. | 125 |
| 8.2.11 Amendments to Organizational Documents; Amendments or Prepayments of Certain Other Indebtedness. | 125 |
| 8.2.12 Swaps. | 126 |
| 8.2.13 Sale of Proved Reserves; Pooling. | 127 |
| 8.2.14 Financial Covenants. | 128 |
| 8.2.15 Restrictions on Distributions from Restricted Subsidiaries. | 129 |
| 8.2.16 Negative Pledge Agreements. | 130 |
| 8.2.17 Anti-Hoarding. | 132 |
| 8.3 Reporting Requirements. | 133 |
| 8.3.1 Quarterly Financial Statements. | 133 |
| 8.3.2 Annual Financial Statements. | 133 |
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| 8.3.3 SEC Website. | 133 |
|---|---|
| 8.3.4 Certificate of the Borrower. | 133 |
| 8.3.5 Notice of Default. | 134 |
| 8.3.6 Certain Events. | 134 |
| 8.3.7 Budgets, Forecasts, Other Reports and Information. | 134 |
| 8.3.8 Reserve Reports. | 135 |
| 9. DEFAULT | |
| 9.1 Events of Default. | 136 |
| 9.1.1 Payments Under Loan Documents. | 136 |
| 9.1.2 Breach of Warranty. | 137 |
| 9.1.3 Breach of Certain Covenants. | 137 |
| 9.1.4 Breach of Other Covenants. | 137 |
| 9.1.5 Defaults in Other Agreements or Indebtedness. | 137 |
| 9.1.6 Final Judgments or Orders. | 137 |
| 9.1.7 Loan Document Unenforceable. | 138 |
| 9.1.8 Inability to Pay Debts. | 138 |
| 9.1.9 ERISA. | 138 |
| 9.1.10 Change of Control. | 138 |
| 9.1.11 [Reserved]. | 138 |
| 9.1.12 Involuntary Proceedings. | 138 |
| 9.1.13 Voluntary Proceedings. | 139 |
| 9.2 Consequences of Event of Default. | 139 |
| 9.2.1 Events of Default Other Than Bankruptcy, Insolvency or Reorganization Proceedings. | 139 |
| 9.2.2 Bankruptcy, Insolvency or Reorganization Proceedings. | 139 |
| 9.2.3 Set-off. | 139 |
| 9.2.4 [Reserved]. | 140 |
| 9.2.5 Application of Proceeds. | 140 |
| 9.2.6 Collateral Agent. | 141 |
| 9.2.7 Other Rights and Remedies. | 141 |
| 9.3 Notice of Sale. | 142 |
| 10. THE AGENTS | |
| 10.1 Appointment and Authority. | 142 |
| 10.2 Rights as a Lender. | 142 |
| 10.3 Exculpatory Provisions. | 142 |
| 10.4 Reliance by Agents. | 143 |
| 10.5 Delegation of Duties. | 144 |
| 10.6 Resignation of Agents. | 144 |
| 10.7 Non-Reliance on Agents and Other Lenders. | 145 |
| 10.8 No Other Duties, Etc. | 145 |
| 10.9 Administrative Agent’s Fee. | 145 |
| 10.10 Authorization to Release Collateral and Guarantors. | 145 |
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| 10.11 No Reliance on Administrative Agent’s Customer Identification Program. | 146 |
|---|---|
| 10.12 Withholding Tax. | 147 |
| 10.13 Certain ERISA Matters. | 147 |
| 10.14 Erroneous Payments. | 148 |
| 11. MISCELLANEOUS | |
| 11.1 Modifications, Amendments or Waivers. | 150 |
| 11.1.1 Required Consents. | 150 |
| 11.1.2 Certain Amendments. | 152 |
| 11.1.3 Amendments Affecting the Administrative Agent, Etc. | 152 |
| 11.1.4 Non-Consenting Lenders. | 152 |
| 11.1.5 Defaulting Lenders. | 152 |
| 11.2 No Implied Waivers; Cumulative Remedies. | 153 |
| 11.3 Expenses; Indemnity; Damage Waiver. | 153 |
| 11.3.1 Costs and Expenses. | 153 |
| 11.3.2 Indemnification by the Borrower. | 153 |
| 11.3.3 Reimbursement by Lenders. | 154 |
| 11.3.4 Waiver of Consequential Damages, Etc. | 154 |
| 11.3.5 Payments. | 155 |
| 11.4 Holidays. | 155 |
| 11.5 Notices; Effectiveness; Electronic Communication. | 155 |
| 11.5.1 Notices Generally. | 155 |
| 11.5.2 Electronic Communications. | 155 |
| 11.5.3 Change of Address, Etc. | 156 |
| 11.6 Severability. | 156 |
| 11.7 Duration; Survival. | 156 |
| 11.8 Successors and Assigns. | 156 |
| 11.8.1 Successors and Assigns Generally. | 156 |
| 11.8.2 Assignments by Lenders. | 157 |
| 11.8.3 Register. | 158 |
| 11.8.4 Participations. | 158 |
| 11.8.5 Certain Pledges; Successors and Assigns Generally. | 159 |
| 11.8.6 Resignation as Issuing Lender or Swingline Lender after Assignment. | 159 |
| 11.9 Confidentiality. | 160 |
| 11.9.1 General. | 160 |
| 11.9.2 Sharing Information With Affiliates of the Lenders. | 161 |
| 11.10 Counterparts; Integration; Effectiveness. | 161 |
| 11.11 Governing Law, Etc. | 162 |
| 11.11.1 Governing Law. | 162 |
| 11.11.2 SUBMISSION TO JURISDICTION. | 162 |
| 11.11.3 WAIVER OF VENUE. | 162 |
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| 11.11.4 SERVICE OF PROCESS. | 163 |
|---|---|
| 11.11.5 WAIVER OF JURY TRIAL. | 163 |
| 11.12 Certain Collateral Matters. | 163 |
| 11.13 USA PATRIOT Act Notice. | 163 |
| 11.14 No Fiduciary Duty. | 163 |
| 11.15 Amendment and Restatement. | 164 |
| 11.16 Acknowledgment and Consent to Bail-In of Affected Financial Institutions. | 165 |
| 11.17 Acknowledgement Regarding Any Supported QFCs. | 165 |
LIST OF SCHEDULES AND EXHIBITS
SCHEDULES
Schedule 1.1(A) Pricing Grid
Schedule 1.1(B) Commitments of Lenders
Schedule 1.1(L) Letter of Credit Issuing Lender Sublimit
Schedule 1.1(P) Patent, Trademark and Copyright Security Agreements
Schedule 1.1(R) Real Property
Schedule 1.1(S) Specified Swap Agreements
Schedule 1.1(T) Real Property as of the Amendment No. 1 Effective Date
Schedule 2.10.1 Existing Letters of Credit
Schedule 6.1 Qualifications To Do Business
Schedule 6.3 Subsidiaries
Schedule 6.11 Pledged Securities
Schedule 7.1.1(k) Lien Searches
Schedule 8.1.17 Excluded Properties
Schedule 8.1.20 Post-Closing Matters
Schedule 8.2.1 Existing Indebtedness
Schedule 8.2.2 Existing Liens
Schedule 8.2.4 Existing Investments
Schedule 8.2.8 Existing Affiliate Transactions
Schedule 8.2.15 Existing Restrictions on Subsidiaries
Schedule 8.2.16 Existing Negative Pledge Agreements
Schedule 11.5.1 Notice Information
EXHIBITS
Exhibit 1.1(A) Assignment and Assumption Agreement
Exhibit 1.1(B) New Lender Joinder
Exhibit 1.1(G)(1) Guarantor Joinder
Exhibit 1.1(G)(2) Guaranty Agreement
Exhibit 1.1(I)(1) Indemnity
Exhibit 1.1(I)(2) Intercompany Subordination Agreement
Exhibit 1.1(M) Mortgage
Exhibit 1.1(N)(1) Revolving Credit Note
Exhibit 1.1(N)(2) Swing Loan Note
Exhibit 1.1(P)(1) Perfection Certificate
Exhibit 1.1(P)(2) Perfection Certificate Supplement
Exhibit 2.5.1 Loan Request
Exhibit 2.5.2 Swing Loan Request
Exhibit 8.2.6 Acquisition Certificate
Exhibit 8.3.4 Quarterly Compliance Certificate
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THIRD AMENDED AND RESTATED CREDIT AGREEMENT
THIS THIRD AMENDED AND RESTATED CREDIT AGREEMENT (the “Agreement”) is dated as of October 6, 2021, as amended as of May 5, 2022, and is made by and among CNX RESOURCES CORPORATION, a Delaware corporation (the “Borrower”), EACH OF THE GUARANTORS (as hereinafter defined), the LENDERS (as hereinafter defined), and PNC BANK, NATIONAL ASSOCIATION, as administrative agent for the Lenders under this Agreement (in such capacity, the “Administrative Agent”) and as collateral agent for the Lenders and the other Secured Parties (in such capacity, the “Collateral Agent”).
WITNESSETH:
WHEREAS, the Borrower, certain of its Subsidiaries, the lenders party thereto, JPMorgan Chase Bank, N.A., in its capacity as syndication agent, and PNC Bank, National Association, in its capacity as administrative agent, are party to that certain Second Amended and Restated Credit Agreement, dated as of March 8, 2018 (as amended prior to the date hereof, the “Existing Credit Agreement”);
WHEREAS, the Borrower has requested that the Lenders amend and restate the Existing Credit Agreement as set forth herein;
WHEREAS, the Lenders agree to amend and restate the Existing Credit Agreement subject to the terms and conditions in this Agreement;
WHEREAS, the liens, security interests and guaranties securing and supporting the Existing Credit Agreement shall continue to secure and support the Obligations as amended and restated pursuant to this Agreement; and
WHEREAS, as of the Amendment No. 1 Effective Date, immediately prior to the effectiveness of Amendment No. 1, (x) Revolving Credit Loans in an aggregate principal amount of $185,000,000 were outstanding (the “Amendment No. 1 Existing Revolving Credit A Loans”), which bear interest as of the Amendment No. 1 Effective Date at a rate per annum equal to 2.81% (which represents the LIBOR Rate plus the Applicable Margin for Loans to which the LIBOR Rate Option applies (each such term as defined in this Agreement as of immediately prior to effectiveness of Amendment No. 1)) (the “Amendment No. 1 Existing Interest Rate A”) with a one-month Interest Period ending on June 1, 2022 (the “Amendment No. 1 Existing Interest Period Termination Date A” and such Interest Period, the “Amendment No. 1 Existing Interest Period A”) and (y) Revolving Credit Loans in an aggregate principal amount of $93,000,000 were outstanding (the “Amendment No. 1 Existing Revolving Credit B Loans” and together with the Amendment No. 1 Existing Revolving Credit A Loans, the “Amendment No. 1 Existing Revolving Credit Loans”), which bear interest as of the Amendment No. 1 Effective Date at a rate per annum equal to 2.56% (which represents the LIBOR Rate plus the Applicable Margin for Loans to which the LIBOR Rate Option applies (each such term as defined in this Agreement as of immediately prior to effectiveness of Amendment No. 1)) (the “Amendment No. 1 Existing Interest Rate B”) with a one-month Interest Period ending on May 16, 2022 (the “Amendment No. 1 Existing Interest Period Termination Date B” and such Interest Period, the “Amendment No. 1 Existing Interest Period B”). The Amendment No. 1 Existing Loans remained outstanding upon the effectiveness of the Amendment No. 1.
NOW, THEREFORE, the parties hereto, in consideration of their mutual covenants and agreements hereinafter set forth and intending to be legally bound hereby, covenant and agree as follows:
- CERTAIN DEFINITIONS
1.aCertain Definitions.
In addition to words and terms defined elsewhere in this Agreement, the following words and terms shall have the following meanings, respectively, unless the context hereof clearly requires otherwise:
“Account” shall have the meaning set forth in the Security Agreement.
“Acquisition Swap Agreements” shall have the meaning assigned to such term in Section 8.2.12(b) [Swaps].
“Adjusted Term SOFR” shall mean the Term SOFR Rate as determined as provided in the definition thereof plus the SOFR Adjustment. If Adjusted Term SOFR would be less than the SOFR Floor, then Adjusted Term SOFR shall be deemed to be the SOFR Floor.
“Administrative Agent” shall have the meaning specified in the preamble hereto.
“Administrative Agent’s Fee” shall have the meaning specified in Section 10.9 [Administrative Agent’s Fee].
“Administrative Agent’s Letter” shall have the meaning specified in Section 10.9 [Administrative Agent’s Fee].
“Affected Financial Institution” shall mean (a) any EEA Financial Institution or (b) any UK Financial Institution.
“Affiliate” of any specified Person shall mean any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. 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 Stock, by agreement or otherwise. For purposes of this definition, the terms “controlling,” “controlled by” and “under common control with” have correlative meanings.
“Affiliate Transaction” shall have the meaning assigned to such term in Section 8.2.8 [Affiliate Transactions].
“Agents” shall mean, collectively, the Administrative Agent and the Collateral Agent. The term “Agent” shall mean any of the Agents.
“Agreement” shall have the meaning specified in the preamble hereto.
“Alternate Reserve Report” shall mean a report, in form and detail reasonably satisfactory to the Administrative Agent and the Applicable Borrowing Base Lenders, on reserves updated internally by petroleum engineers who are employees or agents of a Loan Party making adjustments for any changes in production volumes, expenses, and for dispositions of properties subsequent to the effective date of the information contained in, and based upon, the immediately preceding Reserve Report and, at the Borrower’s option, for any acquisitions of properties not included in the immediately preceding Reserve Report or the restoration to the Borrowing Base Properties of properties previously removed from the Borrowing Base Properties by the Borrower.
“Alternate Source” has the meaning specified in the definition of “Federal Funds Open Rate.”
“Amendment No. 1” shall mean Amendment No. 1, dated as of May 5, 2022, to this Agreement.
“Amendment No. 1 Effective Date” shall have the meaning specified in Amendment No. 1.
“Amendment No. 1 Existing Interest Period” shall mean (i) with respect to the Amendment No. 1 Existing Revolving Credit A Loans, the Amendment No. 1 Existing Interest Period A
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and (ii) with respect to the Amendment No. 1 Existing Revolving Credit B Loans, the Amendment No. 1 Existing Interest Period B.
“Amendment No. 1 Existing Interest Period A” shall have the meaning set forth in the Recitals hereof.
“Amendment No. 1 Existing Interest Period B” shall have the meaning set forth in the Recitals hereof.
“Amendment No. 1 Existing Interest Period Termination Date” shall mean (i) with respect to the Amendment No. 1 Existing Revolving Credit A Loans, the Amendment No. 1 Existing Interest Period Termination Date A and (ii) with respect to the Amendment No. 1 Existing Revolving Credit B Loans, the Amendment No. 1 Existing Interest Period Termination Date B.
“Amendment No. 1 Existing Interest Period Termination Date A” shall have the meaning set forth in the Recitals hereof.
“Amendment No. 1 Existing Interest Period Termination Date B” shall have the meaning set forth in the Recitals hereof.
“Amendment No. 1 Existing Interest Rate” shall mean (i) with respect to the Amendment No. 1 Existing Revolving Credit A Loans, the Amendment No. 1 Existing Interest Rate A and (ii) with respect to the Amendment No. 1 Existing Revolving Credit B Loans, the Amendment No. 1 Existing Interest Rate B.
“Amendment No. 1 Existing Interest Rate A” shall have the meaning set forth in the Recitals hereof.
“Amendment No. 1 Existing Interest Rate B” shall have the meaning set forth in the Recitals hereof.
“Amendment No. 1 Existing Loan Interest Payment Date” shall have the meaning set forth in Section 4.1.2 [Amendment No. 1 Existing Loans].
“Amendment No. 1 Existing Revolving Credit A Loans” shall have the meaning set forth in the Recitals hereof.
“Amendment No. 1 Existing Revolving Credit B Loans” shall have the meaning set forth in the Recitals hereof.
“Amendment No. 1 Existing Revolving Credit Loans” shall have the meaning set forth in the Recitals hereof.
“Anti-Corruption Laws” shall mean (a) the U.S. Foreign Corrupt Practices Act and rules and regulations thereunder, (b) the UK Bribery Act and (c) other anti-corruption and anti-bribery laws and regulations of any applicable jurisdiction.
“Anti-Terrorism Laws” shall mean any Laws relating to terrorism, trade sanctions programs and embargoes, import/export licensing, money laundering or bribery, and any regulation, order, or directive promulgated, issued or enforced pursuant to such Laws, including the USA PATRIOT Act and regulations of OFAC.
“Applicable Account” shall mean a Deposit Account (other than an Excluded Account), a Securities Account or a Commodity Account.
“Applicable Borrowing Base Lenders” shall mean the Required Borrowing Base Lenders or the Required Increasing Borrowing Base Lenders, as applicable.
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“Applicable Commitment Fee Rate” shall mean the percentage rate per annum based on the Utilization Percentage then in effect according to the applicable table on Schedule 1.1(A) below the heading “Commitment Fee.”
“Applicable Date” shall have the meaning assigned to such term in Section 2.9(b) [Borrowing Base].
“Applicable Letter of Credit Fee Rate” shall mean the percentage rate per annum based on the Utilization Percentage then in effect according to the applicable table on Schedule 1.1(A) below the heading “Letter of Credit Fee.”
“Applicable Margin” shall mean, as applicable:
(1) the percentage spread to be added to the Base Rate applicable to Revolving Credit Loans under the Base Rate Option based on the Utilization Percentage then in effect according to the applicable table on Schedule 1.1(A) below the heading “Base Rate Spread,” or
(2) the percentage spread to be added to the Term SOFR Rate applicable to Revolving Credit Loans under the Term SOFR Rate Option based on the Utilization Percentage then in effect according to the applicable table on Schedule 1.1(A) below the heading “Term SOFR Rate Spread.”
“Applicable Notes Indenture Cap” shall mean the maximum amount of secured Indebtedness (and, notwithstanding the definition of “Indebtedness,” with letters of credit (including Letters of Credit) being deemed to have an outstanding principal amount of Indebtedness equal to the maximum potential liability of the Borrower and its Restricted Subsidiaries thereunder) that is permitted under any Permitted Unsecured Notes Indenture; provided that if different Permitted Unsecured Notes Indentures permit different amounts of Indebtedness, the most restrictive Permitted Unsecured Notes Indenture shall govern for purposes of this definition.
“Approved Counterparty” shall have the meaning assigned to such term in the definition of “Permitted Commodity Swap Agreement.”
“Approved Fund” shall mean any fund that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of business and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
“Assignment and Assumption Agreement” shall mean an assignment and assumption agreement entered into by a Lender and an assignee permitted under Section 11.8 [Successors and Assigns], in substantially the form of Exhibit 1.1(A).
“Authorized Officer” shall mean, with respect to any Loan Party, the chief executive officer, president, chief financial officer, treasurer or assistant treasurer of such Loan Party or such other individuals, designated by written notice to the Administrative Agent from the Borrower, authorized to execute notices, reports and other documents on behalf of the Loan Parties required hereunder. The Borrower may amend such list of individuals from time to time by giving written notice of such amendment to the Administrative Agent.
“Auto-Extension Letter of Credit” shall have the meaning assigned to such term in Section 2.10.1(c) [Issuance of Letters of Credit].
“Availability” shall mean, as of any time, the difference between (a) the Commitments at such time, minus (b) the total Revolving Exposures of all Lenders at such time.
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“Average Life” shall mean, as of the date of determination, with respect to any Indebtedness or Preferred Stock, the quotient obtained by dividing
(1) the sum of the products of the numbers of years from the date of determination to the dates of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to such Preferred Stock multiplied by the amount of such payment by
(2) the sum of all such payments.
“Bail-In Action” shall mean the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.
“Bail-In Legislation” shall mean, (a) 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 and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).
“Balance Sheet Cash” shall mean cash, Temporary Cash Investments and any other amounts of the Borrower and its Restricted Subsidiaries that would be reflected as “cash and cash equivalents” on a consolidated balance sheet of the Borrower and its Subsidiaries.
“Bank Price Deck” shall mean the Administrative Agent’s forward curve for each of oil, natural gas and other Hydrocarbons, as applicable, furnished to the Borrower by the Administrative Agent from time to time in accordance with this Agreement and consistent with the bank price deck used by the Administrative Agent with respect to similar reserve-based oil and gas credits for borrowers with similar credit profiles, as reasonably determined by the Administrative Agent. The Administrative Agent hereby agrees to provide, promptly, and in any event within 3 Business Days, following the Borrower’s written request to the Administrative Agent therefor, an updated Bank Price Deck.
“Base Rate” shall mean, for any day, a fluctuating per annum rate of interest equal to the highest of (a) the Federal Funds Open Rate, plus 0.5%, (b) the Prime Rate, and (c) the Daily Simple SOFR, so long as Daily Simple SOFR is offered, ascertainable and not unlawful, plus 100 basis points (1.0%); provided, however, if the Base Rate as determined above would be less than zero, then such rate shall be deemed to be zero. Any change in the Base Rate (or any component thereof) shall take effect at the opening of business on the day such change occurs.
“Base Rate Option” shall mean the option of the Borrower to have Loans bear interest at the rate and under the terms set forth in Section 4.1.1(a)(i) [Revolving Credit Base Rate Option].
“Benchmark Replacement” shall have the meaning specified in Section 4.6(g) [Benchmark Replacement Setting].
“Beneficial Owner” shall have 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 “Beneficially Owns” and “Beneficially Owned” have corresponding meanings. For purposes of this definition, a Person shall be deemed not to Beneficially Own securities that are the subject of a stock purchase agreement, merger agreement, amalgamation agreement, arrangement agreement or similar agreement until consummation of the transactions or, as applicable, series of related transactions contemplated thereby.
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“Beneficial Ownership Certification” shall mean a certification regarding beneficial ownership as required by the Beneficial Ownership Regulation.
“Beneficial Ownership Regulation” shall mean 31 C.F.R. § 1010.230.
“Benefit Plan” shall mean any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” (as defined in Section 4975 of the Code) or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan.”
“Board of Directors” shall mean, with respect to any Person, (a) if the Person is a corporation, the board of directors of the corporation or any committee thereof duly authorized to act on behalf of such board or a similar governing body, (b) if the Person is a partnership, the board of directors of the general partner of the partnership or any committee thereof duly authorized to act on behalf of such board or a similar governing body and (c) with respect to any other Person, the functional equivalent of the foregoing.
“Board Resolution” shall mean a copy of a resolution certified by the Secretary or an Assistant Secretary of the Borrower to have been duly adopted by the Board of Directors of the Borrower and to be in full force and effect on the date of such certification.
“Borrower” shall have the meaning specified in the preamble hereto.
“Borrowing Base” shall mean, at any time, the value of the Borrowing Base Properties, determined in accordance with Section 2.9 [Borrowing Base], as adjusted pursuant to the terms hereof, and calculated in good faith using the Administrative Agent’s usual and customary criteria for gas reserve evaluation and approved by the Applicable Borrowing Base Lenders.
“Borrowing Base Deficiency” shall mean the amount by which the Revolving Facility Usage exceeds the Borrowing Base.
“Borrowing Base Properties” shall mean those Proved Reserves included by the Borrower in the most recent Reserve Report from which the determination of the Borrowing Base is made hereunder; provided that no Proved Reserves shall be included in the determination of the Borrowing Base unless such Proved Reserves are (a) owned by any Loan Party, (b) located in the United States or such other location that is designated in writing by Borrower to the Administrative Agent and which designation is acceptable to the Administrative Agent and the Applicable Borrowing Base Lenders and (c) free of all Liens, other than the Permitted Liens.
“Borrowing Base Value” shall mean, with respect to any Proved Reserves or Swap Agreement, the value attributed to such asset in the Borrowing Base most recently determined pursuant to Section 2.9.
“Borrowing Date” shall mean, with respect to any Loan, the date for the making thereof or the renewal or conversion thereof at or to the same or a different Interest Rate Option, which shall be a Business Day.
“Borrowing Tranche” shall mean specified portions of Loans outstanding as follows: (i) any Loans to which a Term SOFR Rate Option applies which become subject to the same Interest Rate Option under the same Loan Request by the Borrower and which have the same Interest Period shall constitute one Borrowing Tranche, and (ii) all Loans to which a Base Rate Option applies shall constitute one Borrowing Tranche.
“Building” shall mean a walled and roofed structure, other than a gas or liquid storage tank, that is principally above ground and affixed to a permanent site, and a walled and roofed structure while in the course of construction, alteration or repair or shall have such other meaning ascribed to such term in the Flood Laws.
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“Business Day” shall mean any day other than a Saturday or Sunday or a legal holiday on which commercial banks are authorized or required to be closed for business in Pittsburgh, Pennsylvania (or, if otherwise, the Lending Office of the Administrative Agent); provided that, when used in connection with an amount that bears interest at a rate based on SOFR or any direct or indirect calculation or determination of SOFR, the term “Business Day” shall mean any such day that is also a U.S. Government Securities Business Day.
“Capital Expenditures” shall mean for any period, with respect to any Person, the aggregate of all expenditures by such Person during such period for the acquisition or leasing (in the case of leasing, pursuant to a Capital Lease Obligation) of fixed or capital assets or additions to equipment (including replacements, capitalized repairs and improvements during such period) which are required to be capitalized under GAAP on a consolidated balance sheet of such Person.
“Capital Lease Obligation” shall mean an obligation that is required to be classified and accounted for as a capital lease or financing lease for financial reporting purposes in accordance with GAAP, and the amount of Indebtedness represented by such obligation shall be the capitalized amount of such obligation determined 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 terminated by the lessee without payment of a penalty.
“Capital Stock” of any Person shall mean (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 exercisable for, exchangeable for or convertible into Capital Stock, whether or not such debt securities include any right of participation with Capital Stock.
“Cash Collateralize” shall mean to pledge and deposit with or deliver to Administrative Agent, for the benefit of each applicable Issuing Lender, as collateral for the Letter of Credit Obligations, cash or deposit account balances pursuant to documentation reasonably satisfactory to Administrative Agent and each applicable Issuing Lender (which documents are hereby consented to by the Lenders). Such cash collateral shall be maintained in blocked deposit accounts at the Administrative Agent. At the option of the applicable Issuing Lender, in lieu of cash collateral, the applicable Letter of Credit Obligations may be supported by one or more back-to-back letters of credit in form and from institutions reasonably satisfactory to such Issuing Lender, and such arrangement shall also be within the meaning of Cash Collateralize. The terms “Cash Collateral” and “Cash Collateralization” shall have correlative meanings.
“Cash Distribution Consolidated EBITDAX Addback” shall mean, for any period, an amount equal to the lesser of (a) the amount of cash dividends or distributions actually received by the Borrower or any Restricted Subsidiary from CNX Midstream in respect of such period and (b) an amount equal to (i) the fraction, expressed as a percentage, of the Equity Interests in CNX Midstream that are directly or indirectly owned by the Borrower and the Restricted Subsidiaries (calculated as of the last day of such period) multiplied by (ii) the “Consolidated EBITDA” of CNX Midstream for such period as such term is defined in that certain Amended and Restated Credit Agreement dated as of October 6, 2021, among CNX Midstream, each of the financial institutions party thereto as lenders, and PNC, as administrative agent for such lenders, as from time to time in effect (and, if such Credit Agreement is terminated or otherwise ceases to define “Consolidated EBITDA,” as last in effect prior to such termination or cessation).
“Cash on Hand” shall mean, as of any date of determination, an amount equal to (i) the aggregate amount of unrestricted cash and Temporary Cash Investments of the Loan Parties as of such date plus (ii) the aggregate amount of cash and Temporary Cash Investments of the Loan Parties as of such date pledged solely to the Collateral Agent for the benefit of the Secured Parties to secure the Obligation, in each case, after giving effect to all incurrences and repayments of Indebtedness, issuances of Equity Interests, Investments and Restricted Payments to occur on such date; provided that Cash on
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Hand shall exclude any Cash Collateral or any other cash collateral pledged to secure obligations under any undrawn letters of credit.
“Casualty Event” shall mean, with respect to any assets of any Loan Party, any damage to or destruction of, or any condemnation or other taking (including by any Official Body) of, any such assets that occurs after the Closing Date for which the Borrower or any other Loan Party receives insurance proceeds or proceeds of a condemnation award or any other compensation; provided, however, no such event or series of related events shall constitute a Casualty Event if such proceeds or other compensation in respect thereof is less than the Threshold Amount in the aggregate with respect to such event or series of related events. Casualty Event shall include but not be limited to any taking of all or any part of any real property of the Borrower or any other Loan Party in or by condemnation or other eminent domain proceedings pursuant to any Law, or by reason of the temporary requisition or the use or occupancy of all or any part of any real property by any Official Body, civil or military.
“CFC” shall mean a Subsidiary of the Borrower that is a “controlled foreign corporation” as defined in Section 957 of the Code.
“CFC Holdco” shall mean a Subsidiary of the Borrower that owns no material assets other than Equity Interests in one or more Foreign Subsidiaries that are CFCs.
“Change in Law” shall mean the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any Law, (b) any change in any Law or in the administration, interpretation, implementation or application thereof by any Official Body or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of Law) by any Official Body; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, regulations, guidelines, interpretations or directives thereunder or issued in connection therewith (whether or not having the force of Law) and (y) all requests, rules, regulations, guidelines, interpretations or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities (whether or not having the force of Law), 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, issued, promulgated or implemented.
“Change of Control” shall mean:
(1) the consummation of any transaction (including any merger or consolidation or the acquisition of any Capital Stock) the result of which is that any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the Beneficial Owner, directly or indirectly, of more than 35% of the total voting power of the Voting Stock of the Borrower;
(2) the holders of Capital Stock of the Borrower shall have approved any plan of liquidation or dissolution of the Borrower;
(3) 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 assets of the Borrower (including Equity Interests of Restricted Subsidiaries) and its Subsidiaries (other than CNX Midstream and its Subsidiaries), taken as a whole, to any Person other than a Restricted Subsidiary; or
(4) a “change of control” or similar event shall have occurred under any Permitted Unsecured Notes Indenture.
“CIP Regulations” shall have the meaning assigned to such term in Section 10.11 [No Reliance on Administrative Agent’s Customer Identification Program].
“Closing Date” shall mean October 6, 2021, the date of this Agreement.
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“CNX Midstream” shall mean CNX Midstream Partners LP, a Delaware limited partnership.
“Code” shall mean the Internal Revenue Code of 1986.
“Collateral” shall mean the property of whatever kind and nature subject or purported to be subject from time to time to a Lien under any Security Document, but shall not include (i) any asset that shall have been released, pursuant to Section 10.10 [Authorization to Release Collateral and Guarantors] or Section 11.1.1(d) [Required Consents], from the Liens created under such Security Document or (ii) any Excluded Assets.
“Collateral Agent” shall mean PNC Bank, National Association, in its capacity as collateral agent under any of the Loan Documents, or any successor collateral agent.
“Commercial Letter of Credit” shall mean any letter of credit which is a commercial letter of credit issued in respect of the purchase of goods or services by the Borrower or any of its Subsidiaries.
“Commitment” shall mean as to any Lender its Revolving Credit Commitment, and “Commitments” shall mean the aggregate of the Revolving Credit Commitments of all of the Lenders.
“Commitment Fee” shall have the meaning specified in Section 2.3 [Commitment Fees].
“Commodity Account” shall mean any “commodity account” as defined in the UCC in effect in the State of New York from time to time.
“Commodity Exchange Act” shall mean the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.
“Compliance Certificate” shall have the meaning specified in Section 8.3.4 [Certificate of the Borrower].
“Conforming Changes” shall mean, with respect to the Term SOFR Rate or any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Base Rate,” the definition of “Business Day,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, the applicability and length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Administrative Agent decides may be appropriate to reflect the adoption and implementation of the Term SOFR Rate or such Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of the Term SOFR Rate or the Benchmark Replacement exists, in such other manner of administration as the Administrative Agent decides is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents).
“Consideration” shall mean, with respect to any acquisition, without duplication, the aggregate of (i) the cash paid by the Borrower or any Restricted Subsidiary, directly or indirectly, to the seller in connection therewith, (ii) the Indebtedness assumed by the Borrower or any Restricted Subsidiary in connection therewith and (iii) any other consideration given by the Borrower or any Restricted Subsidiary in connection therewith.
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“Consolidated EBITDAX” shall mean, for any period, the sum of Consolidated Net Income, plus (a) other than in the case of clause (8) or clause (10) below, to the extent deducted in calculating such Consolidated Net Income (without duplication):
(1) Consolidated Interest Expense, net of interest income;
(2) provision for taxes based on income or profits (including state franchise taxes accounted for as income taxes in accordance with GAAP) of the Borrower and the Restricted Subsidiaries for such period;
(3) depletion, depreciation and impairment charges and expenses of the Borrower and the Restricted Subsidiaries for such period;
(4) amortization expense (including amortization of goodwill and other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) of the Borrower and the Restricted Subsidiaries for such period;
(5) losses for such period from the early extinguishment of Indebtedness;
(6) non-recurring transaction costs expensed (in accordance with GAAP) by the Borrower and the Restricted Subsidiaries in connection with (i) the Transactions; (ii) any issuance of Permitted Unsecured Notes (and the use of proceeds thereof to redeem any or all Existing Notes, including the payment of premiums, fees and expenses in connection therewith) and (iii) to the extent permitted hereunder, any (A) amendments, restatements and other modifications of the Loan Documents and (B) acquisition, investment, disposition, issuance or repayment of debt, issuance of equity securities, refinancing transaction or amendment or other modification of any debt instrument (in each case, including any such transaction undertaken but not completed), in each case, whether or not successful, in an aggregate amount under this subclause (iii) not to exceed, in any four-quarter period, $15,000,000;
(7) non-cash charges related to legacy employee liabilities;
(8) net cash proceeds of insurance received, or recognized as a receivable in accordance with GAAP, for such period in respect of a casualty event (to the extent such amount is reducing an expense on the statement of operations of the Borrower for such period relating to such casualty event) or business interruption; provided that to the extent such amount is actually not received in cash, the amount not received that increased Consolidated EBITDAX shall be deducted from Consolidated EBITDAX in the period in which it is determined that such amount has not been or is not likely to be received;
(9) oil and gas exploration expenses (including all drilling, completion, geological and geophysical costs); and
(10) the Cash Distribution Consolidated EBITDAX Addback for such period;
minus (b) (1) to the extent increasing Consolidated Net Income for such period, gains for such period from the early extinguishment of Indebtedness and (2) except to the extent already reducing Consolidated Net Income for such period, cash payments made in such period by the Borrower and the Restricted Subsidiaries related to legacy employee liabilities. Consolidated EBITDAX shall be calculated on a Pro Forma Basis.
“Consolidated Indebtedness” shall mean, as of any date, the sum (without duplication) of (a) the aggregate principal amount of Indebtedness of the Borrower and the Restricted Subsidiaries of the type referenced under the first instances of clause (1), (2) or (3) of the definition of “Indebtedness” outstanding on such date and (b) all obligations of the Borrower and the Restricted Subsidiaries under any drawn letters of credit, bankers’ acceptances or similar credit transactions that are not reimbursed within
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one Business Day following receipt by Borrower or the relevant Restricted Subsidiary of a demand for reimbursement following payment on such letter of credit, bankers’ acceptance or similar credit transaction, in each case under clause (a) or (b), after giving effect to all incurrences and repayments of Indebtedness occurring on such date; provided that obligations in respect of advance royalty commitments shall not be included in Consolidated Indebtedness.
“Consolidated Interest Expense” shall mean, for any period, the total interest expense of the Borrower and the Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP (excluding (i) any interest attributable to Dollar-Denominated Production Payments, (ii) write-off of deferred financing costs and (iii) accretion of interest charges on future plugging and abandonment obligations, future retirement benefits and other obligations that do not constitute Indebtedness), plus, to the extent not included in such total interest expense, and to the extent incurred by the Borrower or any Restricted Subsidiary, without duplication:
(1) interest expense attributable to Capital Lease Obligations;
(2) capitalized interest;
(3) non-cash interest expense; and
(4) net costs (including amortization of fees and up-front payments) associated with Interest Rate Agreements and Currency Agreements that, at the time entered into, resulted in the Borrower and the Restricted Subsidiaries being net payees as to future payouts under such Interest Rate Agreements or Currency Agreements, and Interest Rate Agreements and Currency Agreements for which the Borrower or any Restricted Subsidiary has paid a premium.
“Consolidated Net Income” shall mean the aggregate net income (loss) attributable to the Borrower and its Subsidiaries determined on a consolidated basis in accordance with GAAP; provided that there shall not be included in such Consolidated Net Income:
(1) any net income of any other Person if such other Person is not a Restricted Subsidiary, provided that:
(a) subject to the exclusion contained in clause (5) of this definition, the Borrower’s equity in the net income of such other Person for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash actually distributed by such other Person during such period to the Borrower or any Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution paid to a Restricted Subsidiary, to the limitations contained in clause (2) of this definition); and
(b) the Borrower’s equity in a net loss of any such other Person for such period shall be included in determining such Consolidated Net Income;
(2) any net income of any Restricted Subsidiary (other than a Guarantor) if such Restricted Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions by such Restricted Subsidiary, directly or indirectly, to the Borrower, except that:
(a) subject to the exclusion contained in clause (5) below, the Borrower’s equity in the net income of any such Restricted Subsidiary for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash actually distributed by such Restricted Subsidiary in respect of such period to the Borrower or another Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution paid to another Restricted Subsidiary, to the limitation contained in this clause); and
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(b) the Borrower’s equity in a net loss of any such Restricted Subsidiary for such period shall be included in determining such Consolidated Net Income;
(3) any income or loss attributable to discontinued operations;
(4) any extraordinary gains or losses, together with any related provision for taxes on such gains or losses;
(5) any gain or loss, together with any related provision for taxes on such gains or losses, on Dispositions outside the ordinary course of business; provided that for purposes of this clause (5), (i) any Disposition of Equity Interests of any Subsidiary and (ii) any Material Acquisition/Disposition shall, in each case, be deemed to be outside the ordinary course of business;
(6) any non-cash compensation expense realized for grants of performance shares, stock, stock options or other equity-based awards;
(7) unrealized losses and gains under derivative instruments included in the determination of Consolidated Net Income, including those resulting from the application of Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) 815;
(8) any non-cash asset impairment or write-downs on Hydrocarbon Interests under GAAP or SEC guidelines; provided that any reversal or other benefit of any such impairment or write-down in any future period shall be excluded from Consolidated Net Income in such future period;
(9) the cumulative effect of a change in accounting principles; and
(10) all amounts attributable to the results of operations of or distributions from CNX Midstream and its Subsidiaries.
“Contractual Requirement” shall have the meaning assigned to that term in Section 6.6 [No Conflict].
“Control Agreement” shall mean a control agreement among the Collateral Agent, the depository bank, the securities intermediary or commodities counterparty, the other parties thereto and the applicable Loan Party, establishing the Collateral Agent’s control with respect to the applicable Deposit Account, Securities Account or Commodities Account, in each case, in form and substance reasonably satisfactory to the Administrative Agent and Collateral Agent.
“Convertible Indebtedness” shall mean Indebtedness of the Borrower otherwise permitted to be incurred hereunder that is either convertible into common equity of Borrower (and/or cash in lieu of fractional shares), cash (in an amount determined by reference to the price of such common equity) or Indebtedness that would constitute Refinancing Indebtedness that is otherwise permitted by this Agreement and that would not have a scheduled maturity date or other scheduled repayment of principal at any time within 12 months following such date or any combination of such common equity, cash and Indebtedness.
“Covered Entity” shall mean (a) the Borrower, each of the Borrower’s Subsidiaries, all Guarantors and all pledgors of Collateral, and (b) each Person that, directly or indirectly, is an Affiliate of a Person described in clause (a) above.
“Covered Party” shall have the meaning assigned to such term in Section 11.17(a) [Acknowledgement Regarding Any Supported QFCs].
“Currency Agreement” shall mean in respect of a Person any foreign exchange contract, currency swap agreement or other similar agreement to which such Person is a party or a beneficiary.
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“Current Lender” shall have the meaning assigned to such term in Section 2.12(a) [Increasing Lenders and New Lenders].
“Customary Recourse Exceptions” shall mean, with respect to any Non-Recourse Debt of any Person, exclusions from the exculpation provisions with respect to such Non-Recourse Debt for the voluntary bankruptcy of such Person, fraud, misapplication of cash, environmental claims, waste, willful destruction and other circumstances customarily excluded by lenders from exculpation provisions or included in separate indemnification agreements in non-recourse financings.
“Daily Simple SOFR” shall mean, for any day (a “SOFR Rate Day”), the interest rate per annum determined by the Administrative Agent by dividing (the resulting quotient rounded upwards, at the Administrative Agent’s discretion, to the nearest 1/100th of 1%) (A) SOFR for the day (the “SOFR Determination Date”) that is 2 Business Days prior to (i) such SOFR Rate Day if such SOFR Rate Day is a Business Day or (ii) the Business Day immediately preceding such SOFR Rate Day if such SOFR Rate Day is not a Business Day, by (B) a number equal to 1.00 minus the SOFR Reserve Percentage, in each case, as such SOFR is published by the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate) on the website of the Federal Reserve Bank of New York, currently at http://www.newyorkfed.org, or any successor source identified by the Federal Reserve Bank of New York or its successor administrator for the secured overnight financing rate from time to time. If Daily Simple SOFR as determined above would be less than the SOFR Floor, then Daily Simple SOFR shall be deemed to be the SOFR Floor. If SOFR for any SOFR Determination Date has not been published or replaced with a Benchmark Replacement by 5:00 p.m. (Pittsburgh, Pennsylvania time) on the second Business Day immediately following such SOFR Determination Date, then SOFR for such SOFR Determination Date will be SOFR for the first Business Day preceding such SOFR Determination Date for which SOFR was published in accordance with the definition of “SOFR”; provided that SOFR determined pursuant to this sentence shall be used for purposes of calculating Daily Simple SOFR for no more than 3 consecutive SOFR Rate Days. If and when Daily Simple SOFR as determined above changes, any applicable rate of interest based on Daily Simple SOFR will change automatically without notice to the Borrower, effective on the date of any such change.
“December 31 Reserve Report” shall have the meaning assigned to that term in Section 8.3.8(a) [Independent Engineer].
“Defaulting Lender” shall mean any Lender that (a) has failed, within two Business Days of the date required to be funded or paid, to (i) fund any portion of its Loans, (ii) fund any portion of its participations in Letters of Credit or Swing Loans or (iii) pay over to the Administrative Agent, any Issuing Lender, the Swingline Lender or any Lender any other amount required to be paid by it hereunder, unless, in the case of clause (i) above, such Lender notifies the Administrative Agent in writing that such failure is the result of such Lender’s good faith determination that a condition precedent to funding (specifically identified and including the particular default, if any) has not been satisfied, (b) has notified the Borrower or the Administrative Agent in writing, or has made a public statement to the effect that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Lender’s good faith determination that a condition precedent (specifically identified and including the particular default, if any) to funding a Loan under this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit, (c) has failed, within two Business Days after request by the Administrative Agent or the Borrower, acting in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations) to fund prospective Loans and participations in then outstanding Letters of Credit and Swing Loans under this Agreement; provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon the Administrative Agent’s or the Borrower’s receipt of such certification in form and substance satisfactory to the Administrative Agent or the Borrower, as the case may be, (d) has become the subject of a Bankruptcy Event, (e) has failed at any time to comply with the provisions of Section 5.3 [Sharing of Payments by Lenders] with respect to purchasing participations from the other Lenders, whereby such Lender’s share of any payment received, whether by setoff or otherwise, is in excess of its Ratable Share of such payments due and payable to all of the Lenders or (f) has, or has a direct or indirect parent company that has, become the subject of a Bail-In Action.
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As used in this definition, the term “Bankruptcy Event” shall mean, with respect to any Person, such Person or such Person’s direct or indirect parent company becoming the subject of a bankruptcy or insolvency proceeding, or having had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed for it, or, in the good faith determination of the Administrative Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment; provided that a Bankruptcy Event shall not result solely by virtue of (i) any ownership interest, or the acquisition of any ownership interest, in such Person or such Person’s direct or indirect parent company by an Official Body or instrumentality thereof if, and only if, such ownership interest does not result in or provide such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Person (or such Official Body or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person or (ii) the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official by a supervisory authority or regulator with respect to a Person or a Person’s direct or indirect parent company under the Dutch Financial Supervision Act 2007 (as amended from time to time and including any successor legislation) if applicable law prohibits the public disclosure of such appointment and so long as such appointment has in fact not been publicly disclosed.
“Deposit Account” shall mean any “deposit account” as defined in the UCC in effect in the State of New York from time to time and shall specifically include any account with a deposit function.
“Designated Cash” shall mean Balance Sheet Cash of the Borrower held in a segregated deposit account at PNC that is subject to a Control Agreement to be used solely for the purpose of funding the purchase, redemption, repayment or defeasance of Existing Notes outstanding on the Closing Date (including payment of accrued interest on such Existing Notes and commissions and expenses incurred in connection therewith); it being understood that any such purchase, redemption or defeasance of any Existing Notes shall comply with Section 8.2.11 [Amendments to Organizational Documents or Certain Other Indebtedness].
“Designated Non-Cash Consideration” shall mean the Fair Market Value of non-cash Consideration received by the Borrower or a Restricted Subsidiary of the Borrower in connection with a Disposition that is so designated as Designated Non-Cash Consideration pursuant to an Officer’s Certificate, setting forth the basis of such valuation, less the amount of cash or Temporary Cash Investments received in connection with a subsequent sale of or collection on such Designated Non-Cash Consideration.
“Developed Oil and Gas Reserves” shall mean the “developed oil and gas reserves” as such term is defined by the SEC in its standards and guidelines.
“Disposition” or “Dispose” shall mean the sale, conveyance, assignment, lease, sale and leaseback, abandonment or other transfer or disposal of, voluntarily or involuntarily, of any property or assets, tangible or intangible, including the sale, assignment, discount or other disposition of Accounts, equipment or general intangibles with or without recourse, the issuance or sale of Capital Stock of a Subsidiary or granting of options or rights of first refusal in such assets, in each case, including any of the foregoing that is effected by Division. In the case of the grant of an option or right of first refusal with respect to any asset, the date of such grant shall be deemed to be the date of Disposition of such asset.
“Disqualified Stock” shall mean any Equity Interests of a Person or any Restricted Subsidiary that by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable, in either case at the option of the holder thereof) or otherwise (a) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise, (b) is or may become redeemable or repurchaseable at the option of the holder thereof, in whole or in part or (c) is convertible or exchangeable at the option of the holder thereof for Indebtedness or Disqualified Stock, on or prior to the earlier of, in the case of clause (a), (b) or (c) above, (i) 91 days after the Expiration Date (without giving effect to the Springing Expiration Date) and (ii) upon Payment In Full (provided that only the portion of Equity Interests which is mandatorily redeemable or matures or is redeemable at the option of the holder thereof
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prior to such date will be deemed to be Disqualified Stock), in each case other than in exchange for Equity Interests of the Borrower (other than Disqualified Stock).
Notwithstanding the preceding sentence:
(1) any Equity Interests that would constitute Disqualified Stock solely because the holders thereof have the right to require the Borrower to repurchase such Equity Interests upon the occurrence of a change of control or an asset disposition will not constitute Disqualified Stock so long as the right to have such Equity Interests repurchased upon a change of control or asset disposition is no more favorable to the holders thereof than the requirements set forth in the Existing Notes Indentures;
(2) any Equity Interests issued to any plan for the benefit of employees of the Borrower or its Subsidiaries or by any such plan to such employees, such Equity Interests shall not constitute Disqualified Stock solely because they may be required to be repurchased by the Borrower or its Subsidiaries in order to satisfy applicable statutory or regulatory obligations; and
(3) any Equity Interests held by any future, current or former employee, director, manager or consultant (or their respective trusts, estates, investment funds, investment vehicles or immediate family members) of the Borrower or any of its Subsidiaries, in each case upon the termination of employment or death of such person pursuant to any stock option plan or any other management or employee benefit plan or agreement shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Borrower or its Subsidiaries.
“Division” shall mean, with respect to any Person, a division of or by such person into two or more newly formed Persons pursuant to the laws of the jurisdiction of its organization.
“Dollar,” “Dollars,” “U.S. Dollars” and the symbol “$” shall each mean lawful money of the United States of America.
“Dollar-Denominated Production Payments” shall mean production payment obligations recorded as liabilities in accordance with GAAP, together with all undertakings and obligations in connection therewith.
“EEA Financial Institution” shall mean (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 clause (a) or (b) of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country” shall mean any of the member states of the European Union, Iceland, Liechtenstein, and Norway, or any other country that is a member of the European Economic Area.
“EEA Resolution Authority” shall mean 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 Signature” shall have the meaning assigned to in Section 11.10 [Counterparts; Integration; Effectiveness].
“Eligibility Date” shall mean, with respect to each Loan Party and each Swap, the date on which this Agreement or any other Loan Document becomes effective with respect to such Swap (for the avoidance of doubt, the Eligibility Date shall be the effective date of such Swap if this Agreement or any
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other Loan Document is then in effect with respect to such Loan Party, and otherwise it shall be the Existing Credit Agreement Closing Date).
“Eligible Contract Participant” shall mean an “eligible contract participant” as defined in the Commodity Exchange Act and regulations thereunder.
“Environment” shall mean ambient air, indoor air, surface water, groundwater, drinking water, land surface and sub-surface strata and natural resources such as wetlands, flora and fauna.
“Environmental Laws” shall mean any and all applicable current and future federal, state, local and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or other governmental restrictions or common law causes of action relating to (a) protection of the Environment or to emissions, discharges, Releases or threatened Releases of Hazardous Materials, (b) human health as affected by Hazardous Materials, or (c) mining operations and activities to the extent relating to protection of the Environment or reclamation, including the Surface Mining Control and Reclamation Act or to occupational or miner health and safety, provided that “Environmental Laws” do not include any laws relating to worker or retiree benefits, including benefits arising out of occupational diseases.
“Environmental Liability” shall mean any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), directly or indirectly resulting from or based upon (a) actual or alleged violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the Release or threatened Release of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
“Equity Interests” of any Person shall mean (1) any and all Capital Stock of such Person and (2) all rights to purchase, warrants or options (whether or not currently exercisable), participations or other equivalents of or interests in (however designated) such Capital Stock of such Person, but excluding from all of the foregoing any debt securities exercisable for, exchangeable for or convertible into Equity Interests, regardless of whether such debt securities include any right of participation with Equity Interests.
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as the same may be amended or supplemented from time to time, and any successor statute of similar import, and the rules and regulations thereunder, as from time to time in effect.
“ERISA Affiliate” shall mean, at any relevant time, any trade or business (whether or not incorporated) under common control with the Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).
“ERISA Event” shall mean (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan or notification to the Borrower or any ERISA Affiliate that a Multiemployer Plan is insolvent or in reorganization within the meaning of Title IV of ERISA or experienced a mass withdrawal within the meaning of Section 4219 of ERISA; (d) the filing of a notice of intent to terminate a Pension Plan, or the treatment of a plan amendment as a termination of a Pension Plan or a Multiemployer Plan under Sections 4041 or 4041A of ERISA, respectively; (e) the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (f) an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; (g) the determination that any Pension Plan is considered an at-risk plan within the meaning of Section 430 of the Code or Section 303 of ERISA; (h) Borrower or an ERISA Affiliate is informed that any Multiemployer Plan to which Borrower or the ERISA Affiliate contributes
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is in endangered or critical status within the meaning of Section 432 of the Code or Section 305 of ERISA; (i) the failure by the Borrower or any ERISA Affiliate to meet all applicable requirements under the Pension Funding Rules in respect of a Pension Plan, whether or not waived, or a failure by the Borrower or any ERISA Affiliate to make any required contribution to a Multiemployer Plan; or (j) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon Borrower or any ERISA Affiliate.
“Erroneous Payment” has the meaning assigned to it in Section 10.14(a) [Erroneous Payments].
“Erroneous Payment Deficiency Assignment” has the meaning assigned to it in
Section 10.14(d) [Erroneous Payments].
“Erroneous Payment Impacted Class” has the meaning assigned to it in Section 10.14(d) [Erroneous Payments].
“Erroneous Payment Return Deficiency” has the meaning assigned to it in 10.14(d) [Erroneous Payments].
“Erroneous Payment Subrogation Rights” has the meaning assigned to it in Section 11.15(d) [Erroneous Payments].
“EU Bail-In Legislation Schedule” shall mean 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” shall mean any of the events described in Section 9.1 [Events of Default] and referred to therein as an “Event of Default.”
“Excess Balance Sheet Cash” shall mean, as of any date of determination, Balance Sheet Cash as of such date minus, to the extent included in Balance Sheet Cash and without duplication, each of the following:
(i) until the date when no Existing Notes are outstanding, up to $300,000,000 of Designated Cash;
(ii) any cash allocated for, reserved or otherwise set aside to pay royalty obligations, working interest obligations, vendor payments, suspense payments or similar payments as are customary in the oil and gas industry, of the Borrower or any Restricted Subsidiary then due and owing (or to be due and owing within five (5) Business Days of such date) and for which the Borrower or such Restricted Subsidiary either (x) has issued checks or has initiated wires or ACH transfers or (y) reasonably anticipates in good faith that it will issue checks or initiate wires or ACH transfers within five (5) Business Days of such date;
(iii) to the extent the payment of such amounts are not prohibited by this Agreement, other amounts in respect of which the Borrower or any Restricted Subsidiary has issued checks or has initiated wires or ACH transfers to Persons that are not Affiliates of a Loan Party but have not yet been subtracted from the balance in the relevant account of the Borrower or any Restricted Subsidiary;
(iv) any amounts of the Borrower and its Restricted Subsidiaries constituting pledges and/or deposits securing any binding and enforceable purchase and sale agreement with any Persons who are not Affiliates of a Loan Party, in each case to the extent permitted by this Agreement;
(v) amounts in Deposit Accounts described in clause (i) (to the extent constituting amounts for employee wage and benefit payments and accrued and unpaid employee compensation (including salaries, wages, bonuses, benefits and expense reimbursements), in each
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case to the extent then due and owing or due and owing within five (5) Business Days of such date), (ii) or (iii) of the definition of “Excluded Accounts”; and
(vi) cash deposited with any Issuing Lender to cash collateralize Letters of Credit in accordance with this Agreement.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
“Excluded Account” shall mean a Deposit Account (i) which is used solely for making payroll and withholding tax payments related thereto and other employee wage and benefit payments and accrued and unpaid employee compensation (including salaries, wages, bonuses, benefits and expense reimbursements), (ii) which is used solely for paying or remitting taxes, including sales taxes, (iii) which is used solely as an escrow account or as a fiduciary or trust account, in each case, for the benefit of unaffiliated third parties, (iv) the aggregate average daily balance in which (in each case determined for the most recently completed calendar month) does not at any time exceed $3,000,000 in the aggregate for all such Deposit Accounts referred to in this clause (iv) or (v) that is a “zero balance account”; provided that the available balance of each such account is automatically swept on each Business Day into another Deposit Account that is subject to a Control Agreement or is an Excluded Account referenced in one of the other clauses of this definition.
“Excluded Assets” shall have the meaning specified in Section 8.1.17(b) [Collateral].
“Excluded Properties” shall mean the assets of the Borrower and its Subsidiaries set forth on Schedule 8.1.17.
“Excluded Subsidiaries” shall mean (a) each Unrestricted Subsidiary, (b) each Foreign Subsidiary and each CFC Holdco, (c) each Immaterial Subsidiary, (d) so long as it is the general partner of CNX Midstream, CNX Midstream GP LLC, a Delaware limited liability company, and (e) each Restricted Subsidiary of the Borrower that is not directly or indirectly wholly-owned by the Borrower; provided that a Restricted Subsidiary that is a Loan Party shall not become an Excluded Subsidiary by virtue of a transfer of a portion of the Equity Interests in such Restricted Subsidiary (except pursuant to a bona fide joint venture transaction permitted hereunder) until a majority of the Equity Interests in such Restricted Subsidiary are Disposed of in accordance with the provisions of Section 8.2.4 [Loans and Investments] or Section 8.2.7 [Dispositions]. Notwithstanding the foregoing, any Person that is an obligor or guarantor under any Permitted Unsecured Notes Indenture shall not be an Excluded Subsidiary and, if not already a Guarantor, shall become a Guarantor pursuant to Section 8.1.9 [Additional Guarantors].
“Excluded Swap Obligation” shall mean, with respect to any Guarantor, any Swap Obligation if, and to the extent that, all or a portion of the Guaranty of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap Obligation (or any Guaranty thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s failure for any reason to constitute an Eligible Contract Participant at the time the Guaranty of such Guarantor or the grant by such Guarantor of a security interest becomes effective with respect to such Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps of such Guarantor for which such Guaranty or security interest is or becomes illegal.
“Excluded Taxes” shall mean, with respect to the Administrative Agent, any Lender, any Issuing Lender or any other recipient of any payment to be made by or on account of any obligation of any Loan Party hereunder or under any other Loan Document, (a) Taxes imposed on or measured by such recipient’s net income or profits (however denominated), and franchise Taxes imposed on it (in lieu of net income Taxes), by a jurisdiction (or any political subdivision thereof) as a result of such recipient being organized or having its principal office located or, in the case of any Lender, applicable lending office in such jurisdiction or that are Other Connection Taxes, (b) any branch profits Taxes imposed under section 884(a) of the Code, or any similar Tax, imposed by any jurisdiction described in clause (a) above, (c) in the case of a Lender, any U.S. federal withholding Tax that is imposed on amounts payable to such
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Lender pursuant to a Law in effect at the time such Lender becomes a party hereto (or designates a new lending office), except to the extent that such Lender (or its assignor, if any) was entitled, immediately prior to the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrower with respect to such withholding Tax pursuant to Section 5.8.1 [Payments Free of Taxes], (d) any withholding Tax attributable to such Lender’s failure to comply with Section 5.8.5 [Status of Lenders] and (e) any Tax imposed pursuant to FATCA.
“Executive Order No. 13224” shall mean the Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.
“Existing Credit Agreement” shall have the meaning assigned to such term in the recitals hereto.
“Existing Credit Agreement Closing Date” shall mean March 8, 2018.
“Existing Letters of Credit” shall have the meaning set forth in Section 2.10.1(e) [Issuance of Letters of Credit].
“Existing Notes” shall mean the Borrower’s 2.25% Convertible Senior Notes due 2026, 7.25% Senior Notes due 2027 and 6.00% Senior Notes due 2029 outstanding on the Closing Date.
“Existing Notes Indentures” shall mean the indentures governing the Existing Notes.
“Expiration Date” shall mean the fifth anniversary of the Closing Date; provided that if at any time on or after January 30, 2026, if (x) any Specified Existing Notes are outstanding and (y) (a) Availability minus (b) the aggregate principal amount of all outstanding Specified Existing Notes is less than 20% of the Commitments (the first such date, the “Springing Expiration Date”), then the Expiration Date shall be the Springing Expiration Date. No Specified Existing Notes shall be deemed outstanding for the purposes of this definition to the extent that cash (or Temporary Cash Investments permitted to be deposited for such purpose under the applicable Existing Notes Indenture) has been irrevocably deposited with the trustee for the Specified Existing Notes for the satisfaction and discharge or defeasance of the Specified Existing Notes in accordance with the applicable Existing Notes Indenture.
“Exposure” shall mean, with respect to any Acquisition Swap Agreement as of any Test Date, the amount (expressed as a positive) that would be owed by the Borrower or any Restricted Subsidiary to the applicable counterparty or the amount (expressed as a negative) that would be owed to the Borrower or any Restricted Subsidiary by the applicable counterparty, in each case under such Acquisition Swap Agreement on the immediately preceding Test Date, assuming that a settlement date under such Acquisition Swap Agreement had occurred on such immediately preceding Test Date.
“Fair Market Value” shall mean 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 in the case of amounts of at least the Threshold Amount and otherwise by a Responsible Officer, any such determination being conclusive for all purposes under this Agreement.
“FATCA” shall mean Sections 1471 through 1474 of the Code as of the date hereof (and any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to current Section 1471(b)(1) of the Code (and any amended or successor version described above), and any intergovernmental agreements (and any related laws or official administrative guidance) implementing the foregoing.
“Federal Funds Effective Rate” for any day shall mean the rate per annum (based on a year of 360 days and actual days elapsed and rounded upward to the nearest 1/100 of 1%) announced by the Federal Reserve Bank of New York (or any successor) on such day as being the weighted average of the rates on overnight federal funds transactions on the previous trading day, as computed and announced
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by such Federal Reserve Bank (or any successor) in substantially the same manner as such Federal Reserve Bank computes and announces the weighted average it refers to as the “Federal Funds Effective Rate” as of the date of this Agreement; provided, if such Federal Reserve Bank (or its successor) does not announce such rate on any day, the “Federal Funds Effective Rate” for such day shall be the Federal Funds Effective Rate for the last day on which such rate was announced. Notwithstanding anything to the contrary set forth above, in the event the rate determined pursuant to the preceding sentence shall be less than zero, then (for the avoidance of doubt) the Federal Funds Effective Rate shall be deemed to be zero for purposes of this Agreement.
“Federal Funds Open Rate” for any day shall mean the rate per annum (based on a year of 360 days and actual days elapsed) which is the daily federal funds open rate as quoted by ICAP North America, Inc. (or any successor) as set forth on the Bloomberg Screen BTMM for that day opposite the caption “OPEN” (or on such other substitute Bloomberg Screen that displays such rate), or if there shall at any time, for any reason, no longer exist a Bloomberg Screen BTMM (or any substitute screen), as set forth on such other recognized electronic source used for the purpose of displaying such rate as selected by the Administrative Agent (for the purposes of this definition only, an “Alternate Source”) or if such rate for such day does not appear on the Bloomberg Screen BTMM (or any substitute screen) or on any Alternate Source, or if there shall at any time, for any reason, no longer exist a Bloomberg Screen BTMM (or any substitute screen) or any Alternate Source, a comparable replacement rate determined by the Administrative Agent at such time (which determination shall be conclusive absent manifest error); provided, however, that if such day is not a Business Day, the Federal Funds Open Rate for such day shall be the “open” rate on the immediately preceding Business Day. Notwithstanding anything to the contrary set forth above, in the event the rate determined pursuant to the preceding sentence shall be less than zero, then (for the avoidance of doubt) the Federal Funds Open Rate shall be deemed to be zero for purposes of this Agreement. If and when the Federal Funds Open Rate changes, the rate of interest with respect to any advance to which the Federal Funds Open Rate applies will change automatically without notice to the Borrower, effective on the date of any such change.
“Financial Covenants” shall mean the covenants set forth in Section 8.2.14 [Financial Covenants].
“Financial Projections” shall have the meaning assigned to that term in Section 6.9(b) [Financial Projections].
“Flood Laws” shall mean (i) the National Flood Insurance Act of 1994 (which comprehensively revised the National Flood Insurance Act of 1968 and the Flood Disaster Protection Act of 1973) as now or hereafter in effect or any successor statute thereto, (ii) the Flood Insurance Reform Act of 2004 as now or hereafter in effect or any successor statute thereto, (iii) the Biggert-Waters Flood Insurance Reform Act of 2012 as now or hereafter in effect or any successor statute thereto, and (iv) all other applicable Laws relating to policies and procedures that address requirements placed on federally regulated lenders relating to flood matters, in each case, as now or hereafter in effect or any successor statute thereto.
“Foreign Lender” shall mean any Lender that is not a “United States person” as defined in section 7701 of the Code.
“Foreign Subsidiaries” shall mean, for any Person, each Subsidiary of such Person that is incorporated or organized under the laws of any jurisdiction other than the United States of America, any state thereof or the District of Columbia.
“GAAP” shall mean generally accepted accounting principles in the United States as are in effect from time to time, subject to the provisions of Section 1.3 [Accounting Principles], and applied on a consistent basis both as to classification and amounts.
“Gas Properties” shall mean the Hydrocarbon Interests consisting of natural gas (whether in its gaseous or liquefied form); any property now or hereafter pooled or unitized with natural gas 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,
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regulations and rules of any Official Body having jurisdiction) which may affect all or any portion of the Hydrocarbon Interests; all operating agreements, joint venture agreements, contracts and other agreements which relate to any of the foregoing 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 such Hydrocarbon Interests, the lands covered thereby and all rents, issues, profits, proceeds, products, revenues and other incomes from or attributable to the Hydrocarbon Interests; all tenements, profits à prendre, hereditaments, appurtenances and any property in anyway appertaining, belonging, affixed or incidental to such Hydrocarbon Interests, property, 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 gas wells, water wells, injection wells or other wells, buildings, structures, fuel separators, liquid extraction plants, plant compressors, pumps, pumping units, field gathering systems, tanks and tank batteries, fixtures, valves, fittings, machinery and parts, engines, boilers, meters, apparatus, equipment, appliances, tools, implements, cables, wires, towers, casing, tubing and rods, surface leases, rights-of-way, easements and servitudes together with all additions, substitutions, replacements, accessions and attachments to any and all of the foregoing.
“Guarantor” shall mean each of the parties to this Agreement that is designated as a “Guarantor” on the signature page hereof and each other Person that joins this Agreement as a Guarantor after the date hereof, in each case, until such Person ceases to be a Guarantor in accordance with this Agreement.
“Guarantor Joinder” shall mean a joinder by a Person as a Guarantor under the Loan Documents in the form of Exhibit 1.1(G)(1).
“Guaranty” of any Person shall mean any obligation of such Person guaranteeing or in effect guaranteeing any liability or obligation of any other Person in any manner, whether directly or indirectly, including any agreement to indemnify or hold harmless any other Person, any performance bond or other suretyship arrangement and any other form of assurance against loss, including letters of credit issued for the account of Persons other than Loan Parties, except endorsement of negotiable or other instruments for deposit or collection in the ordinary course of business. “Guarantied” shall have a correlative meaning.
“Guaranty Agreement” shall mean the Continuing Agreement of Guaranty and Suretyship in substantially the form of Exhibit 1.1(G)(2) executed and delivered by the Borrower and each of the Guarantors.
“Hazardous Materials” shall mean (i) any explosive substances or wastes and (ii) any chemicals, pollutants or contaminants, substances, materials or wastes, in any form, regulated under, or that could reasonably be expected to give rise to liability under, any applicable Environmental Law, including asbestos and asbestos containing materials, polychlorinated biphenyls, urea-formaldehyde insulation, mining waste (including tailings), perfluoroalkyl and polyfluoroalkyl substances, gasoline or petroleum (including crude oil or any fraction thereof) or petroleum products.
“Hedging Obligations” of any Person shall mean the obligations of such Person pursuant to any Swap Agreement.
“Historical Statements” shall have the meaning specified in Section 6.9(a) [Historical Statements].
“Hydrocarbon Interests” shall mean all rights, titles, interests and estates now owned or hereafter acquired in and to oil and gas leases, oil, gas and mineral leases, or other liquid or gaseous Hydrocarbon leases and interests, mineral fee interests, overriding royalty and royalty interests, net profit interests and production payment interests, including any reserve or residual interest of whatever nature.
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“Hydrocarbon Swap Agreement” shall mean any cap, floor, collar, exchange transaction, hedging contract, forward contract, swap agreement, futures contract, call or put option or any other similar agreement or other exchange or protection agreement relating to Hydrocarbons or power or any other inputs in the production or processing processes for Hydrocarbons.
“Hydrocarbons” shall mean coal, oil, natural gas, casing head gas, drip gasoline, natural gasoline, diesel, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and all constituents, elements or compounds thereof and products refined or processed therefrom.
“Immaterial Subsidiary” shall mean as of any date, any Restricted Subsidiary that does not have assets having an aggregate book value, as of the end of the most recently ended fiscal year of the Borrower, exceeding $1,000,000 or Consolidated Net Income exceeding $1,000,000 for the most recently ended fiscal year of the Borrower, in each case, that is certified in the Perfection Certificate delivered as of the Closing Date or shown in the most recently delivered financial statements of the Borrower delivered pursuant to Section 8.3.1 [Quarterly Financial Statements] or Section 8.3.2 [Annual Financial Statements]; provided that (i) solely with respect to any Restricted Subsidiary that has been acquired or created by the Borrower or any of its Restricted Subsidiaries subsequent to the Closing Date or the most recently delivered financial statements of the Borrower delivered pursuant to Section 8.3.1 [Quarterly Financial Statements] or Section 8.3.2 [Annual Financial Statements], the assets and Consolidated Net Income determinations set forth above shall be made by the Borrower based on information concerning such Restricted Subsidiary that is reasonably available to the Borrower at the date of determination and subsequent to the Closing Date or the most recently delivered financial statements of the Borrower delivered pursuant to Section 8.3.1 [Quarterly Financial Statements] or Section 8.3.2 [Annual Financial Statements] and (ii) a Subsidiary will not be considered an Immaterial Subsidiary if it, directly or indirectly, Guaranties or otherwise provides credit support for any Indebtedness of the Borrower.
“Immaterial Title Deficiencies” shall mean defects or exceptions to title, and other Liens, discrepancies and similar matters relating to title which do not, individually or in the aggregate, reduce or impair the value of the properties by an amount greater than 2.0% of the aggregate present value of the Borrowing Base Properties as determined by the most recently delivered Reserve Report.
“Increasing Lender” shall have the meaning assigned to that term in Section 2.12(a) [Increasing Lenders and New Lenders].
“Indebtedness” shall mean, with respect to any Person on any date of determination (without duplication):
(1) the principal of and premium (if any) in respect of (a) indebtedness of such Person for money borrowed and (b) indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable;
(2) all Capital Lease Obligations of such Person;
(3) all obligations of such Person issued or assumed as the deferred purchase price of property (which purchase price is due more than six months after the date of taking delivery of title to such property), including all obligations of such Person for the deferred purchase price of property under any title retention agreement (but excluding trade accounts payable arising in the ordinary course of business);
(4) all obligations of such Person for the reimbursement of any obligor on any letter of credit, bankers’ acceptance or similar credit transaction (other than obligations with respect to letters of credit securing obligations (other than obligations described in clauses (1) through (3) of this paragraph) entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the fifth Business Day following receipt by such Person of a demand for reimbursement following payment on the letter of credit);
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(5) Hedging Obligations;
(6) all obligations of the type referred to in clauses (1) through (5) of this paragraph of other Persons and all dividends of other Persons with respect to Preferred Stock and Disqualified Stock for the payment of which, in either case, such Person is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise, including by means of any Guaranty; and
(7) all obligations of the type referred to in clauses (1) through (6) of this paragraph of other Persons secured by any Lien on any property or asset of such first-mentioned Person (whether or not such obligation is assumed by such first-mentioned Person), the amount of such obligation being deemed to be the lesser of the Fair Market Value of such property or assets or the amount of the obligation so secured.
The “amount” or “principal amount” of any Indebtedness or Disqualified Stock or other Preferred Stock outstanding at any time of determination as used herein shall be as set forth below or, if not set forth below, determined in accordance with GAAP:
(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount (i.e., face value) of the Indebtedness, in the case of any other Indebtedness, including, for the avoidance of doubt, the Specified Existing Notes;
(3) 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 assets at the date of determination; and (b) the amount of the Indebtedness of the other Person;
(4) in the case of any Capital Lease Obligation, the amount determined in accordance with the definition thereof;
(5) in the case of any Preferred Stock, (a) if other than Disqualified Stock, the greater of its voluntary or involuntary liquidation preference and its maximum fixed redemption price or repurchase price or (b) if Disqualified Stock, as specified in the definition thereof;
(6) in the case of any Swap Agreements permitted by Section 8.2.1(f) [Indebtedness], zero;
(7) in the case of all other unconditional obligations, the amount of the liability thereof determined in accordance with GAAP; and
(8) in the case of all other contingent obligations, the maximum liability at such date of such Person.
For purposes of determining any particular amount of Indebtedness, Guaranties of, or obligations in respect of letters of credit relating to, Indebtedness otherwise included in the determination of such amount shall not also be included. If Indebtedness is secured by a letter of credit that serves only to secure such Indebtedness, then the total amount deemed incurred shall be equal to the greater of (a) the principal of such Indebtedness and (b) the amount that may be drawn under such letter of credit.
None of the following shall constitute Indebtedness:
(1) Indebtedness arising from agreements providing for indemnification or adjustment of purchase price or from Guaranties securing any obligations of the Borrower or any of its Subsidiaries pursuant to such agreements, incurred or assumed in connection with the disposition of any business, assets or Subsidiary of the Borrower, other than Guaranties or similar credit support by the Borrower or any of its Subsidiaries of Indebtedness
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incurred by any Person acquiring all or any portion of such business, assets or Subsidiary for the purpose of financing such acquisition;
(2) obligations to pay accrued expenses, any trade payables or other similar liabilities to trade creditors and other accrued current liabilities incurred in the ordinary course of business as the deferred purchase price of property;
(3) any liability for Federal, state, local or other taxes owed or owing by such Person;
(4) obligations to pay royalties and other amounts due in the ordinary course of business to royalty and working interest owners;
(5) obligations arising from Guaranties to suppliers, lessors, licensees, contractors, franchisees or customers incurred in the ordinary course of business;
(6) obligations (other than express Guaranties of Indebtedness for borrowed money) in respect of Indebtedness of other Persons arising in connection with (a) trade acceptances and (b) endorsements of instruments for deposit in the ordinary course of business;
(7) obligations arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; provided that such obligation is extinguished within two Business Days of its incurrence;
(8) obligations in respect of any obligations under workers’ compensation laws and similar legislation;
(9) obligations under Production Payments and Reserve Sales, and any obligations that do not pertain to the borrowing of money under all contracts and other agreements, instruments or arrangements described in the definition of “Oil and Gas Liens”;
(10) any unrealized losses or charges in respect of Hedging Obligations (including those resulting from the application of FASB ASC 815);
(11) Indebtedness consisting of the financing of insurance premiums in customary amounts consistent with the operations and business of the Borrower and the Restricted Subsidiaries;
(12) any repayment or reimbursement obligation of such Person or any Restricted Subsidiary with respect to Customary Recourse Exceptions, unless and until an event or circumstance occurs that triggers the Person’s or such Restricted Subsidiary’s direct repayment or reimbursement obligation (as opposed to contingent or performance obligations) to the lender or other Person to whom such obligation is actually owed, in which case the amount of such direct payment or reimbursement obligation shall constitute Indebtedness; and
(13) earn-out obligations in respect of Consideration in an acquisition permitted hereunder until such obligations would be required to be reflected on a balance sheet in accordance with GAAP (provided that the amount of such earn-out obligations reflected on a balance sheet shall be counted in the Consideration at such time).
“Indemnified Taxes” shall mean (a) all Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in clause (a) above, all Other Taxes.
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“Indemnity” shall mean the Regulated Substances Certificate and Indemnity Agreement, in substantially the form of Exhibit 1.1(I)(1), executed and delivered by each of the Loan Parties to the Administrative Agent for the benefit of the Secured Parties.
“Independent Engineer” shall mean Netherland, Sewell & Associates, Inc. or such other independent petroleum engineer selected by the Borrower and reasonably acceptable to the Borrower and the Administrative Agent.
“Information” shall mean all information received from the Loan Parties or any of their Subsidiaries relating to the Loan Parties or any of such Subsidiaries or any of their respective businesses, other than any such information that is available to the Administrative Agent, any Lender or any Issuing Lender on a non-confidential basis prior to disclosure by the Loan Parties or any of their Subsidiaries.
“Insolvency Proceeding” shall mean, with respect to any Person, (a) a case, action or proceeding with respect to such Person (i) before any court or any other Official Body under any bankruptcy, insolvency, reorganization or other similar Law now or hereafter in effect, or (ii) for the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator (or similar official) of any Loan Party or otherwise relating to the liquidation, dissolution, winding-up or relief of such Person, or (b) any general assignment for the benefit of creditors, composition, marshaling of assets for creditors, or other, similar arrangement in respect of such Person’s creditors generally or any substantial portion of its creditors undertaken under any Law.
“Intercompany Subordination Agreement” shall mean the Subordination Agreement among the Loan Parties and the Restricted Subsidiaries, dated as of the Closing Date, in substantially the form of Exhibit 1.1(I)(2), executed and delivered by the Loan Parties and the Restricted Subsidiaries.
“Interest Period” shall mean the period of time selected by the Borrower in connection with (and to apply to) any election permitted hereunder by the Borrower to have Revolving Credit Loans bear interest under the Term SOFR Rate Option. Subject to the last sentence of this definition, such period shall be, in each case, subject to the availability thereof, one month, three months or six months. Such Interest Period shall commence on the effective date of such Interest Rate Option, which shall be the Borrowing Date. Notwithstanding the second sentence hereof: (a) any Interest Period which would otherwise end on a date which is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, and (b) the Borrower shall not select, convert to or renew an Interest Period for any portion of the Loans that would end after the Expiration Date.
“Interest Rate Agreement” shall mean any interest rate swap agreement, interest rate cap agreement or other financial agreement or arrangement relating to fluctuations in interest rates.
“Interest Rate Option” shall mean any Term SOFR Rate Option or Base Rate Option.
“Investment” in any Person shall mean any (1) direct or indirect advance, loan or other extensions of credit (including by way of Guaranty or similar arrangement for the benefit of), or capital contribution to such Person (including any transfer of cash or other property to others or any payment for property or services for the account or use of others but excluding (a) advances to customers and contract miners or joint interest partners or drilling partnerships sponsored by the Borrower or any Restricted Subsidiary in the ordinary course of business that are recorded as accounts receivable on the balance sheet of the lender, and (b) trade payables and extensions of trade credit on commercially reasonable terms in accordance with normal trade practices), (2) all items that are or would be classified as investments on a balance sheet or (3) any purchase or acquisition of Capital Stock, Indebtedness or other similar securities (excluding any interest in an oil or natural gas leasehold to the extent constituting a security under applicable law) issued by such Person, in each case, including any of the foregoing clauses (1) through (3) that is effected by Division. Except as otherwise provided for in this Agreement, the amount of an Investment shall be its Fair Market Value at the time the Investment is made and without giving effect to subsequent changes in value. If the Borrower or any Restricted Subsidiary sells or otherwise Disposes of any Capital Stock of any Restricted Subsidiary, or any Restricted Subsidiary issues any Capital Stock, in either case, such that, after giving effect to any such sale or Disposition, such Person is no longer a
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Subsidiary, the Borrower shall be deemed to have made an Investment on the date of any such sale or other disposition equal to the Fair Market Value of the Capital Stock of and all other Investments in such Person retained.
For purposes of Section 8.2.4 [Loans and Investments] with respect to Investments in Unrestricted Subsidiaries:
(1) “Investment” shall include the portion (proportionate to the Borrower’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of any Subsidiary of the Borrower at the time that such Subsidiary is designated an Unrestricted Subsidiary; and upon a redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary, the aggregate amount of Investments outstanding under Section 8.2.4(i) [Loans and Investments] shall be reduced (but not below zero) by an amount equal to the Fair Market Value of the Borrower’s proportionate interest in such Subsidiary immediately following such redesignation; and
(2) any property transferred to or from an Unrestricted Subsidiary shall be valued at its Fair Market Value at the time of such transfer.
“Investment Grade Rating” shall mean a rating of Baa3 or better by Moody’s (or its equivalent under any successor rating categories of Moody’s) and BBB- or better by S&P (or its equivalent under any successor rating categories of S&P).
“IRS” shall mean the U.S. Internal Revenue Service.
“ISP” shall mean, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice, Inc. (or such later version thereof as may be in effect at the time of issuance of such Letter of Credit).
“Issuer Documents” shall mean with respect to any Letter of Credit, the Letter of Credit application, and any other document, agreement and instrument entered into by the applicable Issuing Lender and any Loan Party or in favor of the applicable Issuing Lender and relating to such Letter of Credit.
“Issuing Lenders” shall mean each Person listed on Schedule 1.1(L). References to the “Issuing Lender” shall be to the applicable Issuing Lender(s).
“Joint Operating Agreement” shall mean any joint operating agreement, joint development agreement or other similar contract that is usual and customary in the oil and gas business.
“Joint Venture” shall mean any Person that is not a direct or indirect Subsidiary of the Borrower in which the Borrower or any Restricted Subsidiary makes any equity Investment.
“June 30 Reserve Report” shall have the meaning assigned to that term in Section 8.3.8(b) [Internal Engineer].
“Labor Contracts” shall mean all employment agreements, employment contracts, collective bargaining agreements and other agreements among the Borrower or any Restricted Subsidiary and its employees.
“Law” shall mean any law (including common law), constitution, statute, treaty, regulation, rule, ordinance, opinion, issued guidance, release, ruling, order, executive order, injunction, writ, decree, bond, judgment, authorization or approval, lien or award of or any settlement arrangement, by agreement, consent or otherwise, with any Official Body, foreign or domestic.
“LC Disbursement” shall mean a payment made by an Issuing Lender pursuant to a Letter of Credit issued by such Issuing Lender.
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“Lead Arrangers” shall mean PNC Capital Markets LLC, BofA Securities, Inc., Canadian Imperial Bank of Commerce, New York Branch, Citibank, N.A., JPMorgan Chase Bank, N.A., MUFG Bank, Ltd., TD Securities (USA) LLC, Truist Securities, Inc. and Wells Fargo Securities, LLC, in their capacities as joint lead arrangers and joint bookrunners of the revolving credit facility hereunder.
“Lender-Related Person” shall have the meaning specified in Section 11.3.2 [Indemnification by the Borrower].
“Lenders” shall mean the Persons named on Schedule 1.1(B) and any other Person that becomes a party to this Agreement in such capacity from time to time and, in each case, their respective successors and assigns as permitted hereunder, each of which is referred to herein as a Lender. For the purpose of any grant in any Loan Document of a security interest or other Lien to the Lenders or to the Collateral Agent for the benefit of the Lenders as security for the Obligations, “Lenders” shall include any Affiliate of a Lender to which such Obligation is owed. For the avoidance of doubt, Increased Lenders, Decreased Lenders and Existing Lenders that do not constitute Exiting Lenders shall all constitute Lenders hereunder as of the Closing Date.
“Letter of Credit” shall have the meaning assigned to that term in Section 2.10.1(a) [Issuance of Letters of Credit] and shall include the Existing Letters of Credit.
“Letter of Credit Aggregate Sublimit” shall mean, at any time, the least of (i) $650,000,000, (ii) the Revolving Credit Commitments at such time and (iii) the Borrowing Base at such time.
“Letter of Credit Expiration Date” shall mean the date which is 10 Business Days prior to the Expiration Date (assuming that the proviso in the definition of “Expiration Date” applies until the circumstances that could, pursuant to the definition of Expiration Date, cause the Expiration Date to accelerate to the Springing Expiration Date no longer exist).
“Letter of Credit Fee” shall have the meaning assigned to that term in Section 2.10.2 [Letter of Credit Fees].
“Letter of Credit Issuing Lender Sublimit” shall mean, for each Issuing Lender, the amount set forth opposite the name of such Issuing Lender on Schedule 1.1(L); provided that any Issuing Lender may increase its own Letter of Credit Issuing Lender Sublimit by written notice to the Borrower and the Administrative Agent.
“Letter of Credit Obligations” shall mean, as of any date of determination, the aggregate amount available to be drawn under all outstanding Letters of Credit on such date (if any Letter of Credit shall increase in amount automatically in the future, such aggregate amount available to be drawn shall currently give effect to any such future increase) plus the aggregate outstanding Reimbursement Obligations on such date. The Letter of Credit Obligations of any Lender at any time shall be its Ratable Share of the total Letter of Credit Obligations at such time. For purposes of computing the amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.5 [Letter of Credit Amounts]. For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.13 or Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.
“Leverage Maintenance Covenant” shall mean the covenant set forth in Section 8.2.14(a) [Maximum Net Leverage Ratio].
“Lien” shall mean any mortgage, deed of trust, pledge, lien, security interest, charge or other similar encumbrance or security arrangement of any nature whatsoever, whether voluntarily or involuntarily given, including any conditional sale or title retention arrangement, and any assignment, deposit arrangement or lease intended as, or having the effect of, security and any filed financing statement or other notice of any of the foregoing (whether or not a lien or other encumbrance is created or exists at the time of the filing), but shall not include any operating lease.
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“Liquidity” shall mean, as of any date of determination, the sum of (a) the amount of Cash on Hand, plus (b) the difference (if a positive number) between (i) the lesser of (x) the amount of the Revolving Credit Commitments and (y) the Borrowing Base as of such date, less (ii) the Revolving Facility Usage, in each case, as of such date after giving effect to all transactions to occur on such date.
“LLC Interests” shall have the meaning specified in Section 6.3 [Subsidiaries].
“Loan Documents” shall mean this Agreement, the Administrative Agent’s Letter, the Guaranty Agreement, the Indemnity, the Intercompany Subordination Agreement, the Notes, the Security Documents and amendments, supplements, joinders or assignments to the foregoing and any other instruments, certificates or documents (expressly excluding any Other Lender Provided Financial Service Product, any Specified Swap Agreements or any other Swap Agreements) delivered or contemplated to be delivered hereunder or thereunder or in connection herewith or therewith, and Loan Document shall mean any of the Loan Documents.
“Loan Limit” at any time shall mean the lowest of (i) the Maximum Facility Amount, (ii) the Revolving Credit Commitments at such time and (iii) the Borrowing Base at such time (including as it may be reduced pursuant to Section 2.9 [Borrowing Base]).
“Loan Parties” shall mean the Borrower and the Guarantors.
“Loan Request” shall have the meaning specified in Section 2.5.1 [Revolving Credit Loan Requests].
“Loans” shall mean collectively and “Loan” shall mean separately all Revolving Credit Loans and Swing Loans or any Revolving Credit Loan or Swing Loan.
“Material Acquisition/Disposition” shall mean any Investment, Permitted Acquisition or Disposition that involves (a) an acquisition or disposition of assets, the Fair Market Value of which assets exceeds $50,000,000 or (b) a change in Consolidated EBITDAX that exceeds $20,000,000 per four fiscal quarter period.
“Material Adverse Change” shall mean any set of circumstances or events that (a) has or would reasonably be expected to have any material adverse effect whatsoever upon the validity or enforceability of this Agreement or any other Loan Document, (b) is or would reasonably be expected to be material and adverse to the business, properties, assets, financial condition, or results of operations of the Loan Parties taken as a whole, (c) impairs materially or would reasonably be expected to impair materially the ability of the Loan Parties taken as a whole to duly and punctually pay their Indebtedness under this Agreement or any other Loan Document, or (d) impairs materially or would reasonably be expected to impair materially the rights and remedies of the Administrative Agent or any of the Lenders pursuant to this Agreement or any other Loan Document.
“Material Contract” shall mean (i) the Permitted Unsecured Notes Indentures and (ii) any other agreement that is material to the conduct of the business of the Borrower and the Restricted Subsidiaries, taken as a whole.
“Maximum Facility Amount” shall mean $3,000,000,000.
“Midstream Assets” shall mean (i) assets used primarily for gathering (from above ground sources), transmission, storage, processing or treatment of natural gas, natural gas liquids or other Hydrocarbons or carbon dioxide and assets substantially similar to the foregoing and conventionally understood to be “midstream assets” (including midstream water assets) and (ii) Equity Interests of any Person that has no assets (other than de minimis assets) other than assets referred to in clause (i); for the avoidance of doubt, it being understood that in no event shall Hydrocarbons, Hydrocarbon Interests or Oil and Gas Properties or Equity Interests of any Person owning the foregoing be deemed Midstream Assets.
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“Minimum Title Requirement” shall mean delivery to the Administrative Agent of Required Title Information on Borrowing Base Properties having PV-9 at least equal to the lesser of (x) 85% of the PV-9 of the Proved Reserves included in the Borrowing Base Properties and (y) 2.25 multiplied by the Loan Limit.
“Month,” with respect to an Interest Period under the Tern SOFR Rate Option, shall mean the interval between the days in consecutive calendar months numerically corresponding to the first day of such Interest Period. If any Interest Period begins on a day of a calendar month for which there is no numerically corresponding day in the month in which such Interest Period is to end, the final month of such Interest Period shall be deemed to end on the last Business Day of such final month.
“Moody’s” shall mean Moody’s Investors Service, Inc. and its successors.
“Mortgages” shall mean collectively, (i) the mortgages or deeds of trust with respect to Real Property in which a security interest has been granted prior to the Closing Date and (ii) the mortgages or deeds of trust with respect to Real Property in which a security interest is granted after the Closing Date in substantially the form of Exhibit 1.1(M), in each case, executed and delivered by the applicable Loan Parties to the Collateral Agent to secure the Obligations, for the benefit of the Secured Parties, and “Mortgage” shall mean, individually, any of the Mortgages.
“Multiemployer Plan” shall mean any employee benefit plan which is a “multiemployer plan” within the meaning of Section 4001(a)(3) of ERISA and to which the Borrower or any ERISA Affiliate is then making or accruing an obligation to make contributions or, within the preceding five plan years, has made or had an obligation to make such contributions or has any ongoing obligation with respect to withdrawal liability (within the meaning of Title IV of ERISA).
“Net Cash Proceeds” shall mean, with respect to any issuance of Equity Interests or the incurrence of Indebtedness, the cash proceeds thereof, net of customary fees, commissions, underwriting discounts, costs and other expenses incurred in connection with such issuance or incurrence, as applicable.
“Net Leverage Ratio” shall mean, as of any date of determination, the ratio of:
(1) (a) Consolidated Indebtedness as of such date minus (b) (i) if no Loans are outstanding as of such date (or if the Net Leverage Ratio is being determined on a Pro Forma Basis for determining the permissibility of any transaction, if any Loans outstanding will be fully repaid in connection with such transaction on such date), Cash on Hand as of such date or (ii) if any Loans are outstanding as of such date (or if the Net Leverage Ratio is being determined on a Pro Forma Basis for determining the permissibility of any transaction, if any Loans would be outstanding in connection with such transaction on such date), up to $150,000,000 of Cash on Hand as of such date, in each case, after giving effect to all transactions occurring on such date, to
(2) Consolidated EBITDAX of the Borrower for the period of four fiscal quarters of the Borrower most recently ended on or prior to the date of determination.
“New Lender” shall have the meaning assigned to that term in Section 2.12(a) [Increasing Lenders and New Lenders].
“New Lender Joinder” shall mean the joinder whereby each New Lender joins this Agreement in substantially the form attached hereto as Exhibit 1.1(B).
“Non-Consenting Lender” shall have the meaning specified in Section 11.1.4 [Non-Consenting Lenders].
“Non-Extension Notice Date” shall have the meaning assigned to such term in Section 2.10.1(c) [Issuance of Letters of Credit].
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“Non-Recourse Debt” shall mean, with respect to Indebtedness of any Unrestricted Subsidiary or Joint Venture, Indebtedness:
(1) as to which neither the Borrower nor any Restricted Subsidiary (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness) or (b) is directly or indirectly liable as a guarantor or otherwise, except for Customary Recourse Exceptions and except by the pledge of (or a Guaranty limited in recourse solely to) the Equity Interests of such Unrestricted Subsidiary or Joint Venture; and
(2) as to which the lenders will not have any recourse to the Capital Stock or assets of the Borrower or any Restricted Subsidiary (other than the Equity Interests of such Unrestricted Subsidiary or Joint Venture), except for Customary Recourse Exceptions.
“Notes” shall mean the Revolving Credit Notes and the Swing Loan Notes.
“Obligation” shall mean any obligation or liability of any of the Loan Parties, howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, now or hereafter existing, or due or to become due (including interest, fees and other monetary obligations accruing and/or incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), under or in connection with (i) this Agreement, the Loans, any Letter of Credit or any other Loan Document, whether to any Agent, any Issuing Lender, any Swingline Lender, any Lender-Related Person, any Lender or other Persons provided for under such Loan Documents, (ii) any Specified Swap Agreement (other than, with respect to any Guarantor that is not a Qualified ECP Loan Party, Excluded Swap Obligations of such Guarantor), (iii) any Erroneous Payment Subrogation Rights, or (iv) any Other Lender Provided Financial Service Product.
“OFAC” shall mean the United States Department of the Treasury’s Office of Foreign Assets Control.
“Officer’s Certificate” shall mean a certificate signed by an Authorized Officer of the Borrower.
“Official Body” shall mean the government of the United States of America or any other nation, or in each case any political subdivision thereof, whether state, local, county, provincial or otherwise, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank) and any group or body charged with setting financial accounting or regulatory capital rules or standards (including the Financial Accounting Standards Board, the Bank for International Settlements or the Basel Committee on Banking Supervision or any successor or similar authority to any of the foregoing).
“Oil and Gas Liens” shall mean:
(1) Liens on any specific property or any interest therein, construction thereon or improvement thereto to secure all or any part of the costs incurred for surveying, exploration, drilling, extraction, development, operation, production, construction, alteration, repair or improvement of, in, under or on such property and the plugging and abandonment of wells located thereon (it being understood that, in the case of Oil and Gas Properties, or any interest therein, costs incurred for “development” shall include costs incurred for all facilities relating to such properties or to projects, ventures or other arrangements of which such properties form a part or which relate to such properties or interests);
(2) Liens on Hydrocarbon Interests to secure obligations incurred or Guaranties of obligations incurred in connection with or necessarily incidental to commitments for the
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purchase or sale of, or the transportation or distribution of, the products derived from such property;
(3) Liens arising under partnership agreements, oil and gas leases, overriding royalty agreements, Joint Operating Agreements, net profits agreements, production payment agreements, royalty trust agreements, 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 Restricted Subsidiary, farm-out agreements, farm-in agreements, division orders, contracts for the sale, purchase, exchange, transportation, gathering or processing of Hydrocarbons, unitizations and pooling designations, declarations, orders and agreements, development agreements, operating agreements, production sales contracts, area of mutual interest agreements, gas balancing or deferred production agreements, injection, repressuring and recycling agreements, salt water or other disposal agreements, seismic or geophysical permits or agreements, and other agreements which are customary in the oil and gas business; provided that in all instances, such Liens are limited to the assets that are the subject of the relevant agreement, program, order or contract; and
(4) Liens on pipelines or pipeline facilities that arise by operation of law.
“Oil and Gas Properties” shall mean all properties, including equity or other ownership interests therein, owned by the Borrower or any of its Restricted Subsidiaries which contain or are believed to contain Proved Reserves. Unless the context otherwise requires, the term Oil and Gas Properties refers to Oil and Gas Properties of the Borrower and its Restricted Subsidiaries
“Order” shall have the meaning specified in Section 2.10.9(b) [Liability for Acts and Omissions].
“Other Connection Taxes” shall mean, with respect to any recipient, Taxes imposed as a result of a present or former connection between such recipient and the jurisdiction imposing such Tax (other than connections arising from such recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to and/or enforced any Loan Document, or sold or assigned an interest in any Note or Loan Document).
“Other Lender Provided Financial Service Product” shall mean agreements or other arrangements under which the Administrative Agent, any Lender or Affiliate of the Administrative Agent or a Lender (or any Person that was the Administrative Agent or a Lender or Affiliate of the Administrative Agent or Lender at the time such agreement or arrangement was entered into) provides any of the following products or services to any of the Loan Parties: (a) credit cards, (b) credit card processing services, (c) debit cards, (d) purchase cards, (e) ACH transactions, (f) cash management, including controlled disbursement, accounts or services, or (g) foreign currency exchange.
“Other Taxes” shall mean all present or future stamp or documentary Taxes or any other excise or property Taxes, charges or similar levies arising from any payment made hereunder or under any other Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 5.6.2 [Replacement of a Lender]).
“Participant” shall have the meaning specified in Section 11.8.4 [Participations].
“Participating Member State” shall mean any member State of the European Communities that adopts or has adopted the euro as its lawful currency in accordance with legislation of the European Community relating to Economic and Monetary Union.
“Participation Advance” shall have the meaning specified in Section 2.10.4(a) [Repayment of Participation Advances].
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“Partnership Interests” shall have the meaning specified in Section 6.3 [Subsidiaries].
“Patent, Trademark and Copyright Security Agreement” shall mean, collectively, the Patent, Trademark and Copyright Security Agreements listed on Schedule 1.1(P), each executed and delivered by the applicable Loan Parties to the Collateral Agent for the benefit of the Secured Parties.
“Payment Date” shall mean the first Business Day of each calendar quarter after the date hereof and on the Expiration Date or upon termination of the Commitments.
“Payment In Full” and “Paid in Full” shall mean the payment in full in cash of the Loans and other Obligations (other than contingent indemnity obligations not then due) under the Loan Documents, termination of the Commitments and expiration or termination of all Letters of Credit (or with respect to any Letter of Credit with an expiration date that extends beyond the Letter of Credit Expiration Date, the pledge of Cash Collateral for such Letter of Credit pursuant to Section 2.10.10 [Cash Collateral Prior to the Expiration Date]).
“PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA or any successor.
“Pension Funding Rules” shall mean the rules of the Code and ERISA regarding minimum required contributions (including any installment payment thereof) to Pension Plans and set forth in Sections 412 and 430 of the Code and Sections 302 and 303 of ERISA.
“Pension Plan” shall mean any “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA), other than a “multiemployer plan” within the meaning of Section 4001(a)(3) of ERISA, that is subject to Title IV of ERISA or the Pension Funding Rules and is sponsored or maintained by Borrower or any ERISA Affiliate or to which Borrower or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any times during the immediately preceding five plan years.
“Perfection Certificate” shall mean a certificate in the form of Exhibit 1.1(P)(1) or any other form reasonably acceptable to the Administrative Agent.
“Perfection Certificate Supplement” shall mean a certificate supplement in the form of Exhibit 1.1(P)(2) or any other form reasonably acceptable to the Administrative Agent.
“Permitted Account Counterparty” shall have the meaning specified in Section 8.1.21(b) [Accounts].
“Permitted Acquisition” shall have the meaning assigned to such term in Section 8.2.6(b) [Liquidations, Mergers, Consolidations, Acquisitions].
“Permitted Business” shall mean the businesses conducted by the Borrower and its Subsidiaries on the Closing Date and any business of a nature that is or shall have become related to (i) the acquisition, exploration, development, production, operation and disposition of interests in oil, natural gas, and other Hydrocarbon or carbon dioxide properties, (ii) the gathering, marketing, treating, compression, fractionating, processing, storage, selling and transporting of Hydrocarbons and other minerals and products produced in association therewith, (iii) the production of electricity or other sources of power, such as coal-or natural gas-fueled power generation facilities, wind, solar or hydroelectric power generation facilities or similar activities, (iv) water related services including sourcing, utilizing, protecting, transporting, treating and disposing of water or waste fluid, (v) methane and carbon abatement, capture and storage and hydrogen production, storage, transportation and marketing, (vi) stream, wetland, forestry and other environmental credits and activities, (vii) any process, product or service that reduces negative environmental impacts through significant energy efficiency improvements, sustainable use of resources and/or environmental protection activities, including without limitation those focused on renewable energy and (viii) any activity that is ancillary, complementary or
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incidental to or necessary or appropriate for the activities described in this definition, including entering into Swap Agreements related to any of these activities.
“Permitted Business Investments” shall mean Investments of a nature that is or shall have become customary in the Permitted Business as a means of actively exploiting, exploring for, acquiring, developing, processing, gathering, marketing or transporting Hydrocarbons through agreements, transactions, interests or arrangements which permit one to share risks or costs, comply with regulatory requirements regarding local ownership or satisfy other objectives customarily achieved through the conduct of Permitted Business jointly with third parties, including (i) ownership interests in oil, natural gas, other Hydrocarbon properties or any interest therein or gathering, transportation, processing, storage or related systems or ancillary real property interests, (ii) Investments in the form of or pursuant to operating agreements, working interests, royalty interests, mineral interests, processing agreements, farm-in agreements, farm-out agreements, developments agreements, area of mutual interest agreements, unitization agreements, pooling agreements, joint bidding agreements, service contracts, joint venture agreements, limited liability company agreements, partnership agreements (whether general or limited), subscription agreements, stock purchase agreements and other similar agreements with third parties, and (iii) direct or indirect ownership interests or Investments in drilling rigs, fracturing units and other equipment used in the Permitted Business or in Persons that own or provide such equipment.
“Permitted Commodity Swap Agreement” shall mean any commodity Swap Agreement which (1) any Loan Party enters into with or through a counterparty that, or a counterparty whose credit support provider under the Swap Agreement, has a credit rating of at least “BBB+” by S&P or “Baa1” by Moody’s at the time such Swap Agreement is entered into (an “Approved Counterparty”), together with the confirmations which such Loan Party may hereafter enter into with or through such counterparty covering, in the aggregate, among all such Swap Agreements, not more than 85% (the “Swap Cap”) of the forecasted production from Proved Reserves (as reflected in the most recent Reserve Report delivered to the Administrative Agent) for the remainder of the calendar year in which such Swap Agreements became effective plus the next five (5) calendar years or (2) any Loan Party enters into with or through a counterparty where the Swap Agreement is in the nature of basis differential, commodity floors or puts on up to 100% of forecasted production from Proved Reserves (as reflected in the most recent Reserve Report delivered to the Administrative Agent) to be produced by or for the benefit of the Loan Parties for the remainder of the calendar year in which such Swap Agreements became effective plus the next five (5) calendar years; provided that (a) in the case of either clause (1) or (2) the tenor of any such Swap Agreement shall not be longer than the remainder of the calendar year in which such Swap Agreement became effective plus the next six (6) calendar years and (b) in addition to the limitations set forth above, the total volumes for Swap Agreements with respect to any period beyond the remainder of the calendar year in which such Swap Agreements became effective plus the next five (5) calendar years shall not exceed 25% of forecasted production from Proved Developed Producing Reserves (as reflected in the most recent Reserve Report delivered to the Administrative Agent) for the sixth (6th) calendar year following the calendar year in which such Swap Agreements became effective.
“Permitted Liens” shall mean:
(1) Liens existing on the Closing Date and described on Schedule 8.2.2;
(2) Liens securing the Obligations in favor of the Collateral Agent for the benefit of the Secured Parties;
(3) Liens on cash or Temporary Cash Investments securing Letter of Credit Obligations with respect to Letters of Credit that have an expiration date that extends beyond the Letter of Credit Expiration Date in favor of the applicable Issuing Lender of such Letters of Credit;
(4) Liens (a) in favor of the Borrower or a Guarantor or (b) by a Restricted Subsidiary that is not a Guarantor in favor of any other Restricted Subsidiary that is not a Guarantor;
(5) Liens on the Collateral securing obligations in respect of Indebtedness incurred pursuant to Section 8.2.1(n) [Indebtedness]; provided that such Liens shall be subordinated to the
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Liens securing the Obligations pursuant to an intercreditor agreement reasonably satisfactory to the Administrative Agent;
(6) Liens for taxes, assessments and governmental charges not yet delinquent or the validity of which are being contested in good faith by appropriate proceedings, promptly instituted and diligently conducted, and for which adequate reserves have been established to the extent required by GAAP as in effect at such time, and which proceedings (or orders entered in connection with such proceedings) have the effect of suspending the enforcement or collection of such Liens;
(7) Liens incurred to secure appeal bonds and judgment Liens not constituting an Event of Default or Potential Default, in each case in connection with litigation or legal proceedings that are being contested in good faith by appropriate proceedings;
(8) Liens upon real or personal property other than the Collateral, including any attachment of personal property or real property or other legal process prior to adjudication of a dispute on the merits, (a) if the validity or amount thereof is being contested in good faith by appropriate and lawful proceedings diligently conducted so long as levy and execution thereon have been stayed or bonded and continue to be stayed or bonded, (b) if a final judgment is entered and such judgment is discharged within thirty (30) days of entry, or (c) the payment of which is covered in full (subject to customary deductible) by insurance;
(9) inchoate Liens arising by operation of Law;
(10) Liens securing Capital Lease Obligations, mortgage financings, equipment leases, purchase money obligations or other Indebtedness incurred pursuant to Section 8.2.1(d) [Indebtedness]; provided that such Liens shall attach only to the property (a) acquired with the proceeds of such Indebtedness or (b) which is the subject of such Capital Lease Obligations;
(11) Liens on any of the Excluded Properties;
(12) Liens on the Equity Interests of a Person that is not a Restricted Subsidiary to secure obligations of such Person;
(13) claims, Liens or encumbrances upon, and defects of title to, real or personal property, including any attachment of personal or real property or other legal process prior to adjudication of a dispute on the merits, (a) if the validity or amount thereof is being contested in good faith by appropriate and lawful proceedings diligently conducted so long as levy and execution thereon have been stayed and continue to be stayed, (b) if a final judgment is entered and such judgment is discharged within thirty (30) days of entry, or (c) the payment of which is covered in full (subject to customary deductible) by insurance;
(14) precautionary filings under the UCC by a lessor with respect to personal property leased to such Person;
(15) Liens on insurance policies and proceeds thereof, or other deposits, to secure insurance premium financings;
(16) [reserved];
(17) Liens on cash or Temporary Cash Investments arising in connection with the defeasance, discharge or redemption of Indebtedness permitted hereunder;
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(18) Liens in respect of Production Payments and Reserve Sales; provided that such Liens are limited to the property that is subject to such Production Payments and Reserve Sales;
(19) other Liens not otherwise permitted hereunder with respect to Indebtedness or other obligations that do not in the aggregate exceed at any one time outstanding $50,000,000;
(20) Liens to renew, extend, refinance or refund a Lien referred to in clause (1) above; provided that (i) such new Lien shall be limited to all or part of the same property (including future improvements thereon and accessions thereto) subject to the original Lien and (ii) the obligations secured by such Lien at such time is not increased to any amount greater than the amount permitted by Refinancing Indebtedness;
(21) statutory and common law banker’s Liens and rights of setoff on bank deposits;
(22) option agreements and rights of first refusal granted with respect to assets that are permitted to be disposed of pursuant to the terms of Section 8.2.7 [Dispositions] or Section 8.2.13 [Sale of Proved Reserves; Pooling];
(23) [reserved];
(24) any leases of assets permitted by Section 8.2.7 [Dispositions];
(25) Oil and Gas Liens, in each case which are not incurred in connection with the borrowing of money, the obtaining of advances of credit or the payment of the deferred purchase price of property (other than trade accounts payable arising in the ordinary course of business);
(26) Immaterial Title Deficiencies; it being understood that this Permitted Lien does not affect the Borrower’s obligations under Section 8.1.18 [Title Information];
(27) pledges, deposits or bonds made in the ordinary course of business to secure payment of reclamation liabilities or workers’ compensation, or to participate in any fund in connection with workers’ compensation, unemployment insurance or other social security programs (including pledges or deposits of cash securing letters of credit that secure payment of such workers’ compensation, unemployment insurance or other social security programs);
(28) Liens of mechanics, materialmen, warehousemen, carriers, or other like Liens (including any other statutory nonconsensual or common law Liens), securing obligations incurred in the ordinary course of business that are not yet due and payable and Liens of landlords securing obligations to pay lease payments that are not yet due and payable or in default (including pledges or deposits of cash securing letters of credit that secure such Liens of landlords securing obligations to make lease payments that are not yet due and payable or in default) or, with respect to any of the foregoing, that are being contested in good faith by appropriate proceedings and as to which appropriate reserves have been established in accordance with GAAP and which proceedings (or orders entered in connection with such proceedings) have the effect of suspending the enforcement or collection of such Liens;
(29) good-faith pledges or deposits made or other Liens granted in the ordinary course of business to secure performance of bids, tenders, contracts (other than for the repayment of borrowed money) or leases, not in excess of the aggregate amount due thereunder or other amounts as may be customary, or to secure statutory obligations, or surety, appeal, indemnity, performance or other similar bonds required in the ordinary course of business (including pledges or deposits of cash securing letters of credit that secure such performance of bids, tenders, contracts (other than for the repayment of borrowed money) or leases, not in excess of the aggregate amount due thereunder or other amounts as may
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be customary, or that secure such statutory obligations, or such surety, appeal, indemnity, performance or other similar bonds required in the ordinary course of business);
(30) encumbrances consisting of zoning restrictions, licenses, easements or other restrictions on the use of real property, none of which materially impairs the use of such property or the value thereof, and none of which is violated in any material respect by existing or proposed structures or land use;
(31) Liens on cash and Temporary Cash Investments securing Indebtedness permitted by Section 8.2.1(f) [Indebtedness] in an aggregate amount not to exceed $25,000,000 at any one time outstanding; and
(32) deposits and escrows of cash pursuant to customary purchase price adjustment, indemnity or similar obligations under agreements related to acquisitions and Dispositions permitted hereunder;
provided that the foregoing clauses (5), (7), (10), (19), (24), (27) and (29) shall not be applicable to Proved Reserves. No intention by the Administrative Agent or the Collateral Agent to subordinate any Lien granted in favor of the Collateral Agent for the Secured Parties is to be hereby implied or expressed by the permitted existence of any Permitted Liens.
“Permitted Marketing Obligations” shall mean Indebtedness of the Borrower or any Restricted Subsidiary under letter of credit or borrowed money obligations, or in lieu of or in addition to such letters of credit or borrowed money, Guaranties of such Indebtedness or other obligation, of the Borrower or any Restricted Subsidiary by any other Restricted Subsidiary, as applicable, related to the purchase by the Borrower or any Restricted Subsidiary of Hydrocarbons for which the Borrower or such Restricted Subsidiary has contracts to sell; provided that, in the event that such Indebtedness or obligations are Guarantied by the Borrower or any such Restricted Subsidiary, then either:
(1) the Person with which the Borrower or such Restricted Subsidiary has contracts to sell has an Investment Grade Rating from S&P or Moody’s, or in lieu thereof, a Person Guarantying the payment of such obligated Person has an Investment Grade Rating from S&P or Moody’s; or
(2) such Person posts, or has posted for it, a letter of credit in favor of the Borrower or such Restricted Subsidiary with respect to all such Person’s obligations to the Borrower or such Restricted Subsidiary under such contracts.
“Permitted Prepaid Put Transaction” shall mean, for so long as the common stock of Borrower is publicly traded, the purchase by the Borrower, in cash, of an option to sell shares of its common stock to a counterparty; provided that the Borrower shall pay for such option in full at the time the option is entered into and such payment shall be treated as a Restricted Payment and permitted only if the Borrower is permitted to make such Restricted Payment at such time pursuant to Section 8.2.5 [Restricted Payments].
“Permitted Unsecured Notes” shall mean (a) the Existing Notes and (b) any unsecured notes issued by the Borrower in one or more transactions; provided that (i) no payment of principal in respect of such notes shall be required prior to six months after the Expiration Date (without giving effect to the Springing Expiration Date) in effect at the time of issuance (except for customary offers to purchase with proceeds of asset sales or upon the occurrence of a change of control or, if customary for such type of notes, a fundamental change), (ii) such notes shall not include any financial maintenance covenants, and the covenants and events of default shall be customary for high yield debt securities, or, in the case of convertible notes, customary for convertible notes, but in any event shall not be more restrictive than the covenants and events of default hereunder, taken as a whole, and (iii) no Subsidiary of the Borrower shall Guaranty such notes unless such Subsidiary is (or concurrently with any such Guaranty becomes) a Guarantor hereunder.
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“Permitted Unsecured Notes Indenture” shall mean an indenture or other agreement governing any Permitted Unsecured Notes.
“Person” shall mean any individual, corporation, partnership, limited liability company, association, joint-stock company, trust, unincorporated organization, joint venture, Official Body, or any other entity.
“Pledged Securities” shall mean all of the property described as “Pledged Securities” in the Security Agreement.
“Pledgor” shall have the meaning set forth in the Security Agreement.
“PNC” shall mean PNC Bank, National Association, its successors and assigns.
“Potential Default” shall mean any event or condition which with notice or passage of time, or any combination of the foregoing, would constitute an Event of Default.
“Preferred Stock” shall mean, with respect to any Person, Capital Stock of such Person of any class or classes (however designated) which is preferred as to the payment of dividends or distributions, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over Capital Stock of any other class of such Person.
“Prime Rate” shall mean the interest rate per annum announced from time to time by the Administrative Agent at its Principal Office as its then prime rate, which rate may not be the lowest or most favorable rate then being charged to commercial borrowers or others by the Administrative Agent. Any change in the Prime Rate shall take effect at the opening of business on the day such change is announced.
“Principal Office” shall mean the main banking office of the Administrative Agent in Pittsburgh, Pennsylvania.
“Pro Forma Basis” shall mean:
(1) any Material Acquisition/Disposition and any dividend or distribution on, or repurchases or redemptions of, Capital Stock of the Borrower made or to be made by the Borrower or any Restricted Subsidiary during the applicable reference period or subsequent to such reference period and on or prior to the date of determination will be given pro forma effect as if it had occurred on the first day of the applicable reference period;
(2) any Person that is a Restricted Subsidiary on the date of determination will be deemed to have been a Restricted Subsidiary at all times during such reference period;
(3) any Person that is not a Restricted Subsidiary on the date of determination will be deemed not to have been a Restricted Subsidiary at any time during such reference period;
(4) 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 the effect on such interest rate of any Specified Swap Agreement applicable to such Indebtedness); and
(5) the events for which such calculation is being made will be deemed to have occurred.
For purposes of this definition, whenever pro forma effect is given to a transaction, the pro forma calculations shall be made in good faith by a Responsible Officer of the Borrower and in a manner consistent with Article 11 of Regulation S-X of the Securities Act, as set forth in a certificate of an Authorized Officer of the Borrower (with supporting calculations) and reasonably acceptable to the
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Administrative Agent. For purposes of making the computation referred to above, interest on any Indebtedness under a revolving credit facility (to the extent required to be computed on a pro forma basis) shall be computed based upon the average daily balance of such Indebtedness during the applicable period. Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be deemed to have been based upon the rate actually chosen, or, if none, then based upon such optional rate chosen as the Borrower may designate.
“Production Payments and Reserve Sales” shall mean the grant or transfer by the Borrower or any Restricted Subsidiary to any Person of a royalty, overriding royalty, net profits interest, Dollar-Denominated Production Payment, partnership 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 where the holder of such interest has recourse solely to such production or proceeds of production, subject to the obligation of the grantor or transferor to operate and maintain, or cause the subject interests to be operated and maintained, in a reasonably prudent manner or other customary standard or subject to the obligation of the grantor or transferor to indemnify for environmental, title or other matters customary in the Permitted Business, including any such grants or transfers pursuant to incentive compensation programs on terms that are reasonably customary in the Permitted Business for geologists, geophysicists or other providers of technical services to the Borrower or any Restricted Subsidiary.
“Properties” shall have the meaning assigned to such term in Section 6.25(b) [Environmental Matters].
“Proved Developed Non-Producing Reserves” shall mean the Proved Reserves that are Developed Oil and Gas Reserves that are shut-in and behind-pipe reserves and other reserves for which production can be initiated or restored with relatively low expenditure compared to the cost of drilling a new well.
“Proved Developed Producing Reserves” shall mean the Proved Reserves that are Developed Oil and Gas Reserves and are expected to be recovered from completion intervals that are open and producing at the time of determination; provided that improved recovery Proved Reserves are considered producing only after the improved recovery project is in operation.
“Proved Gas Collateral” shall mean Proved Reserves having PV-9 no less than the lesser of (i) 85% of the PV-9 of all Proved Reserves included in the Borrowing Base Properties as such present values are determined in accordance with the most recent Reserve Report, together with as-extracted collateral related to such Proved Reserves and (ii) 2.25 multiplied by the Loan Limit.
“Proved Reserves” shall mean the “proved oil and gas reserves” as such term is defined by the SEC in its standards and guidelines.
“Proved Undeveloped Reserves” shall mean the Proved Reserves that are “undeveloped oil and gas reserves” as such term is defined by the SEC in its standards and guidelines.
“PTE” shall mean a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.
“PV10” shall mean the present worth of future net income, discounted to present value at the simple interest rate of ten percent (10%) per year.
“PV-9” shall mean, with respect to any Proved Reserves expected to be produced from any Borrowing Base Properties, the net present value, discounted at 9% per annum, of the future net revenues expected to accrue to the Borrower’s and the other Loan Parties’ collective interests in such reserves during the remaining expected economic lives of such reserves, calculated using the most recent Bank Price Deck provided to the Borrower by the Administrative Agent pursuant to this Agreement.
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“QFC Credit Support” shall have the meaning assigned to such term in Section 11.17 [Acknowledgement Regarding Any Supported QFCs].
“Qualified ECP Loan Party” shall mean each Loan Party that on the Eligibility Date is (a) an Eligible Contract Participant (after giving effect to Section 22 of the Guaranty Agreement and any and all other Guaranties of such Guarantor’s Swap Obligations by the Borrower and any other Guarantor), or (b) an Eligible Contract Participant that can cause another Person to qualify as an Eligible Contract Participant on the Eligibility Date under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act by entering into or otherwise providing a “letter of credit or keepwell, support, or other agreement” for purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.
“Ratable Share” shall mean the proportion that a Lender’s Commitment bears to the Commitments of all of the Lenders. If the Commitments have terminated or expired, the Ratable Shares shall be determined based upon the Commitments most recently in effect, giving effect to any assignments; provided that in the case of Section 2.13 [Defaulting Lenders] when a Defaulting Lender shall exist, “Ratable Share” shall mean the percentage of the aggregate Commitments (disregarding any Defaulting Lender’s Commitment) represented by such Lender’s Commitment.
“Real Property” shall mean, individually as the context requires, real property (other than the Excluded Properties) that is owned or leased by any Loan Party, including, but not limited to the surface, methane gas and other mineral rights, interests and leases associated with the properties described on Schedule 1.1(R) (other than the Excluded Properties), and “Real Properties” shall mean, collectively, as the context requires, all of the foregoing but shall not include any asset that shall have been released, pursuant to Section 10.10 [Authorization to Release Collateral or Guarantors] or 11.1.1(d) [Required Consents] from the Liens created in connection with this Agreement.
“Recipient” shall mean (i) the Administrative Agent, (ii) any Lender and (iii) any Issuing Lender, as applicable.
“Refinance” shall mean, in respect of any Indebtedness, to refinance, extend, renew, refund, repay, prepay, redeem, replace, defease or retire, or to issue other Indebtedness in exchange or replacement for, such Indebtedness. “Refinanced” and “Refinancing” shall have correlative meanings.
“Refinancing Indebtedness” shall mean Indebtedness that Refinances (subject to the next paragraph of this definition) any Indebtedness of the Borrower or any Restricted Subsidiary existing on the Closing Date or incurred in compliance with this Agreement, including Indebtedness that Refinances Refinancing Indebtedness; provided that:
(1) such Refinancing Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the Indebtedness being Refinanced or, in the case of Indebtedness that Refinances any Existing Notes, no earlier than six months after the Expiration Date (without giving effect to the Springing Expiration Date);
(2) such Refinancing Indebtedness has an Average Life at the time such Refinancing Indebtedness is incurred that is equal to or greater than the Average Life of the Indebtedness being Refinanced; provided that in the case of Indebtedness that Refinances any Existing Notes, the Average Life shall also be no shorter than the period beginning on the date of issuance and ending six months after the Expiration Date (without giving effect to the Springing Expiration Date);
(3) such Refinancing Indebtedness has an aggregate principal amount (or if incurred with original issue discount, an aggregate issue price) that is equal to or less than the aggregate principal amount (or if incurred with original issue discount, the aggregate accreted value) then outstanding (plus fees and expenses, including any premium and defeasance costs) under the Indebtedness being Refinanced;
(4) if the refinanced Indebtedness was (A) subordinated in right of payment to the Obligations or the Guaranties thereof, as the case may be, then such Refinancing Indebtedness, by
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its terms, is subordinate in right of payment to the Obligations or the Guaranties thereof, as the case may be, at least to the same extent as the Indebtedness being Refinanced, (B) unsecured, then such Refinancing Indebtedness shall be unsecured or (C) secured by a Lien on Collateral that was contractually junior to the Lien on such Collateral securing the Obligations, then such Refinancing Indebtedness may be secured by such Collateral only to the extent the Liens on such Collateral securing such Refinancing Indebtedness are contractually junior to the Liens on such Collateral securing the Obligations to at least the same extent as in the Indebtedness being Refinanced; and
(5) if the refinanced Indebtedness is purchase money obligations, (a) the holders of such Refinancing Indebtedness agree that they will look solely to the fixed assets so acquired which secure such Refinancing Indebtedness, and neither the Borrower nor any Restricted Subsidiary (i) is directly or indirectly liable for such Refinancing Indebtedness or (ii) provides credit support, including any undertaking, Guaranty, agreement or instrument, related to such Refinancing Indebtedness that would constitute Indebtedness (other than the grant of a Lien on such acquired fixed assets) and (b) no default or event of default with respect to such Refinancing Indebtedness would cause, or permit (after notice or passage of time or otherwise), any holder of any other Indebtedness of the Borrower or a Guarantor to declare a default or event of default on such other Indebtedness or cause the payment, repurchase, redemption, defeasance or other acquisition or retirement for value thereof to be accelerated or payable prior to any scheduled principal payment, scheduled sinking fund payment or maturity;
provided further, however, that Refinancing Indebtedness shall not include:
(a) Indebtedness of a Subsidiary that Refinances Indebtedness of the Borrower; or
(b) Indebtedness of the Borrower or a Restricted Subsidiary of the Borrower that Refinances Indebtedness of an Unrestricted Subsidiary; or
(c) Indebtedness of a Restricted Subsidiary of the Borrower that is not a Loan Party which Refinances Indebtedness of a Loan Party.
“Regulation U” shall mean Regulation U, T or X as promulgated by the Board of Governors of the Federal Reserve System, as amended from time to time.
“Reimbursement Date” shall have the meaning specified in Section 2.10.3(b) [Participations, Disbursements, Reimbursement].
“Reimbursement Obligation” shall have the meaning specified in Section 2.10.3(b) [Participations, Disbursements, Reimbursement].
“Related Parties” shall mean, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, advisors, trustees, administrators, managers and representatives of such Person and of such Person’s Affiliates.
“Release” shall mean any spilling, leaking, pumping, pouring, emitting, emptying, discharge, injecting, escaping, leaching, dumping, disposing, depositing into or migration into or through the Environment, or into, from or through any building or structure.
“Removal Effective Date” shall have the meaning assigned to such term in Section 10.6 [Resignation of Agents].
“Reportable Compliance Event” shall mean that any Covered Entity becomes a Sanctioned Person, or is charged by indictment, criminal complaint or similar charging instrument, arraigned, or custodially detained in connection with any Anti-Terrorism Law or any predicate crime to any Anti-Terrorism Law, or has knowledge of facts or circumstances to the effect that it is reasonably likely that any aspect of its operations is in violation of any Anti-Terrorism Law.
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“Reportable Event” shall mean a reportable event described in Section 4043 of ERISA and regulations thereunder with respect to a Pension Plan or Multiemployer Plan.
“Required Borrowing Base Lenders” shall mean, at any time, Lenders having in the aggregate Revolving Exposures and unused Revolving Credit Commitments representing more than 66.66% of the sum of the total Revolving Exposures and unused Revolving Credit Commitments at such time.
“Required Increasing Borrowing Base Lenders” shall mean, at any time, Lenders having in the aggregate Revolving Exposures and unused Revolving Credit Commitments representing no less than 95% of the sum of the total Revolving Exposures and unused Revolving Credit Commitments at such time.
“Required Lenders” shall mean Lenders (other than any Defaulting Lender) having more than 50% of the aggregate amount of the Revolving Credit Commitments of the Lenders (excluding any Defaulting Lender) or, after the termination of the Revolving Credit Commitments, the outstanding Revolving Credit Loans and Ratable Share of Letter of Credit Obligations of the Lenders (excluding any Defaulting Lender).
“Required Permits” shall mean all permits, licenses, authorizations, plans, approvals and bonds necessary under the applicable Laws for the Loan Parties to continue to conduct oil and gas and related operations on, in or under such parties’ real property, and any and all other mining properties owned or leased by the Borrower or any such Loan Party (collectively “Mining Property”) or Oil and Gas Properties substantially in the manner as such operations had been authorized immediately prior to such Loan Party’s acquisition of its interests in such real property and as may be necessary for such Loan Party to conduct, in all material respects, oil and gas and related operations on, in or under the Oil and Gas Properties or the Mining Property as described in any plan of operation.
“Required Share” shall have the meaning assigned to such term in Section 5.10 [Settlement Date Procedures].
“Required Title Information” shall mean, with respect to any Proved Reserves, such title reports and information as shall be in form and substance that is customary and usual for such Proved Reserves and shall be in form and substance reasonably satisfactory to the Administrative Agent.
“Reserve Report” shall mean the most recent of the December 31 Reserve Report, the June 30 Reserve Report, or the Alternate Reserve Report.
“Resolution Authority” shall mean an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
“Responsible Officer” shall mean, with respect to any Loan Party, each of the chief executive officer, president, vice president, chief financial officer, chief administrative officer, general counsel, secretary, treasurer and assistant treasurer of such Loan Party. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.
“Restricted Payment” shall mean:
(1) the declaration or payment of any dividends or any other distributions of any sort in respect of Equity Interests of the Borrower or any Restricted Subsidiary (including any payment in connection with any merger or consolidation involving the Borrower or any Restricted Subsidiary) or similar payment to the direct or indirect holders of such Equity Interests, other than:
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(a) dividends or distributions payable solely in Equity Interests of the Borrower (other than Disqualified Stock);
(b) dividends or distributions payable solely to the Borrower or a Restricted Subsidiary; and
(c) pro rata dividends or other distributions made by a Restricted Subsidiary to minority stockholders (or owners of an equivalent interest in the case of a Subsidiary that is an entity other than a corporation);
(2) the purchase, repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Borrower or any Restricted Subsidiary held by any other Person (other than any acquisition or retirement for value from, or payment to, the Borrower or any Restricted Subsidiary); or
(3) the purchase, repurchase, redemption, defeasance or other acquisition or retirement for value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment of any Subordinated Obligations of the Borrower or any Guarantor (other than (a) any intercompany Indebtedness between or among the Borrower and any Restricted Subsidiary and (b) the purchase, repurchase or other acquisition of Subordinated Obligations acquired in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of acquisition),
in each case, including any of the foregoing that is effected by Division.
“Restricted Subsidiary” shall mean any Subsidiary of the Borrower that is not an Unrestricted Subsidiary.
“Revolving Credit Commitment” shall mean, as to any Lender at any time, the amount as of the Closing Date, set forth opposite its name on Schedule 1.1(B) in the column labeled “Amount of Commitment,” as such Commitment is thereafter assigned pursuant to an Assignment and Assumption Agreement, increased pursuant to Section 2.12 [Increase in Revolving Credit Commitments] or decreased pursuant to Section 2.4 [Commitment Reduction], and “Revolving Credit Commitments” shall mean the aggregate Revolving Credit Commitments of all of the Lenders.
“Revolving Credit Loans” shall mean collectively and “Revolving Credit Loan” shall mean separately all Revolving Credit Loans or any Revolving Credit Loan made by the Lenders or one of the Lenders to the Borrower pursuant to Section 2.1.1 [Revolving Credit Loans] or Section 2.10.3 [Participations, Disbursements, Reimbursement].
“Revolving Credit Notes” shall mean collectively and “Revolving Credit Note” shall mean separately all the promissory notes of the Borrower in the form of Exhibit 1.1(N)(1) evidencing the Revolving Credit Loans.
“Revolving Exposure” shall mean, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender’s Revolving Credit Loans and its Letter of Credit Obligations and Swingline Exposure at such time.
“Revolving Facility Usage” shall mean at any time the sum of the outstanding Revolving Credit Loans, the outstanding Swing Loans, and the Letter of Credit Obligations.
“Sanctioned Country” shall mean a country, territory or region subject to a sanctions program maintained under any Anti-Terrorism Law.
“Sanctioned Person” shall mean any individual person, group, regime, entity or thing listed or otherwise recognized as a specially designated, prohibited, sanctioned or debarred person, group,
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regime, entity or thing, or subject to any limitations or prohibitions (including but not limited to the blocking of property or rejection of transactions), under any Anti-Terrorism Law.
“SEC” shall mean the Securities and Exchange Commission, or any Official Body succeeding to any of its principal functions.
“Secured Parties” shall mean collectively, the Agents, the Swingline Lender, the Issuing Lenders, the Lenders, the Lender-Related Persons and any provider of a Specified Swap Agreement or Other Lender Provided Financial Service Product.
“Securities Account” shall mean any “securities account” as defined in the UCC in effect in the State of New York from time to time.
“Securities Act” shall mean the Securities Act of 1933.
“Security Agreement” shall mean the Amended and Restated Security Agreement, dated as of the Closing Date, executed and delivered by each of the Loan Parties to the Collateral Agent for the benefit of the Secured Parties.
“Security Documents” shall mean, collectively, the Security Agreement, the Mortgages, the Patent, Trademark and Copyright Security Agreement, each intercreditor agreement entered into in accordance with Section 10.10(c) [Authorization to Release Collateral and Guarantors] and each other security document or pledge agreement delivered in accordance with applicable local Law to grant a valid, perfected security interest in any property as Collateral for the Obligations, and all UCC or other financing statements or instruments of perfection required by this Agreement or any other such security document or pledge agreement to be filed with respect to the security interests in property and fixtures created pursuant to any document or instrument utilized to pledge or grant or purport to pledge or grant a security interest or lien on any property as Collateral for the Obligations, and amendments, supplements or joinders to the foregoing.
“Settlement Date” shall mean the Business Day on which the Administrative Agent elects to effect settlement pursuant to Section 5.10 [Settlement Date Procedures].
“SOFR” shall mean, for any day, a rate equal to the secured overnight financing rate as administered by the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).
“SOFR Adjustment” shall mean ten basis points (0.10%).
“SOFR Floor” shall mean a rate of interest per annum equal to zero basis points (0.00%).
“SOFR Reserve Percentage” shall mean, for any day, the maximum effective percentage in effect on such day, if any, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the reserve requirements (including, without limitation, supplemental, marginal and emergency reserve requirements) with respect to SOFR funding.
“Solvent” shall mean, with respect to any Person on any date of determination, taking into account such right of reimbursement, contribution or similar right available to such Person from other Persons, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person, (b) the present fair saleable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay such debts and liabilities as they mature, (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which such Person is engaged, and (e) such Person is able to pay its debts and liabilities, contingent obligations and other commitments
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as they mature in the ordinary course of business. In computing the amount of contingent liabilities at any time, it is intended that such liabilities will be computed at the amount which, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.
“S&P” shall mean S&P Global Ratings, business of S&P Global Ratings, Inc., and any successor thereto.
“Specified Existing Notes” shall mean the Borrower’s 2.25% Convertible Senior Notes due 2026.
“Specified Swap Agreement” shall mean (i) any Swap Agreement entered into for the purpose of hedging risk between (a) any Loan Party and (b) any counterparty that is, or was at the Closing Date or at the time such Swap Agreement was entered into, the Administrative Agent, a Lender or an Affiliate of an entity that is the Administrative Agent or an entity that is a Lender or (ii) any Swap Agreement that has been in effect since prior to the Closing Date, as set forth on Schedule 1.1(S) and is between (a) any Loan Party and (b) any counterparty that was the administrative agent, a lender or an Affiliate of an entity that is the administrative agent or an entity that was a lender under the Existing Credit Agreement and has appointed the Collateral Agent as its collateral agent under the Security Documents pursuant to arrangements reasonably satisfactory to the Administrative Agent.
“Springing Expiration Date” has the meaning specified in the definition of “Expiration Date.”
“Standby Letter of Credit” shall mean a Letter of Credit issued to support obligations of the Borrower or any Restricted Subsidiary, contingent or otherwise, which finance the working capital and business needs of the Borrower and the Restricted Subsidiaries.
“Stated Maturity” shall mean, with respect to any Indebtedness, the maturity date (or specified date on which the final payment of principal on such Indebtedness is due) applicable thereto including as such maturity date (or specified date) may be changed to an earlier date pursuant to the provisions of the documents governing such Indebtedness including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such Indebtedness at the option of the holder thereof upon the happening of any contingency unless such contingency has occurred).
“Subordinated Obligation” shall mean any Indebtedness of the Borrower or any Guarantor (whether outstanding on the Existing Credit Agreement Closing Date or thereafter incurred) which is subordinate or junior in right of payment to, in the case of the Borrower, the Obligations or, in the case of a Guarantor, its Guaranty of the Obligations pursuant to a written agreement to that effect.
“Subsidiary” shall mean, with respect to any Person, any corporation, association, partnership or other business entity of which more than 50% of the total voting power of the Voting Stock thereof is at the time owned or controlled, directly or indirectly, by:
(1) such Person;
(2) such Person and one or more Subsidiaries of such Person; or
(3) one or more Subsidiaries of such Person.
Unless otherwise specified, “Subsidiary” refers to a Subsidiary of the Borrower.
“Subsidiary Shares” shall have the meaning specified in Section 6.3 [Subsidiaries].
“Supported QFC” shall have the meaning assigned to such term in Section 11.17 [Acknowledgement Regarding Any Supported QFCs].
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“Swap” shall mean any “swap” as defined in Section 1a(47) of the Commodity Exchange Act and regulations thereunder, other than (a) a swap entered into, or subject to the rules of, a board of trade designated as a contract market under Section 5 of the Commodity Exchange Act, or (b) a commodity option entered into pursuant to Commodity Futures Trading Commission Regulation 32.3(a).
“Swap Aggregate Exposure” shall mean, as of any Test Date, the sum of all Exposures with respect to all Acquisition Swap Agreements.
“Swap Agreement” shall mean (i) any Interest Rate Agreement, (ii) any Currency Agreement, (iii) any Hydrocarbon Swap Agreement or (iv) any cap, floor, collar, exchange transaction, hedging contract, forward contract, swap agreement, futures contract, call or put option or any other similar agreement or other exchange or protection agreement relating to commodity prices, securities prices or financial market conditions; provided that no sale of a commodity for deferred shipment or delivery that is intended to be physically settled (other than a forward sale contract to the extent that it provides, at the time such contract (or a specified portion of such contract or a specified transaction under such contract) is entered into, for all in fixed prices; provided, that, the Borrower’s or any other Loan Party’s election for “first of month” pricing or other one month pricing pursuant to a forward sale contract for deliveries of Hydrocarbons for the immediately following calendar month shall be deemed not to be a contract for an all in fixed price for purposes of this definition) shall be a Swap Agreement pursuant to this definition.
“Swap Cap” shall have the meaning assigned to such term in the definition of “Permitted Commodity Swap Agreement.”
“Swap Obligation” shall mean, with respect to any Guarantor, any obligation to pay or perform under any agreement, contract or transaction that constitutes a Swap.
“Swing Loan Note” shall mean a promissory note of the Borrower in the form of Exhibit 1.1(N)(2) evidencing the Swing Loans.
“Swing Loan Request” shall mean a request for Swing Loans made in accordance with Section 2.5.2 [Swing Loan Requests].
“Swing Loans” shall mean collectively and “Swing Loan” shall mean separately all Swing Loans or any Swing Loan made by the Swingline Lender to the Borrower pursuant to Section 2.6.3 [Making Swing Loans].
“Swingline Cap” shall mean, at any time, the lesser of (i) $50,000,000 and (ii) the Revolving Credit Commitments at such time.
“Swingline Exposure” shall mean, at any time, the aggregate principal amount of all Swing Loans outstanding at such time. The Swingline Exposure of any Lender at any time shall be its Ratable Share of the total Swingline Exposure at such time.
“Swingline Lender” shall mean the Administrative Agent in its capacity as the lender of Swing Loans.
“Target Oil and Gas Properties” shall have the meaning assigned to such term in Section 8.2.12(b) [Swaps].
“Taxes” shall mean all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Official Body, including any interest, additions to tax or penalties applicable thereto. “Taxation” shall have a correlative meaning.
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“Temporary Cash Investments” shall mean any of the following:
(1) any Investment in direct obligations of the United States of America or any agency thereof or obligations guaranteed by the United States of America or any agency thereof, in each case maturing not later than one year following acquisition thereof;
(2) Investments in time deposit accounts, certificates of deposit and money market deposits maturing within one year of the date of acquisition thereof issued by a bank or trust company which is organized under the laws of the United States of America, any state thereof or any foreign country recognized by the United States, and which bank or trust company has capital, surplus and undivided profits aggregating in excess of $250.0 million (or the foreign currency equivalent thereof) and has outstanding debt which is rated “A-” (or such similar equivalent rating) or higher by at least one nationally recognized statistical rating organization (as defined in Section 3(a)(62) of the Exchange Act) or any money-market fund sponsored by a registered broker dealer or mutual fund distributor whose assets consist of obligations of the types described in clauses (1), (2), (3), (4) and (5) of this definition;
(3) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (1) of this definition entered into with a bank meeting the qualifications described in clause (2) of this definition;
(4) Investments in commercial paper, maturing not more than 180 days after the date of acquisition, issued by a Person (other than an Affiliate of the Borrower) organized and in existence under the laws of the United States of America or any foreign country recognized by the United States of America with a rating at the time as of which any Investment therein is made of “P-2” (or higher) according to Moody’s or “A-2” (or higher) according to S&P or “R-1” (or higher) by Dominion Bond Rating Service Limited or Canadian Bond Rating Service, Inc. (in the case of a Canadian issuer);
(5) Investments in securities with maturities of six months or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States of America, or by any political subdivision or taxing authority thereof, and rated at least “A” by S&P or “A-2” by Moody’s;
(6) Investments in asset-backed securities maturing within one year of the date of acquisition thereof with a long-term rating at the time as of which any Investment therein is made of “A” (or higher) by Dominion Bond Rating Service Limited or Canadian Bond Rating Service, Inc. (in the case of a Canadian issuer);
(7) obligations of any foreign government or obligations that possess a guaranty of the full faith and credit of any foreign government maturing not later than one year after acquisition thereof;
(8) obligations of United States government-sponsored enterprises, Federal agencies, and Federal financing banks that are not otherwise authorized including, but not limited to, (i) United States government-sponsored enterprises such as instrumentalities of the Federal Credit System (Bank for Cooperatives, Federal Land Banks), Federal Home Loan Banks and Federal National Mortgage Association and (ii) Federal agencies such as instrumentalities of the Department of Housing and Urban Development (Federal Housing Administration, Government National Mortgage Association), Export-Import Bank, Farmers Home Administration and Tennessee Valley Authority, in each case maturing not later than one year following acquisition thereof;
(9) debt obligations (other than commercial paper obligations) of domestic or foreign corporations maturing not later than one year after acquisition thereof;
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(10) preferred stock obligations with a floating rate dividend that is reset periodically at auction maturing not later than one year after acquisition thereof;
(11) Investments in repurchase agreements collateralized by any of the above securities eligible for outright purchase; provided that the collateral is delivered to a bank custody account in accordance with the terms of a written repurchase agreement with a dealer or bank; and
(12) Investments in shares of institutional mutual funds whose investment policies are essentially in agreement with the type and criteria for Investments otherwise set forth in this definition,
provided that Investments described in clauses (7) through (12) of this definition are restricted to obligations rated no lower than “A3” or “P-1” by Moody’s or “A-” or “A-1” by S&P.
“Term SOFR Administrator” shall mean CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by the Administrative Agent in its reasonable discretion).
“Term SOFR Rate” shall mean, with respect to any amount to which the Term SOFR Rate Option applies, for any Interest Period, the interest rate per annum determined by the Administrative Agent by dividing (the resulting quotient rounded upwards, at the Administrative Agent’s discretion, to the nearest 1/100th of 1%) (A) the Term SOFR Reference Rate for a tenor comparable to such Interest Period, as such rate is published by the Term SOFR Administrator on the day (the “Term SOFR Determination Date”) that is two (2) Business Days prior to the first day of such Interest Period, by (B) a number equal to 1.00 minus the SOFR Reserve Percentage. If the Term SOFR Reference Rate for the applicable tenor has not been published or replaced with a Benchmark Replacement by 5:00 p.m. (Pittsburgh, Pennsylvania time) on the Term SOFR Determination Date, then the Term SOFR Reference Rate, for purposes of clause (A) in the preceding sentence, shall be the Term SOFR Reference Rate for such tenor on the first Business Day preceding such Term SOFR Determination Date for which such Term SOFR Reference Rate for such tenor was published in accordance herewith, so long as such first preceding Business Day is not more than three (3) Business Days prior to such Term SOFR Determination Date. The Term SOFR Rate shall be adjusted automatically without notice to the Borrower on and as of (i) the first day of each Interest Period, and (ii) the effective date of any change in the SOFR Reserve Percentage.
“Term SOFR Rate Loan” shall mean a Loan that bears interest based on Term SOFR Rate.
“Term SOFR Rate Option” shall mean the option of the Borrower to have Loans bear interest at the rate and under the terms set forth in Section 4.1.1(a)(ii) [Revolving Credit Term SOFR Rate Option].
“Term SOFR Reference Rate” shall mean the forward-looking term rate based on SOFR.
“Test Date” shall mean the first Business Day of each calendar week; provided that if on the first Business Day of any calendar week the Swap Aggregate Exposure shall exceed $100,000,000, then, for the period commencing on such Test Date to and including the first Business Day of the next succeeding calendar week thereafter on which the Swap Aggregate Exposure shall be less than or equal to $100,000,000, the Swap Aggregate Exposure shall be calculated at the end of each Business Day assuming that a settlement date had occurred on the immediately preceding Business Day.
“Threshold Amount” shall mean $50,000,000.
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“Title Cure Period” shall mean, with respect to any title defect or exception with respect to any Proved Gas Collateral, the date which is 60 days after the date on which the Administrative Agent (or its counsel) has notified the Borrower (or its counsel) of such title defect or exception, or such later date as is acceptable to the Administrative Agent in its sole discretion.
“Transactions” shall mean (i) the execution and delivery of the Loan Documents on the Closing Date and (ii) payment of fees and expenses in connection with the foregoing.
“Type” shall mean, with respect to Amendment No. 1 Existing Revolving Credit Loans, whether such Amendment No. 1 Existing Revolving Credit Loans are Amendment No. 1 Existing Revolving Credit A Loans or Amendment No. 1 Existing Revolving Credit B Loans.
“U.S. Special Resolution Regimes” shall have the meaning assigned to such term in Section 11.17.
“UCP” shall have the meaning assigned to such term in Section 11.11.1 [Governing Law].
“UK Financial Institution” shall mean any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended form time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.
“UK Resolution Authority” shall mean the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.
“Uniform Commercial Code” or “UCC” shall mean the Uniform Commercial Code as in effect in each applicable jurisdiction or other applicable Law entitled to all the rights, benefits and priorities provided by the Uniform Commercial Code or such Law.
“United States Tax Compliance Certificate” shall have the meaning assigned to such term in Section 5.8.5(b)(i)(C) [Status of Lenders].
“Unrestricted Subsidiary” shall mean (i) CNX Midstream and its Subsidiaries, (ii) CNX Investments LLC, a Delaware limited liability company, (iii) any other Subsidiary of the Borrower (including any newly acquired or newly formed Subsidiary or a Person becoming a Subsidiary through merger or consolidation or Investment therein) that is designated by the Board of Directors of the Borrower as an Unrestricted Subsidiary pursuant to a Board Resolution in accordance with Section 8.2.3 [Designation of Unrestricted Subsidiaries] and (iv) the Subsidiaries of each of the foregoing; provided that, for the avoidance of doubt, all Investments in any Person referred to any of the foregoing clauses (i) through (iv) by Borrower or a Restricted Subsidiary on or following the Closing Date shall be made pursuant to and subject to capacity under Section 8.2.4 [Loans and Investments].
“USA PATRIOT Act” shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.
“U.S. Government Securities Business Day” shall mean any day except for (a) a Saturday or Sunday or (b) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.
“Utilization Percentage” shall mean, as determined quarterly for the preceding quarter, the average daily quotient obtained by dividing the Revolving Facility Usage during the preceding fiscal quarter by the lesser of (i) the Revolving Credit Commitments and (ii) the Borrowing Base.
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“Voting Stock” of a Person shall mean all classes of Capital Stock of such Person then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof.
“Write-Down and Conversion Powers” shall mean, (a) 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, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.
1.bConstruction.
Unless the context of this Agreement otherwise clearly requires, the following rules of construction shall apply to this Agreement and each of the other Loan Documents: (i) references to the plural include the singular, the plural, the part and the whole and the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation”; (ii) the words “hereof,” “herein,” “hereunder,” “hereto” and similar terms in this Agreement or any other Loan Document refer to this Agreement or such other Loan Document as a whole; (iii) article, section, subsection, clause, schedule and exhibit references are to this Agreement or other Loan Document, as the case may be, unless otherwise specified; (iv) reference to any Person includes such Person’s permitted successors and assigns; (v) unless otherwise provided, reference to any agreement, including this Agreement and any other Loan Document together with the schedules and exhibits hereto or thereto, document or instrument, order, declaration, understanding or other arrangement means such agreement, document, instrument, order, declaration, understanding or other arrangement as amended, restated, supplemented, modified, extended, renewed, refunded, superseded, substituted for, replaced, refinanced or increased in whole or in part, from time to time, to the extent not prohibited hereunder; (vi) any reference to any Law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such Law and any reference to any Law shall, unless otherwise specified, refer to such Law as amended, modified, supplemented or replaced from time to time; (vii) relative to the determination of any period of time, “from” means “from and including,” “to” means “to but excluding,” and “through” means “through and including”; (viii) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights; (ix) section headings herein and in each other Loan Document are included for convenience and shall not affect the interpretation of this Agreement or such Loan Document; (x) unless otherwise specified, all references herein to times of day shall be references to Eastern time and (xi) references to the “date hereof” or “date of this Agreement” shall be to the Closing Date.
1.cAccounting Principles.
Except as otherwise provided in this Agreement, all computations and determinations as to accounting or financial matters and all financial statements to be delivered pursuant to this Agreement shall be made and prepared in accordance with GAAP (including principles of consolidation where appropriate), and all accounting or financial terms shall have the meanings ascribed to such terms by GAAP; provided, however, that all accounting terms used in Section 8.2 [Negative Covenants] (and all defined terms used in the definition of any accounting term used in Section 8.2 [Negative Covenants] shall have the meaning given to such terms (and defined terms) under GAAP as in effect on the date hereof applied on a basis consistent with those used in preparing the Historical Statements referred to in Section 6.9(a) [Historical Statements]). For the avoidance of doubt, (i) in no event shall any lease be deemed a capital lease for purposes of this Agreement if such lease would have been categorized as an operating lease as determined in accordance with GAAP prior to giving effect to the Accounting Standards Codification Topic 842, Leases and (ii) all lease liabilities and right of use assets in each case related to operating leases shall be excluded from all calculations made under this Agreement. If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in
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any Loan Document, and either the Borrower or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.
1.dValuations.
Whenever this Agreement requires the determination of the monetary value of “other consideration,” a Guaranty, “other obligations” or an Investment and the computation method to determine such monetary value is not already addressed by GAAP, (i) the monetary value of “other consideration” or an Investment of tangible property shall be calculated as the Fair Market Value of such consideration or tangible property, (ii) the monetary value of any Guaranty at any time of a fixed monetary obligation shall be the amount of such fixed monetary obligation at such time, (iii) the monetary value of any Guaranty of a fixed stream of monetary obligations at any time shall be the present value of the remaining amounts of such stream of monetary obligations at such time discounted at a rate equal to the Borrower’s cost of funds at such time, (iv) the monetary value of a Guaranty of performance or of contingent liabilities at any time shall be the amount which, in light of all the facts and circumstances existing at the time, represent the amount which would reasonably be expected to become an actual or matured monetary obligation or liability of the Person making such Guaranty determined by such Person in good faith, or (v) the monetary value of “other obligations,” contingent or otherwise, at any time shall be the amount which, in light of all the facts and circumstances existing at the time, represent the amount which would reasonably be expected to become an actual or matured monetary obligation or liability of the Person who is obligated for such “other obligations.”
1.eLetter of Credit Amounts.
Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such time; provided, however, that with respect to any Letter of Credit that, by its terms or the terms of any Issuer Document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such times.
1.fInterest Rates.
Section 4.6(d) [Benchmark Replacement Setting] of this Agreement provides a mechanism for determining an alternative rate of interest in the event that the Term SOFR Rate is no longer available or in certain other circumstances. The Administrative Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to, the administration, submission or any other matter related to the Term SOFR Rate or with respect to any alternative or successor rate thereto, or replacement rate therefor.
(ii. REVOLVING CREDIT AND SWING LOAN FACILITIES
2.iCommitments.
2.1.1Revolving Credit Loans.
Subject to the terms and conditions hereof and relying upon the representations and warranties herein set forth, each Lender severally agrees to make Revolving Credit Loans in U.S. Dollars to the Borrower at any time or from time to time on or after the date hereof to, but not including, the Expiration Date; provided that after giving effect to each such Loan, (i) such Lender’s Revolving Exposure shall not exceed the lesser of (a) such Lender’s Ratable Share of the Borrowing Base and (b) such Lender’s Revolving Credit Commitment, (ii) the Revolving Facility Usage shall not exceed the
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lesser of (a) the Borrowing Base and (b) the Revolving Credit Commitments and (iii) the aggregate amount of Indebtedness under this Agreement shall not exceed the Applicable Notes Indenture Cap; provided, further, that (x) at the Administrative Agent’s request, the Borrower shall provide the Administrative Agent calculations and supporting information reasonably satisfactory to the Administrative Agent showing compliance with clause (iii) and (y) notwithstanding the foregoing clause (x), the Administrative Agent shall have no obligation to request such calculation or information or to determine compliance with clause (iii), and shall be fully entitled to assume (without any further investigation) that each borrowing of Revolving Credit Loans complies with clause (iii) if the Borrower makes a Loan Request for such borrowing. Within such limits of time and amount and subject to the other provisions of this Agreement, the Borrower may borrow, repay and reborrow pursuant to this Section 2.1.1 [Revolving Credit Loans].
With respect to any Incoming Lender or Increased Lender, subject to the terms and conditions set forth in Section 7 of this Agreement, such Lender agrees to fund on the Closing Date such amounts to the Administrative Agent to the extent necessary so that the principal amounts of its Revolving Credit Loans and Participation Advances have been funded by such Lender in accordance with its Ratable Share and to acquire participations in Letters of Credit and Swing Loans so that such Lender’s participations therein are in accordance with its Ratable Share as of the Closing Date. Any such amounts so received by the Administrative Agent pursuant to the immediately preceding sentence shall be disbursed on the Closing Date to Decreased Lenders and Exiting Lenders, so that after such fundings and disbursements the Revolving Credit Loans and Participation Advances have been funded in accordance with each Lender’s Ratable Share as of the Closing Date. For the purposes of the fundings and other adjustments on the Closing Date pursuant to this paragraph only and for no other purpose, each Existing Lender (other than an Existing Lender that is a Exiting Lender) waives (x) the payment of any breakage costs pursuant to Section 5.9 of the Existing Credit Agreement in connection with the payments pursuant to the immediately preceding sentence, (y) delivery of any Loan Requests and notices of prepayment in connection with the adjustments pursuant to this paragraph, whether hereunder or under the Existing Credit Agreement and (z) minimum borrowing and prepayment amounts in connection with the fundings and other adjustments pursuant to this paragraph. Existing Commitment Fees, Existing Letter of Credit Fees and Existing Interest shall be paid on the Closing Date only to Exiting Lenders in the amounts owed to such Exiting Lenders and not to Increased Lenders or Decreased Lenders (and the Increased Lenders and Decreased Lenders shall be paid Existing Commitment Fees, Existing Letter of Credit Fees and Existing Interest (computed, for the avoidance of doubt, at the rate applicable to such Existing Commitment Fees, Existing Letter of Credit Fees and Existing Interest under the Existing Credit Agreement) from the date that such Existing Commitment Fees, Existing Letter of Credit Fees and Existing Interest had so accrued under the Existing Credit Agreement), and such Existing Commitment Fees, Existing Letter of Credit Fees and Existing Interest shall be payable on the earlier of the first Payment Date hereunder following the Closing Date or any earlier date on which any Commitment Fees, Letter of Credit Fees or interest, as applicable, shall become payable hereunder. In the case of any assignment of any Loans, Participation Advances or Letter of Credit Obligations prior to such first Payment Date or earlier date of payment, if not otherwise specified in the Assignment Agreement applicable thereto, any unpaid Existing Commitment Fees, Existing Letter of Credit Fees or Existing Interest shall be payable to the assignee.
“Decreased Lender” means any Existing Lender whose Revolving Credit Commitment hereunder as of the Closing Date is less than the Existing Revolving Credit Commitment of such Existing Lender.
“Existing Commitment Fees” means Commitment Fees (under and as defined in the Existing Credit Agreement) that are accrued and unpaid as of the Closing Date.
“Existing Interest” means interest on Loans (under and as defined in the Existing Credit Agreement) and Participation Advances (under and as defined in the Existing Credit Agreement) that are accrued and unpaid as of the Closing Date.
“Existing Lender” means a Person that was a Lender (under and as defined in the Existing Credit Agreement) immediately prior to the effectiveness of this Agreement on the Closing Date.
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“Existing Letter of Credit Fees” means Letter of Credit Fees (under and as defined in the Existing Credit Agreement) that are accrued and unpaid as of the Closing Date.
“Existing Revolving Credit Commitment” means, as to any Existing Lender, such Existing Lender’s Revolving Credit Commitment (under and as defined in the Existing Credit Agreement) immediately prior to the effectiveness of this Agreement on the Closing Date.
“Exiting Lender” means any Existing Lender but that has no Revolving Credit Commitment hereunder as of the Closing Date.
“Incoming Lender” means, any Lender as of the Closing Date that is not an Existing Lender.
“Increased Lender” means any Existing Lender whose Revolving Credit Commitment hereunder as of the Closing Date is greater than the Existing Revolving Credit Commitment of such Existing Lender.
2.1.2 Swing Loans.
Subject to the terms and conditions hereof and relying upon the representations and warranties herein set forth, and in order to facilitate loans and repayments between Settlement Dates, the Swingline Lender may, at its option, cancelable at any time for any reason whatsoever, make swing loans (the “Swing Loans”) to the Borrower at any time or from time to time after the date hereof to, but not including, the Expiration Date, in an aggregate principal amount up to but not in excess of the Swingline Cap; provided that, after giving effect to each such Loan, (i) the Revolving Facility Usage shall not at any time exceed the lesser of (a) the Borrowing Base and (b) the Revolving Credit Commitments and (ii) the aggregate amount of Indebtedness under this Agreement shall not exceed the Applicable Notes Indenture Cap; provided, further, that (x) at the Administrative Agent’s request, the Borrower shall provide the Administrative Agent calculations and supporting information reasonably satisfactory to the Administrative Agent showing compliance with clause (ii) and (y) notwithstanding the foregoing clause (x), the Administrative Agent shall have no obligation to request such calculation or information or to determine compliance with clause (ii), and shall be fully entitled to assume (without any further investigation) that each borrowing of Swing Loans complies with clause (ii) if the Borrower borrows Swing Loans. Within such limits of time and amount and subject to the other provisions of this Agreement, the Borrower may borrow, repay and reborrow pursuant to this Section 2.1.2 [Swing Loans].
2.aNature of Lenders’ Obligations with Respect to Revolving Credit Loans.
Each Lender shall be obligated to participate in each request for Revolving Credit Loans pursuant to Section 2.5 [Loan Requests] in accordance with its Ratable Share. The obligations of each Lender hereunder are several. The failure of any Lender to perform its obligations hereunder shall not affect the Obligations of the Borrower to any other party nor shall any other party be liable for the failure of such Lender to perform its obligations hereunder. The Lenders shall have no obligation to make Revolving Credit Loans hereunder on or after the Expiration Date.
2.bCommitment Fees.
Accruing from the date hereof until the Expiration Date, the Borrower agrees to pay to the Administrative Agent for the account of each Lender, as consideration for such Lender’s Revolving Credit Commitment hereunder, a nonrefundable commitment fee (the “Commitment Fee”) equal to the Applicable Commitment Fee Rate (computed on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed) on the average daily difference between the amount of (a) such Lender’s Revolving Credit Commitment as the same may be constituted from time to time and (b) such Lender’s Revolving Exposure (for purposes of this computation, Swing Loans shall not be deemed to be borrowed amounts under its Revolving Credit Commitment); provided, however, that any Commitment Fee accrued with respect to the Revolving Credit Commitment of a Defaulting Lender during the period prior to the time such Lender became a Defaulting Lender and unpaid at such time shall not be payable by the Borrower so long as such Lender shall be a Defaulting Lender except to the extent that such Commitment
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Fee shall otherwise have been due and payable by the Borrower prior to such time; and provided further that no Commitment Fee shall accrue with respect to the Revolving Credit Commitment of a Defaulting Lender so long as such Lender shall be a Defaulting Lender. Subject to the proviso in the directly preceding sentence, all Commitment Fees shall be payable in arrears on each Payment Date.
2.cCommitment Reduction.
2.4.iVoluntary.
The Borrower shall have the right any time and from time to time, without premium or penalty, upon three (3) Business Days’ prior written notice to the Administrative Agent to permanently reduce, in whole multiples of $5,000,000, or terminate the Revolving Credit Commitments; provided that the Revolving Credit Commitments may not be reduced pursuant to this Section 2.4.1 below the Revolving Facility Usage. All notices to reduce Revolving Credit Commitments shall be irrevocable, except that any such notice may state that it is conditional upon the consummation of a financing transaction, in which case such notice may be revoked or delayed by the Borrower (by notice to the Administrative Agent on or prior to the specified date of reduction) if such condition is not satisfied.
2.4.iiMandatory.
(1)The Revolving Credit Commitments shall terminate on the Expiration Date.
(2)If any reduction in the Borrowing Base would result in the Borrowing Base being less than the aggregate Commitments, the Commitments shall be automatically and permanently (but subject to any increase pursuant to Section 2.12) reduced, without premium or penalty, contemporaneously with such reduction in the Borrowing Base so that the aggregate Commitments equal the Borrowing Base as reduced; provided that if Section 5.11 [Borrowing Base Deficiency] applies, any reduction in the aggregate Commitments pursuant to the foregoing shall be subject to the Borrower’s right to deliver Mortgages on additional Oil and Gas Properties or to prepay Revolving Credit Loans and Cash Collateralize Letter of Credit Obligations as set forth in Section 5.11.
2.4.iEffect of Commitment Reduction.
Each reduction of Revolving Credit Commitments shall ratably reduce the Revolving Credit Commitments of the Lenders. Any reduction or termination of the Revolving Credit Commitments shall be accompanied by (a) the payment in full of any Commitment Fee then accrued on the amount of such reduction or termination and (b) to the extent that the Revolving Facility Usage exceeds the Revolving Credit Commitment as so reduced or terminated, first, the prepayment of Swing Loans, second, the prepayment of Revolving Credit Loans and third, the Cash Collateralization for the benefit of the Issuing Lenders (ratably among the Issuing Lenders) of the Borrower’s obligation under Letter of Credit Obligations (in an aggregate amount under the foregoing first, second and third clauses, equal to such excess), together with the full amount of interest accrued on the principal sum of Revolving Credit Loans to be prepaid (and all amounts referred to in Section 5.9 [Indemnity] hereof). From the effective date of any such reduction or termination, so long as any and all payments, prepayments and Cash Collateralizations required by either of the immediately preceding clauses (a) or (b) shall have been made in full, the Commitment Fee pursuant to Section 2.3 [Commitment Fees] shall correspondingly be reduced or cease to accrue. At the request of any Lender, the Administrative Agent shall promptly distribute to the Borrower, the Administrative Agent, each Issuing Lender and each Lender Schedule 1.1(B) as revised to reflect the reduction of Revolving Credit Commitments.
2.iiLoan Requests.
2.5.iRevolving Credit Loan Requests.
Except as otherwise provided herein, subject to the notice requirements set forth in this Section 2.5.1 and the other terms and conditions hereof, the Borrower may from time to time prior to the
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Expiration Date request the Lenders to make Revolving Credit Loans, or renew or convert the Interest Rate Option applicable to existing Revolving Credit Loans pursuant to Section 4.2 [Interest Periods], by delivering to the Administrative Agent, not later than 11:00 a.m., (i) three (3) Business Days prior to the proposed Borrowing Date with respect to the making of Revolving Credit Loans to which the Term SOFR Rate Option applies or the conversion to or the renewal of the Term SOFR Rate Option for any Loans; and (ii) the same Business Day of the proposed Borrowing Date with respect to the making of a Revolving Credit Loan to which the Base Rate Option applies or the last day of the preceding Interest Period with respect to the conversion to the Base Rate Option for any Loan, of a duly completed request therefor substantially in the form of Exhibit 2.5.1 or a request by telephone immediately confirmed in writing in such form and delivered by facsimile or email (in “pdf,” “tif” or similar format) (each, a “Loan Request”); it being understood that the Administrative Agent may rely on the authority of any individual making such a telephonic request without the necessity of receipt of such written confirmation. Each Loan Request shall be irrevocable and shall specify or certify, as applicable (i) the proposed Borrowing Date; (ii) the aggregate amount of the proposed Loans comprising each Borrowing Tranche, which amount shall be in (x) an integral multiple of $1,000,000 and not less than $5,000,000 for each Borrowing Tranche under the Term SOFR Rate Option and (y) an integral multiple of $50,000 and not less than the lesser of $500,000 or the maximum amount available for Borrowing Tranches to which the Base Rate Option applies; (iii) whether the Term SOFR Rate Option or Base Rate Option shall apply to the proposed Loans comprising the applicable Borrowing Tranche; and (iv) in the case of a Borrowing Tranche to which the Term SOFR Rate Option applies, an appropriate Interest Period for the Loans comprising such Borrowing Tranche.
2.5.iiSwing Loan Requests.
Except as otherwise provided herein, the Borrower may from time to time prior to the Expiration Date request the Swingline Lender to make Swing Loans by delivery to the Swingline Lender not later than 2:00 p.m. on the proposed Borrowing Date of a duly completed request therefor substantially in the form of Exhibit 2.5.2 hereto or a request by telephone immediately confirmed in writing in such form and delivered by facsimile or email (in “pdf,” “tif” or similar format) (each, a “Swing Loan Request”); it being understood that the Swingline Lender may rely on the authority of any individual making such a telephonic request without the necessity of receipt of such written confirmation. Each Swing Loan Request shall be irrevocable and shall specify the proposed Borrowing Date and the principal amount of such Swing Loan, which shall be in integral multiples of $50,000 and shall be not less than $100,000.
2.iiiMaking and Repayment of Loans.
2.6.iMaking Revolving Credit Loans.
The Administrative Agent shall, promptly after receipt by it of a Loan Request pursuant to Section 2.5.1 [Revolving Credit Loan Requests], notify the Lenders of its receipt of such Loan Request specifying the information provided by the Borrower and the apportionment among the Lenders of the requested Revolving Credit Loans as determined by the Administrative Agent in accordance with Section 2.2 [Nature of Lenders’ Obligations with Respect to Revolving Credit Loans]. Each Lender shall remit the principal amount of each Revolving Credit Loan to the Administrative Agent such that the Administrative Agent is able to, and the Administrative Agent shall, to the extent the Lenders have made funds available to it for such purpose and subject to Section 7.2 [Each Additional Loan or Letter of Credit], fund such Revolving Credit Loans to the Borrower in U.S. Dollars and immediately available funds at the Principal Office prior to 2:00 p.m. on the applicable Borrowing Date; provided that if any Lender fails to remit such funds to the Administrative Agent in a timely manner, the Administrative Agent may elect in its sole discretion to fund with its own funds the Revolving Credit Loans of such Lender on such Borrowing Date, and such Lender shall be subject to the repayment obligation in Section 2.6.2 [Presumptions by the Administrative Agent]. Each Lender may, at its option, make any Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect in any manner the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement.
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2.6.iiPresumptions by the Administrative Agent.
Unless the Administrative Agent shall have received notice from a Lender prior to 1:00 p.m. on the proposed date of any Loan that such Lender will not make available to the Administrative Agent such Lender’s share of such Loan, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section 2.6.1 [Making Revolving Credit Loans] and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Loan available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of a payment to be made by such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation and (ii) in the case of a payment to be made by the Borrower, the interest rate applicable to Loans under the Base Rate Option. If such Lender pays its share of the applicable Loan to the Administrative Agent, then the amount so paid shall constitute such Lender’s Loan. Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.
2.6.iiiMaking Swing Loans.
So long as the Swingline Lender elects to make Swing Loans, the Swingline Lender shall, after receipt by it of a Swing Loan Request pursuant to Section 2.5.2 [Swing Loan Requests], fund such Swing Loan to the Borrower in U.S. Dollars and immediately available funds at the Principal Office prior to 3:00 p.m. on the Borrowing Date.
2.6.ivRepayment of Loans.
The Borrower shall repay all Loans together with all outstanding interest thereon on the Expiration Date.
2.ivNotes.
2.7.iRevolving Credit Notes.
If requested by any Lender, the obligation of the Borrower to repay the aggregate unpaid principal amount of the Revolving Credit Loans made to it by such Lender, together with interest thereon, shall be evidenced by a Revolving Credit Note payable to the order of such Lender in a face amount equal to the Revolving Credit Commitment of such Lender. The Revolving Credit Loans shall mature, and the Borrower unconditionally agrees to pay in full the unpaid principal amount and all amounts outstanding and unpaid in respect of the Revolving Credit Loans to the Administrative Agent for the account of each Lender, on the Expiration Date.
2.7.iiSwing Loan Note.
The obligation of the Borrower to repay the unpaid principal amount of the Swing Loans made to it by the Swingline Lender, together with interest thereon, shall be evidenced by a Swing Loan Note payable to the order of the Swingline Lender in a face amount equal to the Swingline Cap.
2.vUse of Proceeds.
The proceeds of the Revolving Credit Loans will be used in accordance with Section 8.1.11 [Use of Proceeds].
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2.viBorrowing Base.
(3)During the period from the Amendment No. 1 Effective Date to the date of the next redetermination of the Borrowing Base pursuant to the provisions of this Section 2.9 [Borrowing Base], the amount of the Borrowing Base shall be $2,250,000,000.
(4)Upon each delivery of a Reserve Report pursuant to Section 8.3.8 [Reserve Reports], together with such engineering and other data from the Borrower as is customarily provided, the Administrative Agent shall, within a reasonable period of time, make a good faith determination of the proposed Borrowing Base, and promptly thereafter the Administrative Agent will propose by notice in writing to the Lenders such Borrowing Base for acceptance by (i) the Required Borrowing Base Lenders with respect to any reaffirmations or reductions in the Borrowing Base and (ii) the Required Increasing Borrowing Base Lenders with respect to any increases in the Borrowing Base. If such Borrowing Base, as proposed by the Administrative Agent is accepted by the Applicable Borrowing Base Lenders, then such accepted Borrowing Base shall be communicated by the Administrative Agent to the Borrower on or about (i) with respect to any June 30 Reserve Report, (x) if the Administrative Agent shall have received the June 30 Reserve Report in a timely and complete manner, the immediately following October 15 and (y) if the Administrative Agent shall not have received the June 30 Reserve Report in a timely and complete manner, then fifteen (15) days after the Administrative Agent has received the complete June 30 Reserve Report from the Borrower and the Administrative Agent has had a reasonable opportunity to determine the proposed Borrowing Base or (ii) with respect to any December 31 Reserve Report, (x) if the Administrative Agent shall have received the December 31 Reserve Report in a timely and complete manner, the immediately following April 15 and (y) if the Administrative Agent shall not have received the December 31 Reserve Report in a timely and complete manner, then fifteen (15) days after the Administrative Agent has received the complete December 31 Reserve Report from the Borrower and the Administrative Agent has had a reasonable opportunity to determine the proposed Borrowing Base (the applicable date in any of the foregoing clauses (i)(x), (i)(y), (ii)(x) or (ii)(y), the “Applicable Date”); provided that if such proposed Borrowing Base is not approved by the Applicable Borrowing Base Lenders prior to the Applicable Date, then the Applicable Borrowing Base Lenders will establish and agree to a Borrowing Base established using criteria agreed upon by the Applicable Borrowing Base Lenders, and such amount will be communicated to the Borrower, within 30 days following the Applicable Date. Any Lender that shall fail to reject the proposed Borrowing Base within fifteen (15) days of notice of the proposed Borrowing Base shall be deemed to have approved the proposed amount of such Borrowing Base. The new Borrowing Base shall become effective as of the date that the Borrower receives notification from the Administrative Agent of the new Borrowing Base, and until that time, the old Borrowing Base shall continue to be in effect. The Borrowing Base, as determined and established pursuant to this Section 2.9 [Borrowing Base] shall be subject, at all times, to the redetermination or adjustment of the then effective Borrowing Base as a result of a redetermination of the Borrowing Base pursuant to Section 2.9(c) [Borrowing Base] or a reduction of the Borrowing Base pursuant to Section 2.9(e) [Borrowing Base] or Section 8.1.18(c) [Title Information].
(5)Not more than once in any fiscal year, the Administrative Agent upon the instruction of the Required Borrowing Base Lenders, may request from the Borrower an Alternate Reserve Report for the purpose of redetermining the Borrowing Base, and not more than twice in any fiscal year, the Borrower shall have the right to request a redetermination of the Borrowing Base by sending a written notice to the Administrative Agent of such request along with an Alternate Reserve Report. In connection with any redetermination of the Borrowing Base related to a delivery of an Alternate Reserve Report, the Administrative Agent shall make a good faith determination, in a reasonably prompt manner, of a new Borrowing Base, and the Administrative Agent shall propose by notice in writing, in a reasonably prompt manner, such new Borrowing Base to the Lenders, and the Applicable Borrowing Base Lenders shall agree to review in a reasonably prompt manner, and (if acceptable) approve a new Borrowing Base, which shall become effective upon receipt by the Borrower of notice of such new Borrowing Base. Any Lender that shall fail to reject the proposed Borrowing Base within fifteen (15) days of notice of the proposed Borrowing Base shall be deemed to have approved the proposed amount of such Borrowing Base. In connection with any such redetermination of the Borrowing Base, the Borrower shall deliver promptly upon the request of the Administrative Agent an Alternate Reserve Report to the Administrative Agent; provided that the Borrower’s failure to deliver such Alternate Reserve Report shall not preclude or impact the making of such redetermination of the
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Borrowing Base by the Administrative Agent or the approval of such Borrowing Base by the Applicable Borrowing Base Lenders.
(6)The Borrowing Base shall represent the good faith determination by the Administrative Agent of the loan value of the Borrowing Base Properties based upon, among other things, information contained in the Reserve Report and in accordance with the applicable definitions and provisions herein contained, the Administrative Agent’s standard policies regarding energy lending, industry lending practices, and consideration for the nature of the facilities established hereunder. The Borrower acknowledges that the determination of the Borrowing Base contains an equity cushion (market value in excess of the value of all Indebtedness of the Loan Parties), which is acknowledged by the Borrower to be essential for the adequate protection of the Administrative Agent and the Lenders.
(7)Unless otherwise waived in writing by the Required Lenders, (i) in the event of the Disposition or other early monetization or early termination of one or more Swap Agreements that had been assigned aggregate Borrowing Base Value (since the last redetermination of the Borrowing Base) in excess of 5% of the Borrowing Base then in effect, the Borrowing Base shall be reduced (effective upon such Disposition, monetization or termination) by an amount equal to the Borrowing Base Value of such Swap Agreement(s); provided that in determining the 5% threshold, to the extent such Swap Agreement is replaced, in whole or in part, in a substantially contemporaneous transaction, with one or more Swap Agreements otherwise permitted under this Agreement and covering Hydrocarbons of the type that were hedged pursuant to such replaced Swap Agreement(s) and with notional volumes, prices, tenors and economic effect during such tenors not less favorable to the Borrower and/or such Restricted Subsidiary than those set forth in such replaced Swap Agreement(s) and without payments by the Borrower and/or such Restricted Subsidiary in connection therewith, only the part of such Swap Agreement that is not so replaced shall be counted in such 5% and (ii) the Borrowing Base shall be reduced upon the circumstances set forth in, and in accordance with, Section 8.2.1(m)(x) [Indebtedness] and Section 8.2.13(f) [Sale of Proved Reserves; Pooling].
2.dLetters of Credit.
2.10.iIssuance of Letters of Credit.
(8)The Borrower may at any time prior to the Letter of Credit Expiration Date request the issuance of a letter of credit (each, a “Letter of Credit”), for its own account or the account of any Restricted Subsidiary, or the amendment or extension of an existing Letter of Credit, by delivering or transmitting by facsimile or email (in “pdf,” “tif” or similar format), to an Issuing Lender selected by the Borrower (with a copy to the Administrative Agent) a completed application for letter of credit, or request for such amendment or extension, as applicable, signed by the Borrower (and, in the case of a Letter of Credit issued for the account of any Restricted Subsidiary, also signed by such Restricted Subsidiary) and otherwise in such form as such Issuing Lender may specify from time to time by no later than 10:00 a.m. at least five (5) Business Days, or such shorter period as may be agreed to by such Issuing Lender, in advance of the proposed date of issuance. The Borrower shall authorize and direct each Issuing Lender to name the Borrower as the “Applicant” or “Account Party” of each Letter of Credit and, in the case of a Letter of Credit issued for the account of any Restricted Subsidiary, to name such Restricted Subsidiary as the “Co-Applicant” of such Letter of Credit. Promptly after receipt of any letter of credit application, such Issuing Lender shall confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has received a copy of such Letter of Credit application and if not, such Issuing Lender will provide the Administrative Agent with a copy thereof. Letters of Credit may be issued in the form of a Standby Letter of Credit or a Commercial Letter of Credit; provided that in no event shall Truist Bank be required to issue any Commercial Letter of Credit. Letters of Credit shall be issued only in U.S. Dollars. For the avoidance of doubt, the Loan Parties acknowledge that each Letter of Credit issued for the account of Persons other than the Loan Parties shall constitute an Investment and Guaranty in an amount equal to the face amount of such Letter of Credit, without duplication, and shall be subject to the limitations set forth herein.
(9)Unless an Issuing Lender has received notice from any Lender, the Administrative Agent or any Loan Party, at least one day prior to the requested date of issuance, amendment or extension of the applicable Letter of Credit, that one or more applicable conditions in
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Section 7 [Conditions of Lending and Issuance of Letters of Credit] are not satisfied, then, subject to the terms and conditions hereof and in reliance on (among other things) the agreements of the other Lenders set forth in this Section 2.10 [Letters of Credit], such Issuing Lender or any of such Issuing Lender’s Affiliates will issue the proposed Letter of Credit or agree to such amendment or extension; provided that after giving effect thereto:
(i)no Letter of Credit shall expire later than the earlier of (x) subject to Section 2.10.1(c) [Issuance of Letters of Credit], twelve (12) months from the date of issuance or extension, unless the applicable Issuing Lender agrees, and (y) the Letter of Credit Expiration Date, unless the applicable Issuing Lender agrees and the Borrower complies with the requirements of Section 2.10.10 [Cash Collateral Prior to the Expiration Date]; and
(ii)in no event shall (x) the aggregate amount of Letter of Credit Obligations exceed the Letter of Credit Aggregate Sublimit at any one time outstanding, (y) the aggregate amount of Letter of Credit Obligations with respect to Letters of Credit issued and outstanding by any Issuing Lender exceed its Letter of Credit Issuing Lender Sublimit at any one time (unless otherwise agreed to by such Issuing Lender) or (z) the Revolving Facility Usage exceed, at any one time, the Revolving Credit Commitments.
Each request for the issuance, amendment or extension of a Letter of Credit shall be deemed to be a representation by the Borrower that it shall be in compliance with the preceding sentence and with Section 7 [Conditions of Lending and Issuance of Letters of Credit] after giving effect to the requested issuance, amendment or extension of such Letter of Credit. Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to the beneficiary thereof, the applicable Issuing Lender will also deliver to the Borrower and the Administrative Agent a true and complete copy of such Letter of Credit or amendment.
(10)If the Borrower so requests in any applicable request for a Letter of Credit, the Issuing Lender may, in its discretion, agree to issue a Letter of Credit that has automatic extension provisions (each, an “Auto-Extension Letter of Credit”); provided that any such Auto-Extension Letter of Credit must permit the Issuing Lender to prevent any such extension at least once in each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the “Non-Extension Notice Date”) in each such twelve-month period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the Issuing Lender, the Borrower shall not be required to make a specific request to the Issuing Lender for any such extension. Once an Auto-Extension Letter of Credit has been issued, the Lenders shall be deemed to have authorized (but may not require) the Issuing Lender to permit the extension of such Letter of Credit at any time to an expiry date not later than the Letter of Credit Expiration Date; provided, however, that the Issuing Lender shall not permit any such extension if (A) the Issuing Lender has determined that it would not be permitted to issue such Letter of Credit in its revised form (as extended) under the terms hereof, or (B) it has received notice (which may be by telephone or in writing) on or before the day that is seven Business Days before the Non-Extension Notice Date (1) from the Administrative Agent that the Required Lenders have elected not to permit such extension or (2) from the Administrative Agent, any Lender or the Borrower that one or more of the applicable conditions specified in Section 7.2 [Each Additional Loan or Letter of Credit] are not then satisfied, and in each such case directing the Issuing Lender not to permit such extension.
(11)Notwithstanding Section 2.10.1(a) [Issuance of Letters of Credit], no Issuing Lender shall be under any obligation to issue any Letter of Credit if (i) any order, judgment or decree of any Official Body or arbitrator shall by its terms purport to enjoin or restrain such Issuing Lender from issuing the Letter of Credit, or any Law applicable to such Issuing Lender or any request or directive (whether or not having the force of law) from any Official Body with jurisdiction over such Issuing Lender shall prohibit, or request that such Issuing Lender refrain from, the issuance of letters of credit generally or the Letter of Credit in particular or shall impose upon such Issuing Lender with respect to the Letter of Credit any restriction, reserve or capital requirement (for which such Issuing Lender is not otherwise compensated hereunder) not in effect on the Existing Credit Agreement Closing Date, or shall impose upon such Issuing Lender any unreimbursed loss, cost or expense which was not applicable on the
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Existing Credit Agreement Closing Date and which such Issuing Lender in good faith deems material to it, or (ii) the issuance of the Letter of Credit would violate one or more policies of such Issuing Lender applicable to letters of credit generally.
(12)On the Closing Date, the outstanding Letters of Credit previously issued under the Existing Credit Agreement that are set forth on Schedule 2.10.1 (the “Existing Letters of Credit”) will automatically, without any action on the part of any Person, be deemed to be Letters of Credit issued hereunder for the account of the Borrower for all purposes of this Agreement and the other Loan Documents.
2.10.iiLetter of Credit Fees.
The Borrower shall pay (i) to the Administrative Agent for the ratable account of the Lenders a fee (the “Letter of Credit Fee”) equal to the Applicable Letter of Credit Fee Rate on the daily amount available to be drawn under each Letter of Credit, and (ii) to each Issuing Lender for its own account a fronting fee equal to 0.125% per annum on the daily amount available to be drawn under each Letter of Credit issued by such Issuing Lender. All Letter of Credit Fees and fronting fees shall be computed on the basis of a year of 360 days and actual days elapsed and shall be payable in arrears on each Payment Date following issuance of each Letter of Credit; provided, however, that fronting fees on Commercial Letters of Credit shall be payable at the time of issuance. The Borrower shall also pay to each Issuing Lender for such Issuing Lender’s sole account such Issuing Lender’s then in effect customary fees and administrative expenses payable with respect to the Letters of Credit issued by such Issuing Lender as such Issuing Lender may generally charge or incur from time to time in connection with the issuance, maintenance, extension, renewal, amendment (if any), assignment or transfer (if any), negotiation, and administration of Letters of Credit.
2.10.iiiParticipations, Disbursements, Reimbursement.
(13)Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from such Issuing Lender a participation in such Letter of Credit and each drawing thereunder in an amount equal to such Lender’s Ratable Share of the maximum amount available to be drawn under such Letter of Credit and the amount of such drawing, respectively.
(14)In the event of any request for a drawing under a Letter of Credit by the beneficiary or transferee thereof, the applicable Issuing Lender will promptly notify the Borrower and the Administrative Agent thereof. The Borrower shall reimburse (such obligation to reimburse such Issuing Lender shall sometimes be referred to as a “Reimbursement Obligation”) such Issuing Lender prior to 12:00 noon on the next Business Day following the date that the Borrower has received such notice from such Issuing Lender (each such date, a “Reimbursement Date”) by paying to the Administrative Agent for the account of such Issuing Lender an amount equal to the amount so paid by such Issuing Lender plus interest at the interest rate applicable to Loans under the Base Rate Option from the date on which the amount was paid by such Issuing Lender to the date such Issuing Lender is reimbursed, unless otherwise required by the Administrative Agent or such Issuing Lender. In the event the Borrower fails to reimburse such Issuing Lender (through the Administrative Agent) for the full amount of any drawing under any Letter of Credit by 12:00 noon on the Reimbursement Date, the Administrative Agent will promptly notify each Lender thereof of the applicable LC Disbursement, the payment then due from the Borrower in respect thereof and each such Lender’s Ratable Share of the amount of such drawing. Any notice given by the Administrative Agent or Issuing Lender pursuant to this Section 2.10.3(b) may be oral if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.
(15)Each Lender shall upon any notice pursuant to Section 2.10.3(b) [Participations, Disbursements, Reimbursement] make available to the Administrative Agent for the account of the applicable Issuing Lender immediately available funds equal to its Ratable Share of the amount of the drawing, whereupon the Administrative Agent shall promptly pay to the Issuing Lender the amounts so received by it from the Lenders. If any Lender so notified fails to make available to the Administrative Agent for the account of such Issuing Lender the amount of such Lender’s Ratable Share of such amount
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by no later than 2:00 p.m. on the Reimbursement Date, then interest shall accrue on such Lender’s obligation to make such payment, from the Reimbursement Date to the date on which such Lender makes such payment (i) at a rate per annum equal to the Federal Funds Effective Rate during the first three (3) days following the Reimbursement Date and (ii) at a rate per annum equal to the rate applicable to Revolving Credit Loans under the Base Rate Option on and after the fourth day following the Reimbursement Date. Promptly following receipt by the Administrative Agent of any payment from the Borrower pursuant to this Section 2.10.3, the Administrative Agent shall distribute such payment to the Issuing Lender or, to the extent that Lenders have made payments pursuant to this Section 2.10.3(c) to reimburse the Issuing Lender, then to such Lender and the Issuing Lender as their interests may appear. Any payment made by a Lender pursuant to this Section 2.10.3(c) to reimburse the Issuing Lender for any LC Disbursement shall not constitute a Loan and shall not relieve the Borrower of its obligation to reimburse such LC Disbursement. The Administrative Agent and the applicable Issuing Lender will promptly give notice (as described in Section 2.10.3(b) [Participations, Disbursements, Reimbursement] above) of the occurrence of the Reimbursement Date, but failure of the Administrative Agent or such Issuing Lender to give any such notice on the Reimbursement Date or in sufficient time to enable any Lender to effect such payment on such date shall not relieve such Lender from its obligation under this Section 2.10.3(c) [Participations, Disbursements, Reimbursement].
(16)If the Issuing Lender shall make any LC Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in full as set forth in Section 2.10.3(b), the unpaid amount thereof shall bear interest, for each day from and including the first Business Day after receipt of notice to but excluding the date that the Borrower reimburses such LC Disbursement, at the rate per annum then applicable to Revolving Credit Loans under the Base Rate Option; provided that, if the Borrower fails to reimburse such LC Disbursement when due pursuant to Section 2.10.3(b), then Section 4.3(b) [Interest After Default] shall apply. Interest accrued pursuant to this paragraph shall be for the account of the Issuing Lender, except that interest accrued on and after the date of payment by any Lender pursuant to Section 2.10.3(b) to reimburse the Issuing Lender shall be for the account of such Lender to the extent of such payment.
2.10.iRepayment of Participation Advances.
(17)Upon (and only upon) receipt by the Administrative Agent for the account of an Issuing Lender of immediately available funds from the Borrower (i) in reimbursement of any payment made by such Issuing Lender under the Letter of Credit with respect to which any Lender has made a payment to the Administrative Agent for the account of such Issuing Lender pursuant to this Section 2.10.4 (each such payment by a Lender, a “Participation Advance”) to the Administrative Agent, or (ii) in payment of interest on such a payment made by such Issuing Lender under such a Letter of Credit, the Administrative Agent on behalf of such Issuing Lender will pay to each Lender, in the same funds as those received by the Administrative Agent, the amount of such Lender’s Ratable Share of such funds, except the Administrative Agent shall retain for the account of such Issuing Lender the amount of the Ratable Share of such funds of any Lender that did not make a Participation Advance in respect of such payment by such Issuing Lender.
(18)If an Issuing Lender or the Administrative Agent is required at any time to return to any Loan Party, or to a trustee, receiver, liquidator, custodian, or any official in any Insolvency Proceeding, any portion of any payment made by any Loan Party to the Administrative Agent for the account of the Issuing Lender pursuant to this Section in reimbursement of a payment made under any Letter of Credit or interest or fees thereon, each Lender shall, on demand of the Administrative Agent or such Issuing Lender, forthwith return to the Administrative Agent for the account of such Issuing Lender the amount of its Ratable Share of any amounts so returned by the Administrative Agent plus interest thereon from the date such demand is made to the date such amounts are returned by such Lender to the Administrative Agent, at a rate per annum equal to the Federal Funds Effective Rate in effect from time to time.
2.10.ivDocumentation.
Each Loan Party agrees to be bound by the terms of each Issuing Lender’s Issuer Documents and written regulations and customary practices relating to letters of credit, though such
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interpretation may be different from such Loan Party’s own. In the event of a conflict between an Issuer Document and this Agreement, this Agreement shall govern. It is understood and agreed that, except in the case of gross negligence or willful misconduct, no Issuing Lender shall be liable for any error, negligence and/or mistakes, whether of omission or commission, in following any Loan Party’s instructions or those contained in the Letters of Credit or any modifications, amendments or supplements thereto.
2.10.vDeterminations to Honor Drawing Requests.
In determining whether to honor any request for drawing under any Letter of Credit by the beneficiary thereof, the applicable Issuing Lender shall be responsible only to determine that the documents and certificates required to be delivered under such Letter of Credit have been delivered and that they comply on their face with the requirements of such Letter of Credit.
2.10.viNature of Participation and Reimbursement Obligations.
Each Lender’s obligation in accordance with this Agreement to make the Revolving Credit Loans or Participation Advances, as contemplated by Section 2.10.3 [Participations, Disbursements, Reimbursement] and the Obligations of the Borrower to reimburse each respective Issuing Lender upon a draw under a Letter of Credit shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Section 2.10 [Letters of Credit] under all circumstances, including the following circumstances:
(19)any set-off, counterclaim, recoupment, defense or other right which such Lender may have against the applicable Issuing Lender or any of its Affiliates, the Borrower or any other Person for any reason whatsoever, or which any Loan Party may have against the applicable Issuing Lender or any of its Affiliates, any Lender or any other Person for any reason whatsoever;
(20)any lack of validity or enforceability of any Letter of Credit;
(21)any claim of breach of warranty that might be made by any Loan Party or any Lender against any beneficiary of a Letter of Credit, or the existence of any claim, set-off, recoupment, counterclaim, crossclaim, defense or other right which any Loan Party or any Lender may have at any time against a beneficiary, successor beneficiary, any transferee or assignee of any Letter of Credit or the proceeds thereof (or any Persons for whom any such transferee may be acting), any Issuing Lender or its Affiliates or any Lender or any other Person or, whether in connection with this Agreement, the transactions contemplated herein or any unrelated transaction (including any underlying transaction between any Loan Party or Subsidiaries of a Loan Party and the beneficiary for which any Letter of Credit was procured);
(22)the lack of power or authority of any signer of (or any defect in or forgery of any signature or endorsement on) or the form of or lack of validity, sufficiency, accuracy, enforceability or genuineness of any draft, demand, instrument, certificate or other document presented under or in connection with any Letter of Credit, or any fraud or alleged fraud in connection with any Letter of Credit, or the transport of any property or provisions of services relating to a Letter of Credit, in each case even if such Issuing Lender or any of such Issuing Lender’s Affiliates has been notified thereof;
(23)payment by such Issuing Lender or any of its Affiliates under any Letter of Credit against presentation of a demand, draft or certificate or other document which does not comply with the terms of such Letter of Credit;
(24)the solvency of, or any acts or omissions by, any beneficiary of any Letter of Credit, or any other Person having a role in any transaction or obligation relating to a Letter of Credit, or the existence, nature, quality, quantity, condition, value or other characteristic of any property or services relating to a Letter of Credit;
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(25)any failure by such Issuing Lender or any of such Issuing Lender’s Affiliates to issue any Letter of Credit in the form requested by any Loan Party, unless such Issuing Lender has received written notice from such Loan Party of such failure within three (3) Business Days after such Issuing Lender shall have furnished such Loan Party and the Administrative Agent a copy of such Letter of Credit and such error is material and no drawing has been made thereon prior to receipt of such notice;
(26)any adverse change in the business, operations, properties, assets, condition (financial or otherwise) or prospects of the Borrower or any of its Subsidiaries;
(27)any breach of this Agreement or any other Loan Document by any party thereto;
(28)the occurrence or continuance of an Insolvency Proceeding with respect to any Loan Party;
(29)the fact that an Event of Default or a Potential Default shall have occurred and be continuing;
(30)the fact that the Expiration Date shall have passed or this Agreement or any Commitments hereunder shall have been terminated or reduced; and
(31)any other circumstance or happening whatsoever, whether or not similar to any of the foregoing.
2.10.iiIndemnity.
The Borrower hereby agrees to protect, indemnify, pay and save harmless each Issuing Lender and any of its Affiliates that has issued a Letter of Credit from and against any and all claims, demands, liabilities, damages, taxes (subject to the last sentence of this Section 2.10.8 [Indemnity]), penalties, interest, judgments, losses, costs, charges and expenses (including reasonable fees, expenses and disbursements of counsel) which such Issuing Lender or any of such Issuing Lender’s Affiliates may incur or be subject to as a consequence, direct or indirect, of the issuance of any Letter of Credit issued by it, other than as a result of the gross negligence or willful misconduct of such Issuing Lender as determined by a final non-appealable judgment of a court of competent jurisdiction. This Section 2.10.8 [Indemnity] shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.
2.10.iiiLiability for Acts and Omissions.
(32)As between any Loan Party and an Issuing Lender, or such Issuing Lender’s Affiliates, such Loan Party assumes all risks of the acts and omissions of, or misuse of the Letters of Credit by, the respective beneficiaries of such Letters of Credit. In furtherance and not in limitation of the foregoing, no Issuing Lender shall be responsible for any of the following including any losses or damages to any Loan Party or other Person or property relating therefrom: (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document (including all sight drafts, certificates and all other instruments) submitted by any party in connection with the application for an issuance of any such Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged (even if such Issuing Lender or such Issuing Lender’s Affiliates shall have been notified thereof); (ii) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) the failure of the beneficiary of any such Letter of Credit, or any other party to which such Letter of Credit may be transferred, to comply fully with any conditions required in order to draw upon such Letter of Credit or any other claim of any Loan Party against any beneficiary of such Letter of Credit, or any such transferee, or any dispute between or among any Loan Party and any beneficiary of any Letter of Credit or any such transferee; (iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (v) errors in interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any document required in order
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to make a drawing under any such Letter of Credit or of the proceeds thereof; (vii) the misapplication by the beneficiary of any such Letter of Credit of the proceeds of any drawing under such Letter of Credit; or (viii) any consequences arising from causes beyond the control of such Issuing Lender or such Issuing Lender’s Affiliates, as applicable, including any acts of any Official Body, and none of the above shall affect or impair, or prevent the vesting of, any of such Issuing Lender’s or such Issuing Lender’s Affiliates rights or powers hereunder. Nothing in the preceding sentence shall relieve the Issuing Lender from liability for such Issuing Lender’s gross negligence or willful misconduct in connection with actions or omissions described in clauses (i) through (viii) of such sentence, as determined by a final non-appealable judgment of a court of competent jurisdiction. In no event shall any Issuing Lender or any Issuing Lender’s Affiliates be liable to any Loan Party for any indirect, consequential, incidental, punitive, exemplary or special damages or expenses (including attorneys’ fees), or for any damages resulting from any change in the value of any property relating to a Letter of Credit.
(33)Without limiting the generality of the foregoing, each Issuing Lender and each of its Affiliates (i) may rely on any oral or other communication believed in good faith by such Issuing Lender or such Affiliate to have been authorized or given by or on behalf of the applicant for a Letter of Credit or any beneficiary, transferee, or assignee of proceeds thereof; (ii) may honor any presentation if the documents presented appear on their face substantially to comply with the terms and conditions of the relevant Letter of Credit; (iii) may honor a previously dishonored presentation under a Letter of Credit, whether such dishonor was pursuant to a court order, to settle or compromise any claim of wrongful dishonor, or otherwise, and shall be entitled to reimbursement to the same extent as if such presentation had initially been honored, together with any interest paid by such Issuing Lender or its Affiliate; (iv) may honor any drawing that is payable upon presentation of a statement advising negotiation or payment, upon receipt of such statement (even if such statement indicates that a draft or other document is being delivered separately), and shall not be liable for any failure of any such draft or other document to arrive, or to conform in any way with the relevant Letter of Credit; (v) may pay any paying or negotiating bank claiming that it rightfully honored under the laws or practices of the place where such bank is located; and (vi) may settle or adjust any claim or demand made on such Issuing Lender or its Affiliate in any way related to any order issued at the applicant’s request to an air carrier, a letter of guarantee or of indemnity issued to a carrier or any similar document (each, an “Order”) and honor any drawing in connection with any Letter of Credit that is the subject to such Order, notwithstanding that any drafts or other documents presented in connection with such Letter of Credit fail to conform in any way with such Letter of Credit. In furtherance and extension and not in limitation of the specific provisions set forth above, any action taken or omitted by such Issuing Lender or such Issuing Lender’s Affiliates under or in connection with the Letters of Credit issued by it, the Issuer Documents or any documents and certificates delivered thereunder, if taken or omitted in good faith, shall not put such Issuing Lender or such Issuing Lender’s Affiliates under any resulting liability to the Borrower or any Lender, unless such action taken or omitted is found in a final and nonappealable judgment by a court of competent jurisdiction to have constituted gross negligence or willful misconduct.
2.10.viiCash Collateral Prior to the Expiration Date.
If the Borrower or any other Loan Party requests the issuance, extension or renewal of any Letter of Credit and such Letter of Credit would have an expiration date which is after the Letter of Credit Expiration Date, no Issuing Lender shall be required to issue, extend or renew such Letter of Credit, but may elect to do so if the requirements of this Section 2.10.10 [Cash Collateral Prior to the Expiration Date] are satisfied. The Borrower shall, on or before the issuance, extension or renewal of such Letter of Credit, deposit and pledge Cash Collateral for each such Letter of Credit in an amount equal to 105% of the face value of such outstanding Letter of Credit plus the amount of fees that would be due under such Letter of Credit through the expiry date of such Letter of Credit. Such Cash Collateral shall be deposited pursuant to documentation reasonably satisfactory to the Administrative Agent and such Issuing Lender and the Borrower and shall be maintained in blocked deposit accounts at such Issuing Lender. The Borrower hereby grants to the applicable Issuing Lender and the Administrative Agent, on behalf of such Issuing Lender, a security interest in all Cash Collateral pledged to such Issuing Lender pursuant to this Section or otherwise under this Agreement. The Cash Collateral related to a particular Letter of Credit shall be released by the applicable Issuing Lender upon termination or expiration of such Letter of Credit and the reimbursement by the Loan Parties of all amounts drawn thereon and the payment in full of all fees accrued thereon through the date of such expiration or termination. After the Expiration
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Date, the Borrower shall pay any and all fees associated with any such Letter of Credit with an expiration date that extends beyond the Expiration Date directly to the applicable Issuing Lender.
2.10.viiiIssuing Lender Reporting Requirements.
Each Issuing Lender shall, on the first Business Day of each month, provide to Administrative Agent and Borrower a schedule of the Letters of Credit issued by it, in form and substance satisfactory to Administrative Agent, showing the date of issuance of each Letter of Credit, the account party, the original face amount (if any), and the expiration date of any Letter of Credit outstanding at any time during the preceding month, and any other information relating to such Letter of Credit that the Administrative Agent may request.
2.viiBorrowings to Repay Swing Loans.
The Swingline Lender may, at its option, exercisable at any time for any reason whatsoever, demand repayment of the Swing Loans, and each Lender shall make a Revolving Credit Loan in an amount equal to such Lender’s Ratable Share of the aggregate principal amount of the outstanding Swing Loans, plus, if the Swingline Lender so requests, accrued interest thereon; provided that no Lender shall be obligated in any event to make Revolving Credit Loans in excess of the amount that would cause its Revolving Exposure to exceed its Revolving Credit Commitment. Revolving Credit Loans made pursuant to the preceding sentence shall bear interest at the Base Rate Option and shall be deemed to have been properly requested in accordance with Section 2.5.1 [Revolving Credit Loan Requests] without regard to any of the requirements of that provision. The Administrative Agent on behalf of the Swingline Lender shall provide notice to the Lenders (which may be telephonic or written notice by letter, facsimile or email (in “pdf,” “tif” or similar format)) no later than 11:00 a.m. on any Business Day that such Revolving Credit Loans are to be made under this Section 2.11 [Borrowings to Repay Swing Loans] and of the apportionment among the Lenders, and the Lenders shall be unconditionally obligated to fund such Revolving Credit Loans (whether or not the conditions specified in Section 2.5 [Loan Requests] or Section 7.2 [Each Additional Loan or Letter of Credit] are then satisfied) to the Administrative Agent on behalf of the Swingline Lender, no later than 3:00 p.m. on the Settlement Date.
2.viiiIncrease in Revolving Credit Commitments.
(a) Increasing Lenders and New Lenders. The Borrower may, prior to the Expiration Date, request that (1) the current Lenders (each, a “Current Lender”) increase their Revolving Credit Commitments (any Current Lender which elects to increase its Revolving Credit Commitment shall be referred to as an “Increasing Lender”) and/or (2) one or more new lenders (each, a “New Lender”) join this Agreement and provide a Revolving Credit Commitment hereunder, subject to the following terms and conditions:
(i) No Obligation to Increase. No Current Lender shall be obligated to increase its Revolving Credit Commitment, and any increase in the Revolving Credit Commitment of any Current Lender shall be in the sole discretion of such Current Lender;
(ii) No Consent. No consent of any Lender, other than a Lender providing such Revolving Credit Commitment, shall be required to implement such increase;
(iii) Defaults. There shall exist no Event of Default or Potential Default on the effective date of such increase and after giving effect to such increase;
(iv) Increase in and Aggregate Amount of Revolving Credit Commitments. The amount of the increase in Revolving Credit Commitments is at least $100,000,000, and after giving effect to such increase, shall not exceed the Maximum Facility Amount without the consent of all Lenders;
(v) Resolutions; Opinion; Mortgage Amendments. The Loan Parties shall deliver to the Administrative Agent on or before the effective date of such increase the following
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documents in a form reasonably acceptable to the Administrative Agent: (1) certifications of their corporate secretaries with attached resolutions certifying that the increase in the Revolving Credit Commitments has been approved by the Loan Parties, (2) opinions of counsel, addressed to the Administrative Agent and the Lenders addressing the authorization, execution and enforceability of the Loan Documents executed in connection with such increase in the Revolving Credit Commitments, and (3) amendments to the Mortgages executed and delivered by the applicable Loan Parties to the Collateral Agent for the benefit of the Secured Parties to reflect the increase in Revolving Credit Commitments, in form and substance reasonably satisfactory to the Administrative Agent, together with, if reasonably requested by the Administrative Agent or the Lenders providing the increase in Revolving Credit Commitments, local counsel opinions regarding the due authorization, execution, delivery, and enforceability of such mortgage amendments. The Loan Parties shall cause the amendments described in clause (3) above to be properly recorded and/or filed in the applicable filing or recording offices;
(vi) Notes. The Borrower shall execute and deliver (1) to each Increasing Lender that requests a Revolving Credit Note a replacement Revolving Credit Note reflecting the new amount of such Increasing Lender’s Revolving Credit Commitment after giving effect to the increase (and the prior Note issued to such Increasing Lender shall be deemed to be canceled and shall be returned to the Borrower as soon as practicable), and (2) to each New Lender that requests a Revolving Credit Note, a Revolving Credit Note reflecting the amount of such New Lender’s Revolving Credit Commitment;
(vii) Approval of New Lenders. Any New Lender shall be subject to the consents specified in Section 11.8.2(c) [Required Consents] as if the increase in Revolving Credit Commitments were an assignment;
(viii) Increasing Lenders. Each Increasing Lender shall confirm its agreement to increase its Revolving Credit Commitment pursuant to an acknowledgement in a form acceptable to the Administrative Agent, signed by it and the Borrower and delivered to the Administrative Agent before the effective date of such increase; and
(ix) New Lender Joinder. Each New Lender shall execute a New Lender Joinder pursuant to which such New Lender shall join and become a party to this Agreement and the other Loan Documents with a Revolving Credit Commitment in the amount set forth in such New Lender Joinder.
(b) Syndication. In the event that the Borrower elects to request an increase of the Revolving Credit Commitments, the Borrower and the Administrative Agent agree to mutually develop a syndication strategy, including timelines for commitments, to the extent the Administrative Agent agrees to assist in such syndication.
(c) Treatment of Outstanding Loans and Letters of Credit.
(i) Repayment of Outstanding Loans; Borrowing of New Loans. On the effective date of such increase, the Borrower shall (x) repay the Revolving Credit Loans then outstanding to each of the Current Lenders to the extent necessary so that after giving effect to the increase in the Revolving Credit Commitments each Current Lender will have its Ratable Share of the outstanding Revolving Credit Loans, subject to the Borrower’s indemnity obligations under Section 5.9 [Indemnity] and (y) borrow Revolving Credit Loans from Increasing Lenders and New Lenders to the extent necessary so that after giving effect to the increase in the Revolving Credit Commitments, each such Lender will have its Ratable Share of the outstanding Revolving Credit Loans. To facilitate the foregoing, the Borrower may, subject to its compliance with the other terms of this Agreement, borrow new Loans on the effective date of such increase. The Administrative Agent is hereby authorized to update Schedule 1.1(B) to reflect the increase in Revolving Credit Commitments.
(ii) Outstanding Letters of Credit; Repayment of Outstanding Loans; Borrowing of New Loans. On the effective date of such increase, (a) each Current Lender shall be deemed to
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have sold its existing participation in each then outstanding Letter of Credit and purchased a participation in each then outstanding Letter of Credit equal to its Ratable Share of such Letters of Credit, and (b) each New Lender will be deemed to have purchased a participation in each then outstanding Letter of Credit equal to its Ratable Share of such Letter of Credit. All fees shall accrue and be paid on the Letters of Credit based upon each Lender’s participation therein over the relevant period of time. To the extent necessary to enable each of the Current Lenders and the New Lenders to own a Ratable Share of the Participation Advances after any increase in the Revolving Credit Commitments, (a) the Current Lenders will sell a portion of its Participation Advances, and (b) the New Lenders and the Increasing Lenders will acquire Participation Advances (and will pay to the Administrative Agent, for the account of each selling Lender, in immediately available funds, an amount) equal to its Ratable Share of all outstanding Participation Advances. All fees and interest on Participation Advances shall be allocated based upon each Lender’s ownership therein from time to time.
(iii) Equal and Ratable Benefit. The Revolving Credit Commitments established pursuant to this paragraph shall constitute Revolving Credit Commitments under, and shall be entitled to all the benefits afforded by, this Agreement and the other Loan Documents, and shall, without limiting the foregoing, benefit equally and ratably from the Guaranties under the Guaranty Agreement and security interests created by the Security Documents. The Loan Parties shall take any actions reasonably required by the Collateral Agent to ensure and/or demonstrate that the Lien and security interests granted by the Security Documents continue to be perfected under the UCC or otherwise after giving effect to the establishment of any such new Revolving Credit Commitments.
2.ixDefaulting Lenders.
(34)Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:
(a)fees shall cease to accrue on the unfunded portion of the Commitment of such Defaulting Lender pursuant to Section 2.3 [Commitment Fees];
(b)the Commitment and outstanding Loans of such Defaulting Lender shall not be included in any vote of Lenders except as required by Section 11.1.5 [Defaulting Lenders];
(c)if any Swing Loans are outstanding or any Letter of Credit Obligations exist at the time such Lender becomes a Defaulting Lender, then:
(A) all or any part of the outstanding Swing Loans and Letter of Credit Obligations of such Defaulting Lender shall be reallocated among the non-Defaulting Lenders in accordance with their respective Ratable Shares but only to the extent that (x) the Revolving Facility Usage does not exceed the total of all non-Defaulting Lenders’ Revolving Credit Commitments, and (y) no Potential Default or Event of Default has occurred and is continuing at such time;
(B) if the reallocation described in clause (A) above cannot, or can only partially, be effected, the Borrower shall within one Business Day following notice by the Administrative Agent (x) first, prepay such outstanding Swing Loans, and (y) second, Cash Collateralize for the benefit of the Issuing Lenders (ratably among the Issuing Lenders) the Borrower’s obligations corresponding to such Defaulting Lender’s Letter of Credit Obligations (after giving effect to any partial reallocation pursuant to clause (A) above) in a deposit account held at the Administrative Agent for so long as such Letter of Credit Obligations are outstanding;
(C) if the Borrower Cash Collateralizes any portion of such Defaulting Lender’s Letter of Credit Obligations pursuant to clause (B) above, the Borrower shall
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not be required to pay any fees to such Defaulting Lender pursuant to Section 2.10.2 [Letter of Credit Fees] with respect to such Defaulting Lender’s Letter of Credit Obligations during the period such Defaulting Lender’s Letter of Credit Obligations are cash collateralized;
(D) if the Letter of Credit Obligations of the non-Defaulting Lenders are reallocated pursuant to clause (A) above, then the fees payable to the Lenders pursuant to Section 2.10.2 [Letter of Credit Fees] shall be adjusted in accordance with such non-Defaulting Lenders’ Ratable Share; and
(E) if all or any portion of such Defaulting Lender’s Letter of Credit Obligations are neither reallocated nor Cash Collateralized pursuant to clause (A) or (B) above, then, without prejudice to any rights or remedies of the Issuing Lender or any other Lender hereunder, all Letter of Credit Fees payable under Section 2.10.2 [Letter of Credit Fees] with respect to such Defaulting Lender’s Letter of Credit Obligations shall be payable to the Issuing Lenders ((ratably among them) and not to such Defaulting Lender) until and to the extent that such Letter of Credit Obligations are reallocated and/or Cash Collateralized; and
(d)so long as such Lender is a Defaulting Lender, (x) no Issuing Lender shall be required to issue, amend or increase any Letter of Credit, unless such Issuing Lender is satisfied that the related exposure and the Defaulting Lender’s then outstanding Letter of Credit Obligations will be 100% covered by the Revolving Credit Commitments of the non-Defaulting Lenders and/or cash collateral will be provided by the Borrower in accordance with Section 2.13(a)(iii)(B) [Defaulting Lenders], and (y) participating interests in any newly made Swing Loan or any newly issued or increased Letter of Credit shall be allocated among non-Defaulting Lenders in a manner consistent with Section 2.13(a)(iii)(A) [Defaulting Lenders] (and such Defaulting Lender shall not participate therein).
(35)In the event that the Administrative Agent, the Borrower, the Swingline Lender and the Issuing Lenders agree in writing that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the Administrative Agent will so notify the parties hereto, and the Ratable Share of the Swing Loans and Letter of Credit Obligations of the Lenders shall be readjusted to reflect the inclusion of such Lender’s Commitment, and on such date such Lender shall purchase at par such of the Loans of the other Lenders (other than Swing Loans) as the Administrative Agent shall determine may be necessary in order for such Lender to hold such Loans in accordance with its Ratable Share.
(iii. [RESERVED]
(iv. INTEREST RATES
4.aInterest Rate Options.
The Borrower shall pay interest in respect of the outstanding unpaid principal amount of the Loans as selected by it from the Base Rate Option or Term SOFR Rate Option set forth below applicable to the Loans, it being understood that, subject to the provisions of this Agreement, the Borrower may select different Interest Rate Options and different Interest Periods to apply simultaneously to the Loans comprising different Borrowing Tranches and may convert to or renew one or more Interest Rate Options with respect to all or any portion of the Loans comprising any Borrowing Tranche; provided that (i) there shall not be at any one time outstanding more than ten (10) Borrowing Tranches in the aggregate among all of the Loans and (ii) if an Event of Default or Potential Default exists and is continuing, the Borrower may not request, convert to, or renew the Term SOFR Rate Option for any Loans and the Required Lenders may demand that all existing Borrowing Tranches bearing interest under the Term SOFR Rate Option shall be converted immediately to the Base Rate Option, subject to the obligation of the Borrower to pay any indemnity under Section 5.9 [Indemnity] in connection with such conversion. If at any time the designated rate applicable to any Loan made by any Lender exceeds such
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Lender’s highest lawful rate, the rate of interest on such Lender’s Loan shall be limited to such Lender’s highest lawful rate.
4.1.iInterest Rate Options; Swing Line Interest Rate.
(36)The Borrower shall have the right to select from the following Interest Rate Options applicable to the Revolving Credit Loans:
(i)Revolving Credit Base Rate Option: A fluctuating rate per annum (computed on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed) equal to the Base Rate plus the Applicable Margin, such interest rate to change automatically from time to time effective as of the effective date of each change in the Base Rate; or
(ii)Revolving Credit Term SOFR Rate Option: A rate per annum (computed on the basis of a year of 360 days and actual days elapsed) equal to Adjusted Term SOFR Rate as determined for each applicable Interest Period plus the Applicable Margin.
(37)Subject to Section 4.3 [Interest After Default], only the Base Rate Option applicable to Revolving Credit Loans shall apply to Swing Loans.
4.1.iiAmendment No. 1 Existing Loans.
With respect to the Amendment No. 1 Existing Loans of each Type, from the Amendment No. 1 Effective Date until the earlier of (x) the repayment of such Amendment No. 1 Existing Loans and (y) the Amendment No. 1 Existing Interest Period Termination Date (such earlier date with respect to such Type of Amendment No. 1 Existing Revolving Credit Loans, the “Amendment No. 1 Existing Loan Interest Payment Date”), the Amendment No. 1 Existing Loans of such Type shall continue to bear interest at the Amendment No. 1 Existing Interest Rate, subject to any increase after an Event of Default pursuant to Section 4.3 [Interest After Default] . On the Amendment No. 1 Existing Loan Interest Payment Date for each Type of Amendment No. 1 Existing Revolving Credit Loans, the Borrower shall pay interest in respect of the Amendment No. 1 Existing Loans of such Type accrued from the beginning of the Amendment No. 1 Existing Interest Period to the Amendment No. 1 Existing Loan Interest Payment Date at the Amendment No. 1 Existing Interest Rate. On the Amendment No. 1 Existing Interest Period Termination Date with respect to each Type of Amendment No. 1 Existing Revolving Credit Loans, any Amendment No. 1 Existing Loans of such Type that remain outstanding shall be converted to Revolving Credit Loans at either the Base Rate Option or the Term SOFR Rate Option, as selected by the Borrower in accordance with Section 2.5.1. In the event that the Borrower does not provide notice of conversion to the Term SOFR Rate Option to the Administrative Agent prior to 11:00 a.m., three (3) Business Days prior to the Amendment No. 1 Existing Interest Period Termination Date with respect to each Type of Amendment No. 1 Existing Revolving Credit Loans, the Borrower shall be deemed to have elected to convert Amendment No. 1 Existing Loans of such Type to the Base Rate Option and the Amendment No. 1 Existing Loans of such Type shall automatically be converted to Revolving Credit Loans at the Base Rate Option on the Amendment No. 1 Existing Interest Period Termination Date.
4.1.iiiRate Quotations.
The Borrower may call the Administrative Agent on or before the date on which a Loan Request is to be delivered to receive an indication of the rates then in effect, but it is acknowledged that such projection shall not be binding on the Administrative Agent or the Lenders nor affect the rate of interest which thereafter is actually in effect when the election is made.
4.1.ivConforming Changes Relating to Term SOFR Rate.
With respect to the Term SOFR Rate, the Administrative Agent may make Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Conforming Changes will become effective without any
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further action or consent of any other party to this Agreement or any other Loan Document; provided that, the Administrative Agent shall provide notice to the Borrower and the Lenders of each amendment implementing Conforming Changes reasonably promptly after such amendment becomes effective.
4.bInterest Periods.
At any time when the Borrower shall select, convert to or renew a Term SOFR Rate Option, the Borrower shall notify the Administrative Agent thereof at least three (3) Business Days prior to the effective date of such Term SOFR Rate Option by delivering a Loan Request. The notice shall specify an Interest Period during which such Interest Rate Option shall apply. Notwithstanding the preceding sentence, the following provisions shall apply to any selection of, renewal of, or conversion to a Term SOFR Rate Option:
(38)each Borrowing Tranche of Loans under the Term SOFR Rate Option shall be in integral multiples and not less than the respective amounts set forth in Section 2.5.1 [Revolving Credit Loan Requests] for Borrowings;
(39)in the case of the renewal of a Term SOFR Rate Option at the end of an Interest Period, the first day of the new Interest Period shall be the last day of the preceding Interest Period, without duplication in payment of interest for such day; and
(40)Section 4.5 [Selection of Interest Rate Options] shall apply to any Loan under the Term SOFR Rate Option as to which an interest election has not been made prior to the deadline for delivery of a notice set forth above.
4.aInterest After Default.
To the extent permitted by Law, upon the occurrence of an Event of Default and until such time such Event of Default shall have been cured or waived, and upon written demand by the Required Lenders:
(41)the Letter of Credit Fees and the rate of interest for each Loan otherwise applicable pursuant to Section 2.10.2 [Letter of Credit Fees] or Section 4.1 [Interest Rate Options], respectively, shall be increased by 2.0% per annum; and
(42)each other Obligation hereunder if not paid when due shall bear interest at a rate per annum equal to the sum of the rate of interest applicable under the Base Rate Option plus an additional 2.0% per annum from the time such Obligation becomes due and payable and until it is paid in full.
The Borrower acknowledges that the increase in rates referred to in this Section 4.3 [Interest After Default] reflects, among other things, the fact that such Loans or other amounts have become a substantially greater risk given their default status and that the Lenders are entitled to additional compensation for such risk; and all such interest shall be payable by Borrower upon demand by Administrative Agent.
4.cTerm SOFR Rate Unascertainable; Illegality; Increased Costs.
4.4.iUnascertainable.
If on any date on which a Term SOFR Rate would otherwise be determined, the Administrative Agent shall have determined that:
(43)adequate and reasonable means do not exist for ascertaining such Term SOFR Rate, or
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(44)a fundamental change has occurred with respect to the Term SOFR Rate (including, without limitation, changes in national or international financial, political or economic conditions) that materially and adversely affects the ability to determine the Term SOFR Rate,
the Administrative Agent shall have the rights specified in Section 4.4.3 [Administrative Agent’s and Lender’s Rights].
4.4.iiIllegality; Increased Costs.
If at any time any Lender shall have determined that:
(45)the making, maintenance or funding of any Loan to which a Term SOFR Rate Option applies has been made impracticable or unlawful by compliance by such Lender in good faith with any Law or any interpretation or application thereof by any Official Body or with any request or directive of any such Official Body (whether or not having the force of Law), or
(46)such Term SOFR Rate Option will not adequately and fairly reflect the cost to such Lender of the establishment or maintenance of any such Loan,
then the Administrative Agent shall have the rights specified in Section 4.4.3 [Administrative Agent’s and Lender’s Rights].
4.4.iAdministrative Agent’s and Lender’s Rights.
In the case of any event specified in Section 4.4.1 [Unascertainable] above, the Administrative Agent shall promptly so notify the Lenders and the Borrower thereof, and in the case of an event specified in Section 4.4.2 [Illegality; Increased Costs] above, such Lender shall promptly so notify the Administrative Agent and endorse a certificate to such notice as to the specific circumstances of such notice, and the Administrative Agent shall promptly send copies of such notice and certificate to the other Lenders and the Borrower. Upon such date as shall be specified in such notice (which shall not be earlier than the date such notice is given), the obligation of (A) the Lenders, in the case of such notice given by the Administrative Agent, or (B) such Lender, in the case of such notice given by such Lender, to allow the Borrower to select, convert to or renew a Term SOFR Rate Option shall be suspended until the Administrative Agent shall have later notified the Borrower, or such Lender shall have later notified the Administrative Agent, of the Administrative Agent’s or such Lender’s, as the case may be, determination that the circumstances giving rise to such previous determination no longer exist. If at any time the Administrative Agent makes a determination under Section 4.4.1 [Unascertainable] and the Borrower has previously notified the Administrative Agent of its selection of, conversion to or renewal of a Term SOFR Rate Option and such Interest Rate Option has not yet gone into effect, such notification shall be deemed to provide for selection of, conversion to or renewal of the Base Rate Option otherwise available with respect to such Loans. If any Lender notifies the Administrative Agent of a determination under Section 4.4.2 [Illegality; Increased Costs], the Borrower shall, subject to the Borrower’s indemnification Obligations under Section 5.9 [Indemnity], as to any Loan of the Lender to which a Term SOFR Rate Option applies, on the date specified in such notice either convert such Loan to the Base Rate Option otherwise available with respect to such Loan or prepay such Loan in accordance with Section 5.6 [Prepayments]. Absent due notice from the Borrower of conversion or prepayment, such Loan shall automatically be converted to the Base Rate Option otherwise available with respect to such Loan upon such specified date.
4.dSelection of Interest Rate Options.
If the Borrower fails to select a new Interest Period to apply to any Borrowing Tranche of Loans under the Term SOFR Rate Option at the expiration of an existing Interest Period applicable to such Borrowing Tranche in accordance with the provisions of Section 4.2 [Interest Periods], the Borrower shall be deemed to have selected an Interest Period of one month, commencing upon the last day of the existing Interest Period.
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4.eBenchmark Replacement Setting.
(47)Benchmark Replacement. Notwithstanding anything to the contrary herein or in any other Loan Document (and, for the avoidance of doubt, any agreement executed in connection with a Specified Swap Agreement shall be deemed not to be a “Loan Document” for purposes of this Section 4.6), if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting of the then-current Benchmark, then (x) if a Benchmark Replacement is determined in accordance with clause (1) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document and (y) if a Benchmark Replacement is determined in accordance with clause (2) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of any Benchmark setting at or after 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided to the Lenders without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document so long as the Administrative Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Lenders comprising the Required Lenders.
(48)Benchmark Replacement Conforming Changes. In connection with the use, administration, adoption or implementation of a Benchmark Replacement, the Administrative Agent may make Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Loan Document.
(49)Notices; Standards for Decisions and Determinations. The Administrative Agent will promptly notify the Borrower and the Lenders of (i) the implementation of any Benchmark Replacement and (ii) the effectiveness of any Conforming Changes in connection with the use, administration, adoption or implementation of a Benchmark replacement. The Administrative Agent will notify the Borrower of (x) the removal or reinstatement of any tenor of a Benchmark pursuant to paragraph (d) below and (y) the commencement or conclusion of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Administrative Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section 4.6, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party to this Agreement or any other Loan Document, except, in each case, as expressly required pursuant to this Section 4.6.
(50)Unavailability of Tenor of Benchmark. Notwithstanding anything to the contrary herein or in any other Loan Document, at any time (including in connection with the implementation of a Benchmark Replacement), (i) if the then-current Benchmark is a term rate (including Term SOFR) and either (A) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion or (B) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is not or will not be representative, then the Administrative Agent may modify the definition of “Interest Period” (or any similar or analogous provision) for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor and (ii) if a tenor that was removed pursuant to clause (i) above either (A) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (B) is not, or is no longer, subject to an announcement that it is not or will not be representative for a Benchmark (including a Benchmark Replacement), then the Administrative Agent may modify the definition of “Interest Period” (or any similar or analogous provision) for all Benchmark settings at or after such time to reinstate such previously removed tenor.
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(51)Benchmark Unavailability Period. Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, the Borrower may revoke any pending request for a Loan bearing interest based on the Term SOFR Rate, conversion to or continuation of Loans bearing interest based on the Term SOFR Rate to be made, converted or continued during any Benchmark Unavailability Period and, failing that, the Borrower will be deemed to have converted any such request into a request for a Loan of or conversion to Loans bearing interest under the Base Rate Option. During any Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the component of the Base Rate based upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of the Base Rate.
(52)[Reserved].
(53)Certain Defined Terms. As used in this Section 4.6:
“Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, (x) if such Benchmark is a term rate or is based on a term rate, any tenor for such Benchmark (or component thereof) that is or may be used for determining the length of an Interest Period pursuant to this Agreement or (y) otherwise, any payment period for interest calculated with reference to such Benchmark (or component thereof) that is or may be used for determining any frequency of making payments of interest calculated with reference to such Benchmark pursuant to this Agreement, in each case, as of such date and not including, for the avoidance of doubt, any tenor of such Benchmark that is then-removed from the definition of “Interest Period” pursuant to Section 4.6(d).
“Benchmark” means, initially, the Term SOFR Rate; provided that if a Benchmark Transition Event, a Term SOFR Transition Event and its related Benchmark Replacement Date has occurred with respect to the Term SOFR Rate or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to Section 4.6(a).
“Benchmark Replacement” means, with respect to any Benchmark Transition Event, the first alternative set forth in the order below that can be determined by the Administrative Agent for the applicable Benchmark Replacement Date:
(1) the sum of: (A) Daily Simple SOFR and (B) the SOFR Adjustment;
(2) the sum of: (A) the alternate benchmark rate that has been selected by the Administrative Agent and the Borrower, giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Benchmark for U.S. dollar-denominated syndicated credit facilities at such time and (B) the related Benchmark Replacement Adjustment;
provided that, if the Benchmark Replacement as determined pursuant to clause (2) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents; and, provided, further, that any Benchmark Replacement shall be administratively feasible as determined by the Administrative Agent in its sole discretion.
“Benchmark Replacement Adjustment” means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Borrower, giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for U.S. dollar-denominated syndicated credit facilities at such time.
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“Benchmark Replacement Date” means a date and time determined by the Administrative Agent, which date shall be no later than the earlier to occur of the following events with respect to the then-current Benchmark:
(1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof); or
(2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the date determined by the Administrative Agent, which date shall promptly follow the date of the public statement or publication of information referenced therein.
For the avoidance of doubt, the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) or (2) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the then-current Benchmark:
(1) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);
(2) a public statement or publication of information by an Official Body having jurisdiction over the Administrative Agent, the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Federal Reserve Board, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or
(3) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) or an Official Body having jurisdiction over the Administrative Agent announcing that all Available Tenors of such Benchmark (or such component thereof) are not, or as of a specified future date will not be, representative.
For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Unavailability Period” means the period (if any) (x) beginning at the time that a Benchmark Replacement Date has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with
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this Section 4.6 and (y) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with this Section 4.6.
“Floor” means the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to the Term SOFR Rate or, if no floor is specified, zero.
“Relevant Governmental Body” means the Federal Reserve Board or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board or the Federal Reserve Bank of New York, or any successor thereto.
“Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.
(v. PAYMENTS
5.aPayments.
All payments and prepayments to be made in respect of principal, interest, Commitment Fees, Letter of Credit Fees, Administrative Agent’s Fee or other fees or amounts due from the Borrower hereunder shall be payable prior to 1:00 p.m. on the date when due without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived by the Borrower, and without set-off, counterclaim or other deduction of any nature, and an action therefor shall immediately accrue. Such payments shall be made to the Administrative Agent at the Principal Office for the account of the Swingline Lender with respect to the Swing Loans and for the ratable accounts of the Lenders with respect to the Revolving Credit Loans in U.S. Dollars and in immediately available funds, and the Administrative Agent shall promptly distribute such amounts to the Lenders in immediately available funds; provided that in the event payments are received by 1:00 p.m. by the Administrative Agent with respect to the Loans and such payments are not distributed to the Lenders on the same day received by the Administrative Agent, the Administrative Agent shall pay the Lenders interest at the Federal Funds Effective Rate with respect to the amount of such payments for each day held by the Administrative Agent and not distributed to the Lenders. The Administrative Agent’s and each Lender’s statement of account, ledger or other relevant record shall, in the absence of manifest error, be conclusive as the statement of the amount of principal of and interest on the Loans and other amounts owing under this Agreement and shall be deemed an “account stated.”
5.bPro Rata Treatment of Lenders.
Each Borrowing Tranche shall be allocated to each Lender according to its Ratable Share, and each selection of, conversion to or renewal of any Interest Rate Option and each payment or prepayment by the Borrower with respect to principal, interest, Commitment Fees, Letter of Credit Fees, or other fees (except for the Administrative Agent’s Fee and the fees payable to the Issuing Lender pursuant to Section 2.10.2 [Letter of Credit Fees]) or amounts due from the Borrower hereunder to the Lenders with respect to the Revolving Credit Commitments and the Loans, shall (except as otherwise may be provided with respect to a Defaulting Lender and except as provided in Section 4.4.3 [Administrative Agent’s and Lender’s Rights] in the case of an event specified in Section 4.4 [Term SOFR Rate Unascertainable; Illegality; Increased Costs], Section 5.6.2 [Replacement of a Lender] or Section 5.7 [Increased Costs]) be payable ratably among the Lenders entitled to such payment in accordance with the amount of principal, interest, Commitment Fees, Letter of Credit Fees, and other fees or amounts then due to such Lender as set forth in this Agreement. Notwithstanding any of the foregoing, each borrowing or payment or prepayment by the Borrower of principal, interest, fees or other amounts from the Borrower with respect to Swing Loans shall be made by or to the Swingline Lender according to Section 2.11 [Borrowings to Repay Swing Loans].
5.cSharing of Payments by Lenders.
If any Lender shall, by exercising any right of setoff, counterclaim or banker’s lien, by receipt of voluntary payment, by realization upon security, or by any other non-pro rata source, obtain
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payment in respect of any principal of or interest on any of its Loans or other obligations hereunder resulting in such Lender’s receiving payment of a proportion of the aggregate amount of its Loans and accrued interest thereon or other such obligations greater than the pro rata share of the amount such Lender is entitled thereto, then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Loans and such other obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and other amounts owing them, provided that:
(1)if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, together with interest or other amounts, if any, required by Law (including court order) to be paid by the Lender or the holder making such purchase; and
(2)the provisions of this Section 5.3 shall not be construed to apply to (x) any payment made by the Loan Parties pursuant to and in accordance with the express terms of the Loan Documents or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or Participation Advances to any assignee or participant, other than to the Borrower or any Subsidiary thereof (as to which the provisions of this Section 5.3 [Sharing of Payments by Lenders] shall apply).
Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable Law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against each Loan Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of each Loan Party in the amount of such participation.
5.aPresumptions by Administrative Agent.
Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the Issuing Lender hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the Issuing Lender, as the case may be, the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders or the Issuing Lender, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or the Issuing Lender, with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.
5.bInterest Payment Dates.
Interest on Loans to which the Base Rate Option applies shall be due and payable in arrears on each Payment Date. Interest on Loans to which the Term SOFR Rate Option applies shall be due and payable on the last day of each Interest Period for those Loans and, if such Interest Period is longer than three (3) Months, also on each date that falls every three (3) Months after the beginning of such Interest Period and on the Expiration Date or upon termination of the Commitments. Interest on the principal amount of each Loan or other monetary Obligation shall be due and payable on demand after such principal amount or other monetary Obligation becomes due and payable (whether on the stated Expiration Date, upon acceleration or otherwise).
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5.cPrepayments.
5.6.iRight to Prepay.
So long as the Borrower has repaid any unreimbursed LC Disbursements, the Borrower shall have the right at its option from time to time to prepay the Loans in whole or part, without premium or penalty (except as provided in Section 5.6.2 [Replacement of a Lender] below, in Section 5.7 [Increased Costs] and Section 5.9 [Indemnity]). Whenever the Borrower desires to prepay any part of the Loans, it shall provide a prepayment notice to the Administrative Agent by 1:00 p.m. at least one (1) Business Day prior to the date of prepayment of the Revolving Credit Loans to which the Term SOFR Rate Option applies or no later than 11:00 a.m. on the date of prepayment of Swing Loans and Revolving Credit Loans to which the Base Rate Option applies, setting forth the following information:
(54)the date, which shall be a Business Day, on which the proposed prepayment is to be made;
(55)a statement indicating the application of the prepayment between the Revolving Credit Loans and Swing Loans;
(56)a statement indicating the application of the prepayment between Loans to which the Base Rate Option applies and Loans to which the Term SOFR Rate Option applies; and
(57)the total principal amount of such prepayment, which shall not be less than the lesser of (x) the aggregate principal amount of all outstanding Loans or (y) $100,000 for any Swing Loan or $5,000,000 for any Revolving Credit Loan and increments of $5,000,000 in excess thereof.
All prepayment notices shall be irrevocable, except that any notice of voluntary prepayment may state that such notice is conditional upon the consummation of a financing transaction, in which case such notice of prepayment may be revoked or delayed by the Borrower (by notice to the Administrative Agent on or prior to the specified date of prepayment) if such condition is not satisfied. The principal amount of the Loans for which a prepayment notice is given, together with interest on such principal amount, shall be due and payable on the date specified in such prepayment notice as the date on which the proposed prepayment is to be made. Except as provided in Section 4.4.3 [Administrative Agent’s and Lender’s Rights], if the Borrower prepays a Loan but fails to specify the applicable Borrowing Tranche which the Borrower is prepaying, the prepayment shall be applied (i) first to Swing Loans and then to Revolving Credit Loans; and (ii) after giving effect to the allocations in clause (i) above first to Loans to which the Base Rate Option applies, then to Loans to which the Term SOFR Rate Option applies. Any prepayment hereunder shall be subject to the Borrower’s obligation to indemnify the Lenders under Section 5.9 [Indemnity].
5.6.iiReplacement of a Lender.
In the event any Lender (a) gives notice under Section 4.4 [Term SOFR Rate Unascertainable; Illegality; Increased Costs], (b) requests compensation under Section 5.7 [Increased Costs], or requires the Borrower to pay any Indemnified Taxes or additional amount to any Lender or any Official Body for the account of any Lender pursuant to Section 5.8 [Taxes], (c) is a Defaulting Lender, or (d) is a Non-Consenting Lender referred to in Section 11.1.4 [Non-Consenting Lenders], then in any such event the Borrower may, at its sole expense, upon notice to such Lender and the Administrative Agent, either:
(58)prepay the Loans and Participation Advances of such Lender in whole, together with all interest accrued thereon and any accrued fees and all other amounts payable to such Lender hereunder and under the other Loan Documents (including any amounts under Section 5.9 [Indemnity]), and terminate such Lender’s Commitment; or
(59)at its sole expense, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by,
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Section 11.8 [Successors and Assigns]), all of its interests, rights (other than existing rights to payments pursuant to Sections 5.7 [Increased Costs] or 5.8 [Taxes]) and obligations under this Agreement and the related Loan Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment), provided that:
(i)the Borrower or such assignee shall have paid to the Administrative Agent the assignment fee specified in Section 11.8.2(d) [Assignment and Assumption Agreement];
(ii)such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and Participation Advances, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 5.9 [Indemnity]) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts);
(iii)in the case of any such assignment resulting from a claim for compensation under Section 5.7.1 [Increased Costs Generally] or payments required to be made pursuant to Section 5.8 [Taxes], such assignment will result in a reduction in such compensation or payments thereafter; and
(iv)such assignment does not conflict with applicable Law.
A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply. Each Lender agrees that, if the Borrower elects to replace such Lender in accordance with this Section 5.6.2 [Replacement of a Lender], it shall promptly execute and deliver to the Administrative Agent an Assignment and Assumption Agreement to evidence the assignment and shall deliver to the Administrative Agent any Note (if Notes have been issued in respect of such Lender’s Loans) subject to such Assignment and Assumption Agreement; provided that the failure of any such Lender to execute an Assignment and Assumption Agreement shall not render such assignment invalid, and such assignment shall be recorded in the Register if all other requirements of such assignments have been satisfied.
5.6.iDesignation of a Different Lending Office.
If any Lender requests compensation under Section 5.7 [Increased Costs], or the Borrower is or will be required to pay any Indemnified Taxes or additional amounts to any Lender or any Official Body for the account of any Lender pursuant to Section 5.8 [Taxes], then such Lender shall (at the request of the Borrower) use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the reasonable judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 5.7 [Increased Costs] or Section 5.8 [Taxes], as the case may be, in the future, and (ii) would not subject such Lender to any material unreimbursed cost or expense and would not otherwise be materially disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.
5.6.iiMandatory Prepayments.
(60)If at any time the Revolving Facility Usage exceeds the Borrowing Base (other than as a result of a reduction of the Borrowing Base in accordance with Section 2.9(e) [Borrowing Base]), the Borrower shall take one or more of the actions required by Section 5.11 [Borrowing Base Deficiency], which may include making mandatory prepayments of the Revolving Credit Loans.
(61)If at any time the Revolving Facility Usage is in excess of the Revolving Credit Commitments (as used in this Section 5.6.4(b), a “deficiency”), the Borrower shall immediately make a principal payment on the Loans sufficient to cause the principal balance of the Loans then outstanding to
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be equal to or less than the Revolving Credit Commitments then in effect. If a deficiency cannot be eliminated pursuant to this Section 5.6.4(b) by prepayment of the Revolving Credit Loans as a result of outstanding Letter of Credit Obligations, the Borrower shall also deposit cash collateral with the Administrative Agent, to be held by the Administrative Agent to secure such outstanding Letter of Credit Obligations.
(62)In the event a Borrowing Base Deficiency occurs as a result of a reduction in the Borrowing Base in accordance with Section 2.9(e) [Borrowing Base], the Borrower shall prepay the Loans (and after all Loans are repaid in full, Cash Collateralize Letter of Credit Obligations) within one Business Day of the date of effectiveness of such reduction, to the extent necessary to eliminate such Borrowing Base Deficiency.
(63)All prepayments required pursuant to this Section 5.6.4 [Mandatory Prepayments] shall first be applied among the Interest Rate Options to the principal amount of the Loans subject to the Base Rate Option, then to Loans subject to a Term SOFR Rate Option. In accordance with Section 5.9 [Indemnity], the Borrower shall indemnify the Lenders for any loss or expense, including loss of margin, incurred with respect to any such prepayments applied against Loans subject to a Term SOFR Rate Option on any day other than the last day of the applicable Interest Period. Any prepayment of Loans pursuant to this Section 5.6.4 or Section 8.2.17(a) [Anti-Hoarding] shall be accompanied by interest accrued on such Loans.
5.dIncreased Costs.
5.7.iIncreased Costs Generally.
If any Change in Law shall:
(64)impose, modify or deem applicable any reserve, special deposit, liquidity, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement reflected in the Term SOFR Rate) or the Issuing Lender;
(65)subject any Lender or the Issuing Lender to any Tax of any kind whatsoever with respect to this Agreement, any Letter of Credit, any participation in a Letter of Credit or any Loan under the Term SOFR Rate Option made by it, or its other obligations, deposits, reserves, other liabilities or capital attributable thereto, or change the basis of Taxation of payments to such Lender or the Issuing Lender in respect thereof (except for Indemnified Taxes and any Excluded Taxes); or
(66)impose on any Lender, the Issuing Lender or the relevant market any other condition, cost or expense (other than Taxes) affecting this Agreement or any Loan under the Term SOFR Rate Option made by such Lender or any Letter of Credit or participation therein;
and the result of any of the foregoing shall be to increase the cost to such Recipient of making, converting to, continuing or maintaining any Loan (or of maintaining its obligation to make any such Loan), or to increase the cost to such Recipient of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Recipient hereunder (whether of principal, interest or any other amount) then, upon request of such Recipient, the Borrower will pay to such Recipient such additional amount or amounts as will compensate such Recipient for such additional costs incurred or reduction suffered.
5.7.iiCapital Requirements.
If any Lender or the Issuing Lender determines that any Change in Law affecting such Lender or the Issuing Lender or any lending office of such Lender or such Lender’s or the Issuing Lender’s holding company, if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s or the Issuing Lender’s capital or on the capital of
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such Lender’s or the Issuing Lender’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the Issuing Lender, to a level below that which such Lender or the Issuing Lender or such Lender’s or the Issuing Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or the Issuing Lender’s policies and the policies of such Lender’s or the Issuing Lender’s holding company with respect to capital adequacy and liquidity), then from time to time the Borrower will pay to such Lender or the Issuing Lender, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Lender or such Lender’s or the Issuing Lender’s holding company for any such reduction suffered.
5.7.iiiCertificates for Reimbursement; Repayment of Outstanding Loans; Borrowing of New Loans.
A certificate of a Lender or the Issuing Lender setting forth the amount or amounts necessary to compensate such Lender or the Issuing Lender or its holding company, as the case may be, as specified in Sections 5.7.1 [Increased Costs Generally] or Section 5.7.2 [Capital Requirements] and delivered to the Borrower shall be conclusive absent manifest error. The Borrower shall pay such Lender or the Issuing Lender, as the case may be, the amount shown as due on any such certificate within ten (10) Business Days after receipt thereof.
5.7.ivDelay in Requests.
Failure or delay on the part of any Lender or the Issuing Lender to demand compensation pursuant to this Section 5.7 [Increased Costs] shall not constitute a waiver of such Lender’s or the Issuing Lender’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender or the Issuing Lender pursuant to this Section 5.7 [Increased Costs] for any increased costs incurred or reductions suffered more than nine (9) months prior to the date that such Lender or the Issuing Lender, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or the Issuing Lender’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine (9) month period referred to above shall be extended to include the period of retroactive effect thereof).
5.eTaxes.
5.8.iPayments Free of Taxes.
All payments by or on account of any obligation of any Loan Party hereunder or under any other Loan Document shall be made free and clear of and without reduction or withholding for any Taxes; provided that if any Loan Party or any other applicable withholding agent shall be required by applicable Law to deduct any Taxes from such payments, then (i) if the Tax in question is an Indemnified Tax, the sum payable by the applicable Loan Party shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 5.8 [Taxes]) each Lender (or, in the case of a payment made to the Administrative Agent for its own account, the Administrative Agent) receives an amount equal to the sum it would have received had no such deductions been made (provided that, if the applicable withholding agent in respect of an Indemnified Tax is a Person other than a Loan Party or the Administrative Agent (e.g., a Lender), the additional amounts required to be paid by a Loan Party under this clause (i) in respect of such Tax shall not be greater than the additional amounts such Loan Party would have been obligated to pay had such Loan Party made payment of such sum directly to the applicable beneficial owner of such payment, provided further, that such Tax would not have been an Excluded Tax had such beneficial owner been a Lender hereunder and had complied with Section 5.8.5 [Status of Lenders]), (ii) the applicable withholding agent shall make such deductions and (iii) the applicable withholding agent shall timely pay the full amount deducted to the relevant Official Body in accordance with applicable Law.
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5.8.iiPayment of Other Taxes by the Borrower.
Without limiting the provisions of Section 5.8.1 [Payments Free of Taxes] above, the Borrower shall timely pay any Other Taxes to the relevant Official Body in accordance with applicable Law.
5.8.iiiIndemnification by the Borrower.
The Borrower shall indemnify the Administrative Agent and each Lender, within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 5.8 [Taxes]) paid by the Administrative Agent or such Lender, as the case may be, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Official Body. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.
5.8.ivEvidence of Payments.
As soon as practicable after any payment of any Taxes by the Borrower to an Official Body, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Official Body evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.
5.8.vStatus of Lenders.
(67)Each Lender that is entitled to an exemption from or reduction of withholding Tax with respect to any payments hereunder or under any other Loan Document shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable Law or reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation prescribed by applicable Law as will permit such payments to be made without withholding or at a reduced rate of withholding. Each such Lender shall, whenever a lapse in time or change in circumstances renders any such documentation (including any specific documentation required below in this Section 5.8.5 [Status of Lenders]) obsolete, expired or inaccurate in any respect, deliver promptly to the Borrower and the Administrative Agent updated or other appropriate documentation (including any new documentation reasonably requested by the Borrower or the Administrative Agent) or promptly notify the Borrower and the Administrative Agent in writing of its legal ineligibility to do so. 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.
(68)Without limiting the generality of the foregoing:
(v)Each Foreign Lender shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the request of the Borrower or the Administrative Agent), whichever of the following is applicable:
(A) two (2) duly completed valid originals (or an electronically transmitted original) of IRS Form W-8BEN or W-8BEN-E (or any successor forms) claiming eligibility for benefits of an income tax treaty to which the United States of America is a party,
(B) two (2) duly completed valid originals (or an electronically transmitted original) of IRS Form W-8ECI (or any successor forms),
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(C) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code, (x) a certificate to the effect that such Foreign Lender is not (A) a “bank” within the meaning of section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the Borrower within the meaning of section 881(c)(3)(B) of the Code, or (C) a “controlled foreign corporation” described in section 881(c)(3)(C) of the Code and that no payments under any Loan Document are effectively connected with such Foreign Lender’s conduct of a U.S. trade or business (a “United States Tax Compliance Certificate”) and (y) two (2) duly completed valid originals (or an electronically transmitted original) of IRS Form W-8BEN or W-8BEN-E (or any successor forms),
(D) to the extent a Foreign Lender is not the beneficial owner (for example, where the Foreign Lender is a partnership or a participating Lender), two (2) duly completed valid originals (or an electronically transmitted original) of IRS Form W-8IMY (or any successor forms) of the Foreign Lender, accompanied by a Form W-8ECI, W-8BEN or W-8BEN-E, United States Tax Compliance Certificate, Form W-9, Form W-8IMY or any other required information (or any successor forms) from each beneficial owner that would be required under this Section 5.8.5 [Status of Lenders] if such beneficial owner were a Lender, as applicable (provided that if the Foreign Lender is a partnership (and not a participating Lender) and one or more direct or indirect partners are claiming the portfolio interest exemption, the United States Tax Compliance Certificate may be provided by such Foreign Lender on behalf of such direct or indirect partner(s)), or
(E) two (2) duly completed valid originals (or an electronically transmitted original) of any other form prescribed by applicable Law as a basis for claiming exemption from or a reduction in United States federal withholding Tax duly completed together with such supplementary documentation as may be prescribed by applicable Law to permit the Borrower to determine the withholding or deduction required to be made.
(vi)Each Lender that is a “United States person” as defined in section 7701 of the Code 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 request of the Borrower or the Administrative Agent) two (2) duly completed valid originals (or an electronically transmitted original) of an IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding.
(vii)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 Sections 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 FATCA obligations, to determine whether such Lender has or has not complied with such Lender’s FATCA obligations and to determine the amount, if any, to deduct and withhold from such payment.
(69)Notwithstanding any other provision of this Section 5.8.5 [Status of Lenders], a Lender shall not be required to deliver any documentation that such Lender is not legally eligible to deliver.
(70)Each Lender hereby authorizes the Administrative Agent to deliver to the Loan Parties and to any successor Administrative Agent any documentation provided by such Lender to the Administrative Agent pursuant to this Section 5.8.5 [Status of Lenders].
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5.8.viRefunds.
If the Administrative Agent or any Lender receives a refund of any Indemnified Taxes as to which it has been indemnified by any Loan Party or with respect to which any Loan Party has paid additional amounts pursuant to this Section 5.8 [Taxes], it shall pay to such Loan Party an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by such Loan Party under this Section 5.8 [Taxes] with respect to the Indemnified Taxes giving rise to such refund), net of all out-of-pocket expenses (including any Taxes imposed with respect to such refund) of the Administrative Agent or such Lender, as the case may be, and without interest (other than any interest paid by the relevant Official Body with respect to such refund); provided that such Loan Party, upon the request of the Administrative Agent or such Lender, shall repay the amount paid over to such Loan Party (plus any penalties, interest or other charges imposed by the relevant Official Body) to the Administrative Agent or such Lender in the event the Administrative Agent or such Lender is required to repay such refund to such Official Body. This Section 5.8 [Taxes] 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.
5.8.viiDefinition of Lender.
For the avoidance of doubt, the term “Lender” shall, for purposes of this Section 5.8 [Taxes], include any Issuing Lender and any Swingline Lender.
5.8.viiiAdministrative Agent Forms.
The Administrative Agent (and any assignee or successor) will deliver, to the Borrower, on or prior to the date on which it becomes a party to this Agreement, either (i) (A) two (2) executed copies of IRS Form W-8ECI with respect to any amounts payable to the Administrative Agent for its own account and (B) two (2) duly completed copies of IRS Form W-8IMY (certifying that it is either a “qualified intermediary” or a “U.S. branch” that agrees to be treated as a United States person with respect to payments made to and on behalf of the Lenders) for the amounts the Administrative Agent receives for the account of others, or (ii) two (2) executed copies of IRS Form W-9, whichever is applicable. Notwithstanding anything to the contrary in this Section 5.8.8, the Administrative Agent shall not be required to deliver any documentation that the Administrative Agent is not legally eligible to deliver as a result of any Change in Law after the Existing Credit Agreement Closing Date.
5.fIndemnity.
In addition to the compensation or payments required by Section 5.7 [Increased Costs] or Section 5.8 [Taxes], the Borrower shall indemnify each Lender against all liabilities, losses, claims, damages or expenses (including loss of anticipated profits, any foreign exchange losses and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan, from fees payable to terminate the deposits from which such funds were obtained or from the performance of any foreign exchange contract) which such Lender sustains or incurs as a consequence of any:
(71)payment, prepayment, conversion or renewal of any Loan to which a Term SOFR Rate Option applies on a day other than the last day of the corresponding Interest Period (whether or not such payment or prepayment is mandatory, voluntary or automatic and whether or not such payment or prepayment is then due),
(72)attempt by the Borrower to revoke (expressly, by later inconsistent notices or otherwise) in whole or part any Loan Requests under Section 2.5 [Loan Requests] or Section 4.2 [Interest Periods] or notice relating to prepayments under Section 5.6 [Prepayments],
(73)default by the Borrower in the performance or observance of any covenant or condition contained in this Agreement or any other Loan Document, including any failure of the Borrower to pay when due (by acceleration or otherwise) any principal, interest, Commitment Fee or any other amount due hereunder, or
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(74)the assignment of any Revolving Credit Loans under the Term SOFR Rate Option other than on the last day of the Interest Period as a result of a request by the Borrower pursuant to Section 5.6.2 [Replacement of a Lender]; provided, however, that with respect to this clause (d), the Borrower shall not be required to indemnify any Defaulting Lender whose Revolving Credit Loans are being replaced as a result of a request by the Borrower pursuant to Section 5.6.2 [Replacement of a Lender].
If any Lender sustains or incurs any such loss or expense, it shall from time to time notify the Borrower of the amount determined in good faith by such Lender (which determination may include such assumptions, allocations of costs and expenses and averaging or attribution methods as such Lender shall deem reasonable) to be necessary to indemnify such Lender for such loss or expense. Such notice shall set forth in reasonable detail the basis for such determination. Such amount shall be due and payable by the Borrower to such Lender ten (10) Business Days after such notice is given.
5.dSettlement Date Procedures.
In order to minimize the transfer of funds between the Lenders and the Administrative Agent, the Borrower may borrow, repay and reborrow Swing Loans and the Swingline Lender may make Swing Loans as provided in Section 2.1.2 [Swing Loans] hereof during the period between Settlement Dates. The Administrative Agent shall notify each Lender of its Ratable Share of the total of the Revolving Credit Loans and the Swing Loans (each a “Required Share”). On such Settlement Date, each Lender shall pay to the Administrative Agent the amount equal to the difference between its Required Share and its Revolving Credit Loans, and the Administrative Agent shall pay to each Lender its Ratable Share of all payments made by the Borrower to the Administrative Agent with respect to the Revolving Credit Loans. The Administrative Agent shall also effect settlement in accordance with the foregoing sentence on the proposed Borrowing Dates for Revolving Credit Loans and on dates on which mandatory prepayments are due under Section 5.6.4 [Mandatory Prepayments] and may at its option effect settlement on any other Business Day. These settlement procedures are established solely as a matter of administrative convenience, and nothing contained in this Section 5.10 [Settlement Date Procedures] shall relieve the Lenders of their obligations to fund Revolving Credit Loans on dates other than a Settlement Date pursuant to Section 2.1.2 [Swing Loans]. The Administrative Agent may at any time at its option for any reason whatsoever require each Lender to pay immediately to the Administrative Agent such Lender’s Ratable Share of the outstanding Revolving Credit Loans and each Lender may at any time require the Administrative Agent to pay immediately to such Lender its Ratable Share of all payments made by the Borrower to the Administrative Agent with respect to the Revolving Credit Loans.
5.eBorrowing Base Deficiency.
(75)If the Revolving Facility Usage ever exceeds the Borrowing Base (other than in the circumstances where Section 5.6.4(c) [Mandatory Prepayments] applies), the Borrower shall, within ten (10) days after receipt of written notice of such condition from the Administrative Agent, elect by written notice to the Administrative Agent to take one or more of the following actions to eliminate the Borrowing Base Deficiency:
(viii)within 30 days (or such later date as is acceptable to the Administrative Agent in its sole discretion) after the Borrower’s notice of such election, deliver to the Administrative Agent Mortgages on additional Oil and Gas Properties reasonably acceptable to the Administrative Agent, together with Required Title Information on such additional Oil and Gas Properties, each in form and substance satisfactory to the Administrative Agent, such that, upon such delivery, the Borrowing Base Deficiency is cured; or
(ix)either (a) within 30 days following the delivery of such notice, prepay Loans in an aggregate principal amount equal to such Borrowing Base Deficiency or (b) eliminate such Borrowing Base Deficiency by making six (6) consecutive, mandatory, equal, monthly prepayments of principal on the Revolving Credit Loans, each of which shall be in the amount of 1/6th of the amount of such Borrowing Base Deficiency, commencing on the first Business Day of the first calendar month following the delivery of
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such notice and continuing on the first Business Day of each calendar month thereafter. If the Revolving Credit Loans have been repaid in full and a Borrowing Base Deficiency still exists, the Borrower shall Cash Collateralize the Letter of Credit Obligations such that the Borrowing Base Deficiency is eliminated within a period of 30 days after the Revolving Credit Loans have been repaid in full.
(76)Each prepayment pursuant to this Section 5.11 [Borrowing Base Deficiency] shall be accompanied by accrued interest on the amount prepaid to the date of such prepayment.
- REPRESENTATIONS AND WARRANTIES
The Loan Parties, jointly and severally, represent and warrant to the Administrative Agent and each of the Lenders as follows:
6.aOrganization and Qualification.
Each Loan Party is a corporation, partnership or limited liability company duly organized (in the case of the Borrower, in a United States jurisdiction), validly existing and in good standing (if the concept of “good standing” is recognized under the laws of the applicable jurisdiction with respect to such Loan Party) under the laws of its jurisdiction of organization. Each Loan Party has the lawful power to own or lease its properties and to conduct its business in which it is currently engaged, except where the failure to have such power would not reasonably be expected to result in any Material Adverse Change. Each Loan Party is duly licensed or qualified and in good standing in each jurisdiction listed on Schedule 6.1 and in all other jurisdictions where the property owned or leased by it or the nature of the business transacted by it or both makes such licensing or qualification necessary except to the extent that the failure to be so duly licensed or qualified or in good standing would not reasonably be expected to result in any Material Adverse Change.
6.bEEA Financial Institutions.
No Loan Party is an Affected Financial Institution.
6.cSubsidiaries.
As of the Closing Date, Schedule 6.3 states the name of each Subsidiary of the Borrower, its jurisdiction of incorporation, the issued and outstanding shares (referred to herein as the “Subsidiary Shares”) and the owners thereof if it is a corporation, its outstanding partnership interests (the “Partnership Interests”) if it is a partnership, its outstanding limited liability company interests, interests assigned to managers thereof and the voting rights associated therewith (the “LLC Interests”) if it is a limited liability company, identifies each Subsidiary as either a Restricted Subsidiary or an Unrestricted Subsidiary and for each Restricted Subsidiary whether or not it is a Guarantor and, if it is not a Guarantor, the clause in the definition of “Excluded Subsidiaries” applicable to such Restricted Subsidiary. There are no options, warrants or other rights outstanding to purchase any such Subsidiary Shares, Partnership Interests or LLC Interests except as indicated on Schedule 6.3.
6.dPower and Authority.
Each Loan Party has full power to enter into, execute, deliver and carry out this Agreement and the other Loan Documents to which it is a party, to incur the Indebtedness contemplated by the Loan Documents and to perform its Obligations under the Loan Documents to which it is a party, and all such actions have been duly authorized by all necessary proceedings on its part.
6.eValidity and Binding Effect.
This Agreement has been duly and validly executed and delivered by each Loan Party, and each other Loan Document which any Loan Party is required to execute and deliver has been duly executed and delivered by such Loan Party. This Agreement and each other Loan Document constitutes
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legal, valid and binding obligations of each Loan Party which is a party thereto, enforceable against such Loan Party in accordance with its terms, except to the extent that enforceability of any of such Loan Document may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other similar laws affecting the enforceability of creditors’ rights generally or limiting the right of specific performance.
6.fNo Conflict.
Neither the execution and delivery of this Agreement or the other Loan Documents to which it is a party by any Loan Party nor the consummation of the transactions herein or therein contemplated or compliance with the terms and provisions hereof or thereof by any of them will conflict with, constitute a default under or result in any breach of (i) the terms and conditions of the certificate of incorporation, bylaws, certificate of limited partnership, partnership agreement, certificate of formation, limited liability company agreement or other organizational documents of any Loan Party, (ii) any material Law, instrument, order, writ, judgment, injunction or decree to which any Loan Party is a party or by which it is bound or to which it is subject, or result in the creation or enforcement of any Lien, charge or encumbrance whatsoever upon any property (now or hereafter acquired) of any Loan Party (other than Liens granted under the Loan Documents) or (iii) the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien upon any material property or assets of such Loan Party or any of the Restricted Subsidiaries (other than Liens created under the Loan Documents and Liens permitted hereunder) pursuant to the terms of any material indenture, loan agreement, lease agreement, mortgage, deed of trust, agreement or other instrument to which such Loan Party or any of the Restricted Subsidiaries is a party or by which it or any of its property or assets is bound (any such term, covenant, condition or provision, a “Contractual Requirement”), except that certain consents may be required under various contracts and agreements in connection with any attempt to assign such various contracts and agreements pursuant to the assertion of remedies under the Loan Documents.
6.gLitigation.
There are no actions, suits, proceedings or investigations pending or, to the knowledge of any Responsible Officer of the Borrower, threatened against any Loan Party at law or equity before any Official Body or arbitrator that individually or in the aggregate would reasonably be expected to result in any Material Adverse Change. To the knowledge of any Responsible Officer of the Borrower, none of the Loan Parties is in violation of any order, writ, injunction or any decree of any Official Body that would reasonably be expected to result in any Material Adverse Change.
6.hTitle to Properties.
(77)Each Loan Party has good and marketable title to or valid leasehold interest in all properties, assets and other rights constituting Borrowing Base Properties, free and clear of all Liens and encumbrances except Permitted Liens, and subject to the terms and conditions of the applicable leases or conveyance instrument; provided that a Loan Party shall not be in breach of the foregoing (i) in the event that it fails to own a valid fee or leasehold interest which, either considered alone or together with all other such valid fee or leaseholds that it fails to own, is not material to the current Reserve Report, (ii) as a result of certain title defects and exceptions, if the Loan Parties are working to cure such title defects and exceptions as provided for in Section 8.1.18 [Title Information] until such time as such title defects and exceptions are cured by the Loan Parties or waived by the Administrative Agent (or Lenders) as provided by such Section, or (iii) the Borrowing Base has been or is in the process of being adjusted pursuant to Section 8.1.18(c) [Title Information].
(78)Each Loan Party has good and marketable title to or valid leasehold interest in all properties, assets and other rights, which it purports to own or lease or which are reflected as owned or leased on its books and records (other than Borrowing Base Properties), free and clear of all Liens and encumbrances except Permitted Liens, and subject to the terms and conditions of the applicable leases or conveyance instrument, except to the extent that the failure to hold such title or interest, either alone or together with all other title defects, would not reasonably be expected to result in a Material Adverse Change.
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6.aFinancial Statements.
(79)Historical Statements. The Borrower has delivered to the Administrative Agent copies of its audited consolidated year-end financial statements as of December 31, 2020 and 2019 and for the fiscal years then ended (the “Historical Statements”). The Historical Statements were compiled from the books and records maintained by management of the Borrower and its Subsidiaries, are correct and complete in all material respects and fairly represent the consolidated financial condition of the Borrower and its Subsidiaries as of their dates and their results of operations and cash flows for the fiscal periods specified and have been prepared in accordance with GAAP consistently applied.
(80)Financial Projections. The Borrower has delivered to the Administrative Agent financial projections (including balance sheets and statements of operation and cash flows) for the period from the Closing Date through 2026 (broken out on a quarterly basis for the first year after the Closing Date and annually thereafter) derived from various assumptions of the Borrower’s management (the “Financial Projections”). The Financial Projections have been, and all financial projections that are delivered pursuant to Section 8.3.7(f) [Budgets, Forecasts, Other Reports and Information] will be, prepared in good faith based upon reasonable assumptions; it being understood that financial projections are subject to significant uncertainties and contingencies, many of which are beyond the Borrower’s control, and that no assurance can be given that the financial projections will be realized.
(81)Accuracy of Financial Statements. Neither the Borrower nor any of its Subsidiaries has any material liabilities, contingent or otherwise, or forward or long-term commitments that are not disclosed in the Historical Statements or in the notes thereto, and except as disclosed therein there are no unrealized or anticipated losses from any commitments of the Borrower or any of its Subsidiaries that would reasonably be expected to cause a Material Adverse Change. Since December 31, 2020, no Material Adverse Change has occurred.
6.iUse of Proceeds.
The Loan Parties intend to use the proceeds of the Loans in accordance with Section 8.1.11 [Use of Proceeds].
6.jLiens in the Collateral.
(82)Security Interests. The Security Agreement is effective to create valid Lien and security interests in the Collateral described therein in favor of the Collateral Agent for the benefit of the Secured Parties. Except to the extent that the Loan Parties are not required to perfect Liens in certain Collateral pursuant to this Agreement or the Security Agreement, the Liens and security interests granted to the Collateral Agent for the benefit of the Secured Parties pursuant to the Security Agreement in the Collateral (of the type that can be perfected under the Uniform Commercial Code or by filing with the United States Patent and Trademark Office or United States Copyright Office), subject to the actions described in the following sentence, constitute and will continue to constitute legal, valid and enforceable first-priority security interests, subject to Permitted Liens and the proviso set forth in Section 6.8(a) [Title to Properties], under the Uniform Commercial Code as in effect in each applicable jurisdiction or other applicable Law entitled to all the rights, benefits and priorities provided by the Uniform Commercial Code or such Law. Upon the due filing of financing statements relating to said security interests in each office and in each jurisdiction where required in order to perfect the security interests described above, the filing of the Patent, Trademark and Copyright Security Agreement with the United States Patent and Trademark Office and United States Copyright Office, taking possession of any stock certificates or other certificates evidencing the Pledged Securities, and upon the taking of possession or control by the Collateral Agent of the Collateral with respect to which a security interest may be perfected only by possession or control (which possession or control shall be given to the Collateral Agent to the extent possession or control by the Collateral Agent is required by this Agreement or the Security Agreement), all such action as is necessary or advisable to perfect the Lien in favor of the Collateral Agent with respect to the Collateral described above will have been taken except to the extent that the Loan Parties are not required to perfect Liens in certain Collateral pursuant to this Agreement or the Security Agreement. All filing fees and other expenses in connection with each such action have been or will be paid by the Borrower.
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(83)Mortgage Liens. Subject to the qualifications and limitations set forth expressly in the Mortgages and in the proviso set forth in Section 6.8(a) [Title to Properties], the Liens granted to the Collateral Agent pursuant to each Mortgage constitute a legal, valid and enforceable first priority Lien on the Real Property under applicable law, subject only to Permitted Liens. Schedule 1.1(R) sets forth a complete and accurate list as of the Closing Date of (x) Proved Reserves that constitute no less than eighty-five percent (85%) of the total present value of all Proved Reserves included in the Borrowing Base and (y) Proved Developed Producing Reserves that constitute no less than eighty-five percent (85%) of the PV10 value of all Proved Developed Producing Reserves included in the Borrowing Base. Schedule 1.1(T) sets forth a complete and accurate list as of the Amendment No. 1 Effective Date of Proved Reserves having a PV-9 no less than the lesser of (x) eighty-five percent (85%) of the total PV-9 of all Proved Reserves included in the Borrowing Base and (y) 2.25 multiplied by the Loan Limit.
(84)Pledged Securities. All Equity Interests included in the Pledged Securities to be pledged pursuant to the Security Agreement are or will be upon issuance validly issued and nonassessable and owned beneficially and of record by the pledgor free and clear of any Lien or restriction on transfer, except for nonconsensual Permitted Liens, Liens contemplated by clause (5) of the definition of “Permitted Liens” and inchoate Permitted Liens that do not have priority over the Liens granted under the Loan Documents and as otherwise provided by the Security Agreement and except as the right of the Lenders to dispose of such Equity Interests may be limited by the Securities Act and the regulations promulgated by the SEC thereunder and by applicable state securities laws. There are no shareholder or other agreements or understandings other than partnership agreements, limited liability company agreements or operating agreements, with respect to the Equity Interests included in the Pledged Securities, except as described on Schedule 6.11. As of the Closing Date, the Loan Parties have delivered true and correct copies of such partnership agreements and limited liability company agreements to the Administrative Agent pursuant to Section 7.1.1(b)(iii) [Secretary’s Certificate].
6.aFull Disclosure.
(a) Neither this Agreement nor any other Loan Document, nor any certificate, statement, agreement or other documents furnished to any Agent or any Lender in connection herewith or therewith, contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein and therein, in light of the circumstances under which they were made, not misleading. There is no fact known to any Loan Party which materially adversely affects the business, property, assets, financial condition, or results of operations of the Loan Parties taken as a whole that has not been set forth in this Agreement or in the certificates, statements, agreements or other documents furnished in writing to the Agents and the Lenders prior to or at the date hereof in connection with the transactions contemplated hereby or prior to or at the Closing Date in connection with the transactions contemplated thereby.
(b) As of the Closing Date, the information included in the Beneficial Ownership Certification is true and correct in all respects.
6.bTaxes.
All material federal, state, local and other Tax returns required to have been filed with respect to each Loan Party have been filed, and payment or adequate provision has been made for the payment of all material Taxes, fees, assessments and other governmental charges (including in its capacity as withholding agent), except to the extent that such Taxes, fees, assessments and other charges are being contested in good faith by appropriate proceedings diligently conducted and for which such reserves or other appropriate provisions, if any, as shall be required by GAAP shall have been made. There are no agreements or waivers extending the statutory period of limitations applicable to any material federal income Tax return of any Loan Party for any period.
6.cConsents and Approvals.
Except for the filings or recordings required pursuant to Section 7.1.1(j) [Security Documents], no consent, approval, exemption, order or authorization of, or a registration or filing with, any Official Body or any other Person is necessary to authorize or permit the execution, delivery or
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performance of this Agreement and the other Loan Documents or for the validity or enforceability hereof or thereof.
6.dNo Event of Default; Compliance with Instruments.
No event has occurred and is continuing and no condition exists or will exist after giving effect to the borrowings or other extensions of credit to be made under or pursuant to the Loan Documents which constitutes an Event of Default or Potential Default. None of the Loan Parties is in violation of (i) any term of its certificate of incorporation, bylaws, certificate of limited partnership, partnership agreement, certificate of formation, limited liability company agreement or other organizational documents, or (ii) any material agreement or instrument to which it is a party or by which it or any of its properties may be subject or bound where such violation would reasonably be expected to result in a Material Adverse Change.
6.ePatents, Trademarks, Copyrights, Licenses, Permits, Etc.
The Borrower and the Restricted Subsidiaries own or possess all the material patents, trademarks, service marks, trade names, copyrights, licenses, registrations, franchises, Required Permits and rights, without known or actual conflict with the rights of others, necessary for the Borrower and the Restricted Subsidiaries, taken as a whole, to own and operate their properties and to carry on their businesses as presently conducted and planned to be conducted by them, except where the failure to so own or possess with or without such conflict would reasonably be expected to result in a Material Adverse Change.
6.fSolvency.
The Loan Parties, taken as a whole, are Solvent. On the Closing Date, at the time of each borrowing of the Loans, the issuance of the Letters of Credit (including extensions, renewals and amendments thereof) and at the time of selection of, renewal of or conversion to an Interest Rate Option, the Loan Parties, taken as a whole, shall be Solvent after giving effect to the transactions contemplated by the Loan Documents and any incurrence of Indebtedness and all other Obligations.
6.gProducing Wells.
All producing wells that constitute part of the Borrowing Base Properties: (a) have been, during all times that any such wells were operated by any Loan Party or its Affiliates, and (b) to the knowledge of the Loan Parties, have been at all other times, drilled, operated and produced in conformity with all applicable Laws, are subject to no penalties on account of past production, and are bottomed under and are producing from, and the well bores are wholly within, the Borrowing Base Properties, or on Oil and Gas Properties which have been pooled, unitized or communitized with the Borrowing Base Properties, except to the extent that any noncompliance with the representations set forth in this Section 6.18 [Producing Wells] would not reasonably be expected to result in a Material Adverse Change.
6.hInsurance.
Schedule 9 of the Perfection Certificate is a copy of the insurance certificate of the Borrower and Restricted Subsidiaries that lists all material insurance policies of the Borrower and the Restricted Subsidiaries as of the Closing Date, all of which are valid and in full force and effect as of the Closing Date. Such policies provide adequate insurance coverage from reputable and financially sound insurers in amounts sufficient to insure the assets and risks of the Borrower and the Restricted Subsidiaries in accordance with prudent business practice in the industry of the Borrower and the Restricted Subsidiaries.
6.iCompliance with Laws.
The Borrower and its Subsidiaries are in compliance with all applicable Laws (other than Environmental Laws which are specifically addressed in Section 6.25 [Environmental Matters]) in all
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jurisdictions in which the Borrower or any of its Subsidiaries is presently or will be doing business, except where the failure to do so would not reasonably be expected to result in a Material Adverse Change.
6.jMaterial Contracts; Burdensome Restrictions.
Except to the extent that the failure to be in full force and effect would not reasonably be expected to result in a Material Adverse Change, all Material Contracts of each Loan Party are in full force and effect. None of the Loan Parties is bound by any contractual obligation, or subject to any restriction in any organization document, or any requirement of Law which would reasonably be expected to result in a Material Adverse Change.
6.kInvestment Companies; Regulated Entities.
None of the Loan Parties is an “investment company” registered or required to be registered under the Investment Company Act of 1940 or under the “control” of an “investment company” as such terms are defined in the Investment Company Act of 1940 and shall not become such an “investment company” or under such “control.” None of the Loan Parties is subject to any other Law limiting its ability to incur Indebtedness for borrowed money.
6.lERISA Compliance.
Except as could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Change:
(85)each Pension Plan and Multiemployer Plan is in compliance with the applicable provisions of ERISA, the Code and other Laws (except that with respect to any Multiemployer Plan, such representation is deemed made only to the knowledge of the Borrower);
(86)the Borrower and each ERISA Affiliate have met all applicable minimum funding requirements under the Pension Funding Rules in respect of each Pension Plan, and no waiver of the minimum funding standards under the Pension Funding Rules has been applied for or obtained;
(87)as of the most recent valuation date for any Pension Plan, the funding target attainment percentage (as defined in Section 430(d)(2) of the Code and Section 303(d)(2) of ERISA) is 80% or higher and neither the Borrower nor any ERISA Affiliate knows of any facts or circumstances which would cause the funding target attainment percentage for any such plan to drop below 80% as of the most recent valuation date;
(88)with respect to any Multiemployer Plan to which the Borrower or its ERISA Affiliates contribute, the Borrower has not been notified of an “accumulated funding deficiency” (within the meaning of Section 412 of the Code) or that application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made;
(89)there has been no nonexempt “prohibited transaction” (as defined in Section 406 of ERISA) or violation of the fiduciary responsibility rules with respect to any Pension Plan;
(90)no ERISA Event has occurred or is reasonably expected to occur; and
(91)neither the Borrower nor any ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or 4212(c) of ERISA.
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6.kEmployment Matters.
Each of the Loan Parties is in compliance with the Labor Contracts and all applicable federal, state and local labor and employment Laws including those related to equal employment opportunity and affirmative action, labor relations, minimum wage, overtime, child labor, medical insurance continuation, worker adjustment and relocation notices, immigration controls and worker and unemployment compensation, except where the failure to comply would not reasonably be expected to constitute a Material Adverse Change. There are no outstanding grievances, arbitration awards or appeals therefrom arising out of the Labor Contracts or current or threatened strikes, picketing, handbilling or other work stoppages or slowdowns at facilities of any of the Loan Parties which in any case would constitute a Material Adverse Change.
6.lEnvironmental Matters.
Except as disclosed in the Borrower’s Annual Report on Form 10-K for the year ended December 31, 2020, or as otherwise could not reasonably be expected to have a Material Adverse Change:
(92)The Borrower and its Subsidiaries, their operations, facilities and properties are and for the past three years have been in compliance with all Environmental Laws.
(93)The facilities and properties currently owned, leased or operated by the Borrower or any of its Subsidiaries or, to the knowledge of the Borrower or any of its Subsidiaries, formerly owned, leased or operated by the Borrower or any of its Subsidiaries (the “Properties”), do not contain any Hazardous Materials in amounts or concentrations which (i) constitute or constituted a violation of Environmental Law by, or (ii) could reasonably be expected to give rise to any Environmental Liability for, the Borrower or any of its Subsidiaries.
(94)Neither the Borrower nor any of its Subsidiaries has received any written notice of violation, alleged violation, non-compliance, liability or potential liability regarding compliance with or other liabilities under Environmental Laws, including any with regard to their activities at any of the facilities and properties currently owned, leased or operated by the Borrower or any of its Subsidiaries or, to the knowledge of the Borrower or any of its Subsidiaries, formerly owned, leased or operated by the Borrower or any of its Subsidiaries or the business currently or formerly operated by the Borrower or any of its Subsidiaries, or any prior business for which the Borrower or any of its Subsidiaries is subject to liability under any Environmental Law.
(95)Hazardous Materials have not been transported or Released from the Properties in violation of, or in a manner or to a location which could reasonably be expected to give rise to liability for the Borrower or any of its Subsidiaries under, any applicable Environmental Law, nor have any Hazardous Materials been generated, treated, stored or Released by or on behalf of the Borrower or any of its Subsidiaries at, on, from or under any of the facilities and properties currently owned, leased or operated by the Borrower or any of its Subsidiaries or, to the knowledge of the Borrower or any of its Subsidiaries, formerly owned, leased or operated by the Borrower or any of its Subsidiaries in violation of any Environmental Law or in a manner that could reasonably be expected to give rise to Environmental Liability for the Borrower or any of its Subsidiaries.
6.bAnti-Terrorism Laws.
(96)(i) No Covered Entity and no director or officer of any Covered Entity, nor, to the knowledge of the Borrower, any employees or agents of any Covered Entity, is a Sanctioned Person, and (ii) no Covered Entity and no director or officer of any Covered Entity, nor, to the knowledge of the Borrower, any employees or agents of any Covered Entity, either in its own right or through any third party, (a) has any of its assets in a Sanctioned Country or in the possession, custody or control of a Sanctioned Person in violation of any Anti-Terrorism Law, (b) does business in or with, or derives any of its income from investments in or transactions with, any Sanctioned Country or Sanctioned Person in
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violation of any Anti-Terrorism Law; or (c) engages in any dealings or transactions prohibited by any Anti-Terrorism Law.
(97)No Covered Entity, no director or officer of any Covered Entity, nor, to the knowledge of the Borrower, any employees or agents of any Covered Entity, is doing business in violation of any Anti-Corruption Laws.
6.mGas Imbalances.
There are no gas imbalances, take or pay obligations, or other prepayments with respect to any Oil and Gas Properties that would require the Borrower or any Restricted Subsidiary to deliver Hydrocarbons produced from their respective Oil and Gas Properties at some future time without then or promptly thereafter receiving full payment therefor which would exceed 250,000 m.c.f. in the aggregate.
- CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT
The obligation of each Lender to make Loans, of an Issuing Lender to issue Letters of Credit hereunder, and of the Swingline Lender to make Swing Loans is subject to the following conditions:
7.aFirst Loans and Letters of Credit.
7.1.iDeliveries.
On the Closing Date, the Administrative Agent shall have received each of the following, in form and substance reasonably satisfactory to the Administrative Agent:
(1)Officer’s Certificate. A certificate of each of the Loan Parties signed by a Responsible Officer, dated the Closing Date stating that (i) each of the representations and warranties of the Loan Parties are true and accurate on and as of the Closing Date (except representations and warranties which relate solely to an earlier date or time, which representations and warranties shall be true and correct on and as of the specific dates or times referred to therein), (ii) no Event of Default or Potential Default exists and (iii) since December 31, 2020, no Material Adverse Change has occurred.
(2)Secretary’s Certificate. A certificate dated the Closing Date and signed by an Authorized Officer of each of the Loan Parties, certifying:
(x)that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors of such Loan Party (or its managing general partner, managing member or equivalent) authorizing the execution, delivery and performance of the Loan Documents to which such Person is a party and, in the case of the Borrower, the borrowings hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect on the Closing Date;
(xi)the names of the officer or officers authorized to sign this Agreement and the other Loan Documents and the true signatures of such officer or officers and specifying the Authorized Officers permitted to act on behalf of such Loan Party for purposes of this Agreement and the true signatures of such officers, on which the Administrative Agent, the Issuing Lenders, and each Lender may conclusively rely; and
(xii)copies of its organizational documents, including its certificate of incorporation, bylaws, certificate of limited partnership, partnership agreement, certificate of formation, and limited liability company agreement as in effect on the Closing Date, recently certified by the appropriate state official where such documents are filed in a state office, together with recently dated certificates from the appropriate state officials as to the continued existence and good standing of such Loan Party in each state where organized.
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(3)Delivery of Loan Documents. This Agreement, each of the other Loan Documents and the Perfection Certificate signed by an Authorized Officer of each of the Loan Parties party thereto.
(4)Opinions of Counsel.
(a)A written opinion of Latham & Watkins LLP, counsel to the Loan Parties (who may rely on the opinions of such other counsel as may be acceptable to the Administrative Agent), dated the Closing Date, addressed to the Lenders, the Issuing Lenders, the Swingline Lender and the Agents, substantially in the form provided to the Agents prior to the Closing Date.
(b)Written opinions of counsel covering matters under the laws of Virginia and West Virginia, who shall be selected by the Loan Parties and reasonably acceptable to the Administrative Agent, dated the Closing Date, addressed to the Lenders, the Issuing Lenders, the Swingline Lender and the Agents, substantially in the form provided to the Agents prior to the Closing Date.
(5)Legal Details. All legal details and proceedings in connection with the transactions contemplated by this Agreement and the other Loan Documents shall be in form and substance reasonably satisfactory to the Administrative Agent and its counsel, and the Administrative Agent shall have received all such other counterpart originals or certified or other copies of such documents and proceedings in connection with such transactions, in form and substance reasonably satisfactory to the Administrative Agent and its counsel, as the Administrative Agent or its counsel may reasonably request.
(6)Insurance. Evidence that adequate insurance required to be maintained under the Loan Documents is in full force and effect and evidence in the form of insurance certificates and endorsements that the Collateral Agent is named as an additional insured (in the case of liability) and loss payee (in the case of property) in the Loan Parties’ insurance policies.
(7)Evidence of Filing. UCC financing statements in appropriate form for filing under the UCC and such other documents under applicable requirements of Law in each jurisdiction as may be necessary or appropriate or, in the reasonable opinion of the Administrative Agent or Collateral Agent, desirable to perfect the Liens created, or purported to be created, by the Security Documents.
(8)Existing Credit Agreement. Concurrently with the effectiveness and initial borrowings under this Agreement, (i) all principal amounts outstanding under the Existing Credit Agreement shall be prepaid and (ii) all unpaid interest, breakage fees and all other fees and charges owing to Exiting Lenders under the Existing Credit Agreement as of the Closing Date shall be paid; provided that (x) such payment of principal shall be made by way of reallocations and payments pursuant to the second paragraph of Section 2.1.1 and (y) Existing Commitment Fees, Existing Letter of Credit Fees and Existing Interest shall be paid to Increased Lenders and Decreased Lenders in accordance with Section 2.1.1.
(9)Title to Gas Properties. The Administrative Agent shall have received the Required Title Information.
(10)Security Documents. Each of the Security Documents shall have been signed by an Authorized Officer, and to the extent required under applicable requirements of Law, such Security Documents shall be properly recorded or filed with the applicable recording or filing offices and be in proper form for such recording.
(11)Lien Searches. The lien searches listed on Schedule 7.1.1(k) shall have been completed, and the Administrative Agent shall be satisfied with the results thereof.
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(12)Pledged Securities. All certificates, agreements or instruments representing or evidencing the Pledged Securities accompanied by instruments of transfer and stock powers undated and endorsed in blank have been delivered to the Collateral Agent.
(13)Other Documentation. All other certificates, agreements, including instruments necessary to perfect the Collateral Agent’s security interest (to the extent required by the Security Documents) in all Chattel Paper, Instruments and Investment Property (as each such term is defined in the Security Agreement) of each Loan Party have been delivered or assigned to the Collateral Agent.
(14)[Reserved].
(15)Solvency Certificate. A certificate of the chief financial officer of the Borrower stating that, after giving effect to the Transactions, the Loan Parties, taken as a whole, are Solvent.
(16)Financial Statements. The Administrative Agent shall have received the Historical Statements and the Financial Projections.
7.1.iiPayment of Fees.
The Borrower shall have paid or caused to be paid to the Agents, the Lead Arrangers and the Lenders to the extent not previously paid, all fees payable on or before the Closing Date (including upfront fees) and all costs and expenses for which the Agents are entitled to be reimbursed, including the reasonable fees and expenses of Cahill Gordon & Reindel LLP.
7.1.iiiUSA PATRIOT Act.
The Administrative Agent shall have received, at least three (3) Business Days prior to the Closing Date (or such later date satisfactory to the Administrative Agent), all documentation and other information required by bank regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including but not restricted to the USA PATRIOT Act to the extent requested at least ten (10) Business Days prior to the Closing Date.
7.bEach Additional Loan or Letter of Credit.
At the time of making any Loans or issuing any Letters of Credit (or amendments or extensions thereto) and after giving effect to the proposed extensions of credit:
(17)the representations and warranties of the Loan Parties contained in Section 6 [Representations and Warranties] and in the other Loan Documents shall be true and correct in all material respects on and as of the date of the making of any Loan Request, any Swing Loan Request and the making of such additional Loan or the issuance such Letter of Credit (or amendments or extensions thereto) with the same effect as though such representations and warranties had been made on and as of such date (except that (i) any representation and warranty that is already qualified as to materiality shall be true and correct in all respects as so qualified and (ii) representations and warranties which expressly relate solely to an earlier date or time, which representations and warranties shall be true and correct on and as of the specific dates or times referred to therein);
(18)no Event of Default or Potential Default shall have occurred and be continuing;
(19)the Revolving Facility Usage shall not exceed the lesser of (i) the Borrowing Base and (ii) the Revolving Credit Commitments;
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(20)the Borrower shall have delivered to the Administrative Agent a duly executed and completed Loan Request or to the applicable Issuing Lender the Issuer Documents for a Letter of Credit, as the case may be; and
(21)the aggregate amount of Excess Balance Sheet Cash will not exceed $150,000,000.
Each request for the making of any Loans or issuance of any Letters of Credit and each issuance, amendment, renewal, increase or extension of a Letter of Credit shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in clauses (a), (b) and (c) of this Section 7.2.
(viii. COVENANTS
8.aAffirmative Covenants.
The Loan Parties, jointly and severally, covenant and agree that until Payment in Full of the Loans and Reimbursement Obligations and interest thereon, expiration or termination of all Letters of Credit, and satisfaction of all of the Loan Parties’ other Obligations under the Loan Documents and termination of the Commitments, the Loan Parties shall comply at all times with the following affirmative covenants:
8.1.iPreservation of Existence, Etc.
Each of the Borrower and the Restricted Subsidiaries shall maintain (i) its legal existence as a corporation, limited partnership or limited liability company and (ii) its license or qualification and good standing, in each case, in each jurisdiction in which its failure to so qualify, individually or in the aggregate, would reasonably be expected to result in a Material Adverse Change, except as otherwise expressly permitted by Section 8.2.6 [Liquidations, Mergers, Consolidations, Acquisitions].
8.1.iiPayment of Liabilities, Including Taxes, Etc.
Each of the Borrower and the Restricted Subsidiaries shall duly pay and discharge all liabilities to which it is subject or which are asserted against it, promptly as and when the same shall become due and payable (including extensions), including all Taxes, assessments and governmental charges upon it or any of its properties, assets, income or profits, prior to the date on which penalties attach thereto, except to the extent that such liabilities, including Taxes, assessments or charges, are being contested in good faith and by appropriate and lawful proceedings diligently conducted and for which such reserve or other appropriate provisions, if any, as shall be required by GAAP shall have been made, but only to the extent that failure to pay or discharge any such liabilities would not result in any additional liability which would adversely affect to a material extent the financial condition of the Borrower and the Restricted Subsidiaries, taken as a whole, or which would materially and adversely affect the Collateral; provided that the Loan Parties will pay all such liabilities forthwith upon the commencement of proceedings to enforce any Lien which may have attached as security therefor or take other action as is required to suspend such enforcement action unless such Lien otherwise qualifies as a Permitted Lien.
8.1.iiiMaintenance of Insurance.
(22)The Borrower and the Restricted Subsidiaries shall insure their properties and assets against loss or damage by fire and such other insurable hazards (including flood, fire, property damage, workers’ compensation, business interruption and public liability insurance) and against other risks, and in such amounts as similar properties and assets, as are commonly insured by prudent companies in similar circumstances carrying on similar businesses, and with reputable and financially sound insurers, including self-insurance to the extent customary. At the request of the Collateral Agent, the Borrower shall deliver to the Collateral Agent (x) annually an original certificate of insurance signed by its independent insurance broker describing and certifying as to the existence of the insurance on the Collateral required to be maintained by this Agreement and the other Loan Documents, together with a copy of the endorsement described in the next sentence attached to such certificate and (y) from time to
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time a summary schedule indicating all commercial insurance then in force with respect to the Borrower and the Restricted Subsidiaries. Such policies of insurance shall contain the necessary endorsements or policy language, which shall (i) specify the Collateral Agent on behalf of the Secured Parties as an additional insured on the liability policies and mortgagee and lender loss payee as their interests may appear on the property policies, with the understanding that any obligation imposed upon the insured (including the liability to pay premiums) shall be the sole obligation of the Borrower and the Restricted Subsidiaries and not that of the additional insured, (ii) provide that the interest of the Collateral Agent, under the lender’s loss payable endorsement in a form similar to the form provided prior to the Closing Date, shall be insured regardless of any breach or violation by the Borrower or any of its Subsidiaries of any warranties, declarations or conditions contained in such policies or any action or inaction of the Borrower or any of its Subsidiaries, (iii) provide a waiver of any right of the insurers to set off or counterclaim or any other deduction, whether by attachment or otherwise (to the extent that the Loan Parties are able on a commercially reasonable efforts basis to obtain such waiver from the insurers), (iv) provide that no cancellation of such policies for any reason (including non-payment of premium) nor any change therein shall be effective until at least ten (10) days after notification to the Collateral Agent of such cancellation or change, (v) be primary without right of contribution of any other liability insurance carried by or on behalf of any additional insureds with respect to their respective interests in the Collateral, and (vi) provide that inasmuch as any liability policy covers more than one insured, all terms, conditions, insuring agreements and endorsements (except limits of liability) shall operate as if there were a separate policy covering each insured.
(23)If a Casualty Event occurs, the Borrower shall promptly notify the Administrative Agent of such event and the estimated (or actual, if available) amount of such loss.
8.1.ivMaintenance of Properties and Equipment.
(24)Each Loan Party shall maintain in good repair, working order and condition (ordinary wear and tear excepted) in accordance with the general practice of other businesses of similar character and size, all of those material properties and equipment that are necessary to operate Borrowing Base Properties, and from time to time, such Loan Party will make or cause to be made, in a reasonably diligent fashion, all appropriate repairs thereof. In particular, each Loan Party shall operate or cause to be operated its Borrowing Base Properties in a manner similar to a reasonable and prudent operator.
(25)The Borrower and the Restricted Subsidiaries shall (x) maintain in good repair, working order and condition (ordinary wear and tear excepted) in accordance with the general practice of other businesses of similar character and size, all of those material properties and equipment useful or necessary to their businesses and (y) make or cause to be made, in a reasonably diligent fashion, all appropriate repairs, renewals or replacements thereof, in each case if the failure to so maintain, repair, renew or replace the same would reasonably be expected to constitute a Material Adverse Change.
8.1.iMaintenance of Patents, Trademarks, Etc.
The Borrower and the Restricted Subsidiaries shall maintain in full force and effect all patents, trademarks, service marks, trade names, copyrights, licenses, franchises, rights, privileges, permits, consents, approvals and other authorizations necessary or desirable for the ownership and normal operation of their properties and business if the failure so to maintain the same would constitute a Material Adverse Change.
8.1.iiVisitation Rights.
The Borrower and the Restricted Subsidiaries shall permit any of the officers or authorized employees or representatives of any Agent or any Lender (so long as no Event of Default has occurred and is continuing, at such Agent’s or Lender’s expense) to visit and inspect their properties during normal business hours and to examine (including, without limitation, any field examinations) and make excerpts from their books and records and discuss their business affairs, finances and accounts with their officers, all in such detail and at such times and as often as any of the Lenders may reasonably request; provided that each Lender shall provide the Borrower and the Administrative Agent with reasonable notice prior to any visit or inspection, all such visits and inspections shall be made in
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accordance with the standard safety, visit, and inspection procedures of the Borrower and the Restricted Subsidiaries and no such visit or inspection shall interfere with their normal business operation. In the event any Lender desires to conduct an audit of the Borrower or any Restricted Subsidiary, such Lender shall make a reasonable effort to conduct such audit contemporaneously with any audit to be performed by the Administrative Agent.
8.1.iiiKeeping of Records and Books of Account.
The Borrower and the Restricted Subsidiaries shall maintain and keep proper books of record and account which enable the Borrower to issue financial statements in accordance with GAAP and as otherwise required by applicable Laws, and in which full, true and correct entries shall be made in all material respects of all their dealings and business and financial affairs. Without limiting the generality of the foregoing, the Borrower and the Restricted Subsidiaries shall maintain adequate allowances on their books in accordance with GAAP for (i) future costs associated with any lung disease claim alleging pneumoconiosis or silicosis or arising out of exposure or alleged exposure to coal dust or the coal mining environment, (ii) future costs associated with retiree and health care benefits, (iii) future costs associated with reclamation of disturbed acreage, removal of facilities and other closing costs in connection with its mining activities and (iv) future costs associated with other potential Environmental Liabilities.
8.1.ivFurther Assurances.
Each Loan Party shall, from time to time, at its expense, faithfully preserve and protect the Lien on the Collateral in favor of the Collateral Agent for the benefit of the Secured Parties as a continuing first priority perfected Lien, subject only to Permitted Liens, and shall do such other acts and things as the Administrative Agent in its reasonable discretion may deem necessary or advisable from time to time in order to preserve, perfect and protect the Liens granted under the Loan Documents and to exercise and enforce the Collateral Agent’s rights and remedies thereunder with respect to the Collateral.
8.1.vAdditional Guarantors.
If (i) the Borrower forms or acquires, directly or indirectly, any Subsidiary (other than an Excluded Subsidiary) or (ii) any Subsidiary that was an Excluded Subsidiary ceases to be an Excluded Subsidiary, the Borrower shall cause such Subsidiary to join this Agreement within 30 days after the date of acquisition or formation of such Subsidiary or within 30 days after the date any Subsidiary that was an Excluded Subsidiary ceases to be an Excluded Subsidiary (in each case, or such longer period as the Administrative Agent may agree in its reasonable discretion) as a Guarantor by delivering to the Administrative Agent and Collateral Agent, as applicable, (A) a signed Guarantor Joinder, (B) documents in the forms described in Sections 7.1.1(b), (c), (d) (if requested by the Administrative Agent), (f), (g), (k), (l) and (m) [Deliveries], and 8.1.17 [Collateral], modified as appropriate, and (C) documents necessary to grant and perfect Liens to the Collateral Agent for the benefit of the Secured Parties in the Collateral held by such Subsidiary. For the avoidance of doubt, such Subsidiary, and if applicable, the other Loan Parties shall execute and deliver to the Administrative Agent and the Collateral Agent such amendments or supplements to the relevant Security Documents or such other documents as the Administrative Agent or the Collateral Agent shall deem necessary or advisable to grant to the Collateral Agent, for its benefit and for the benefit of the other Secured Parties, a Lien in the property and equity of such Subsidiary to the extent required by the Loan Documents, subject to no Liens other than Permitted Liens, and shall take all actions necessary or advisable in the opinion of the Administrative Agent or the Collateral Agent to cause the Lien created by the applicable Security Documents to be duly perfected in accordance with all applicable requirements of Law to the extent required by the Loan Documents, including the filing of financing statements in such jurisdictions as may be reasonably requested by the Administrative Agent or the Collateral Agent.
8.1.viCompliance with Laws.
The Borrower and its Subsidiaries shall comply with all applicable Laws (including all Environmental Laws), except where the failure to so comply would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Change.
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8.1.viiUse of Proceeds.
(26)The Loan Parties will use the Letters of Credit and the proceeds of the Loans only as follows: (i) to refinance all amounts outstanding under the Existing Credit Agreement, (ii) to provide for the continuance of Letters of Credit issued thereunder, and (iii) to provide for general corporate purposes of the Borrower, the Restricted Subsidiaries, and to the extent permitted in this Agreement, the Unrestricted Subsidiaries, including Permitted Acquisitions, Permitted Business Investments, transaction fees and expenses, working capital and capital expenditures of the Borrower, the Restricted Subsidiaries, and to the extent permitted in this Agreement, the Unrestricted Subsidiaries.
(27)None of the Loan Parties engages or will engage principally, or as one of its important activities, in the business of extending credit for the purpose, immediately, incidentally or ultimately, of purchasing or carrying margin stock (within the meaning of Regulation U). No part of the proceeds of any Loan has been or shall be used for any purpose which entails a violation of or which is inconsistent with the provisions of the regulations of the Board of Governors of the Federal Reserve System, and the Borrower shall assist the Lenders, as reasonably requested by the Administrative Agent, with the Lenders’ compliance with Regulation U as such compliance relates to the Borrower and the Loans, including by providing the Administrative Agent with all documents, forms and certificates reasonably requested by the Administrative Agent in relation thereto.
8.1.vSubordination of Intercompany Loans.
Each Loan Party shall cause any Indebtedness, loans or advances owed by any Loan Party to any Restricted Subsidiary that is not a Guarantor to be subordinated pursuant to the terms of the Intercompany Subordination Agreement.
8.1.viAnti-Terrorism Laws; Anti-Corruption Laws.
(28)(i) No Covered Entity, nor to the knowledge of the Borrower, any directors, officers or employees of any Covered Entity, will become a Sanctioned Person, (ii) no Covered Entity, either in its own right or through any third party, nor to the knowledge of the Borrower, any of a Covered Entity’s directors, officers or employees, will (1) have any of its assets in a Sanctioned Country or in the possession, custody or control of a Sanctioned Person in violation of any Anti-Terrorism Law; (2) do business in or with, or derive any of its income from investments in or transactions with, any Sanctioned Country or Sanctioned Person in violation of any Anti-Terrorism Law; (3) engage in any dealings or transactions prohibited by any Anti-Terrorism Law or (4) use the Loans or Letters of Credit to fund any operations in, finance any investments or activities in, or, make any payments to, a Sanctioned Country or Sanctioned Person or in any manner that would cause a violation of the Anti-Terrorism Laws by any party to this Agreement, (iii) the funds used to repay the Obligations will not be derived from any unlawful activity, (iv) each Covered Entity shall comply with all Anti-Terrorism Laws in all material respects and (v) the Borrower shall promptly notify the Administrative Agent in writing upon the occurrence of a Reportable Compliance Event.
(29)No part of the proceeds of any Loans shall be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of any Anti-Corruption Laws.
8.1.viiiCompliance with Certain Contracts.
(30)The Borrower and the Restricted Subsidiaries will pay or cause to be paid and discharged all material rentals, delay rentals, royalties, production payment, and indebtedness required to be paid by the Borrower and the Restricted Subsidiaries (or required to keep unimpaired in all material respects the rights of the Borrower and the Restricted Subsidiaries in Gas Properties) accruing under, and perform or cause to be performed in all material respects each and every act, matter, or thing required of such party by, each and all of the assignments, deeds, leases, subleases, easements, rights of way, distribution, gathering and other pipeline agreements, contracts, and agreements relating to any of the Gas Properties and do all other things necessary of such party to keep unimpaired in all material respects the
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rights of such party thereunder and to prevent the forfeiture thereof or default thereunder; except (x) nothing in this Agreement shall be deemed to require the Borrower or any Restricted Subsidiary to (i) perpetuate or renew any oil and gas lease or other lease by payment of rental or delay rental or by commencement or continuation of operations nor to prevent any Loan Party from abandoning or releasing any oil and gas lease or other lease or well thereon when, in any of such events, in the opinion of the affected Loan Party exercised in good faith, it is not in the best interest of such Loan Party to perpetuate the same or (ii) make any payments under dispute so long as the validity and amount thereof is being contested in good faith by appropriate and lawful proceedings diligently conducted so long as provisions for adequate reserves in accordance with GAAP shall have been made on the books of the affected Loan Party and (y) with respect to Gas Properties other than Borrowing Base Properties, where such failure would not reasonably be expected to result in a Material Adverse Change.
(31)The Borrower and the Restricted Subsidiaries shall maintain and materially comply with the terms and conditions of all Material Contracts, the nonperformance of which would reasonably be expected to result in a Material Adverse Change.
8.1.viiCertain Additional Assurances Regarding Maintenance and Operations of Properties.
With respect to those Borrowing Base Properties which are being operated by operators other than the Borrower or any Restricted Subsidiary, neither the Borrower nor any Restricted Subsidiary shall be obligated to perform any undertakings contemplated by the covenants and agreement contained in Section 8.1.14 [Compliance with Certain Contracts] that any Responsible Officer of the Borrower or any Restricted Subsidiary reasonably believes are (a) performable only by such operators or (b) beyond the control of the Borrower and the Restricted Subsidiaries; however, the Borrower agrees to promptly take, or cause to be taken, all reasonable actions available under any operating agreements or otherwise to bring about the performance of any such material undertakings required to be performed thereunder.
8.1.viii[Reserved].
8.1.ixCollateral.
(32)Pursuant to the Loan Documents, the Loan Parties shall grant, or cause to be granted, to the Collateral Agent, for the benefit of the Secured Parties, a first priority lien and security interest, subject only to Permitted Liens:
(i)on the date hereof and, with respect to any Equity Interests acquired after the Closing Date, not later than the applicable deadline specified in Section 8.1.9 [Additional Guarantors] (or such longer period as reasonably acceptable to the Administrative Agent), in all Equity Interests owned by the Loan Parties;
(ii)not later than 30 days (or such longer period as reasonably acceptable to the Administrative Agent) after the delivery of each Reserve Report, in Proved Gas Collateral; and
(iii)on the date hereof and with respect to any Person that becomes a Subsidiary (other than an Excluded Subsidiary) after the Closing Date or any Subsidiary that ceases to be an Excluded Subsidiary, not later than the applicable deadline specified in Section 8.1.9 [Additional Guarantors] (or such longer period as reasonably acceptable to the Administrative Agent), in all of the other assets of the Loan Parties (except as excluded or limited above or below or as excluded or limited in any other Loan Document) (including all minerals extracted from the ground, accounts receivable, inventory, chattel paper, intellectual property and other general intangibles, equipment, Applicable Accounts and other investment property whether owned on the Closing Date or subsequently acquired) and products and proceeds of the foregoing.
(33)Notwithstanding the foregoing, Liens will not be required on any of the following (collectively, the “Excluded Assets”):
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(c)any Excluded Property;
(d)any Proved Reserves that are (x) not Proved Gas Collateral and (y) not subject to a Mortgage as of the Amendment No. 1 Effective Date;
(e)(x) Excluded Accounts described in clauses (i), (ii) and (iii) of the definition of “Excluded Accounts” or (y) funds in Excluded Accounts described in clause (v) of the definition of “Excluded Accounts” solely to the extent such funds will be swept into one or more Excluded Accounts described in clauses (i), (ii) and (iii) of the definition of “Excluded Accounts”;
(f)any right, title and interests in and to any Manufactured (Mobile) Home (as defined in the applicable Flood Laws), and any Buildings;
(g)motor vehicles (and other assets covered by certificates of title or ownership) and Letter-of-Credit Rights (as defined in the UCC in the State of New York), in each case, except to the extent the security interest in such assets can be perfected by the filing of an “all assets” UCC financing statement;
(h)Commercial Tort Claims (as defined in the UCC) that do not exceed $10,000,000 in the aggregate for all Pledgors;
(i)assets owned by any Pledgor on the Closing Date or hereafter acquired and any proceeds thereof that are subject to a Lien permitted by clause (10) in the definition of “Permitted Liens” to the extent and for so long as the contract or other agreement in which such Lien is granted (or the documentation providing for the Capital Lease Obligations, equipment lease or purchase money obligation subject to such Lien) validly prohibits the creation of any other Lien on such assets and proceeds;
(j)those assets over which the granting of security interests in such assets would be prohibited by (1) any contract in effect on the Closing Date and listed on Schedule 8.2.15 or Schedule 8.2.16 (or, as to any assets acquired after the Closing Date in an acquisition permitted hereunder, in effect at the time of acquisition thereof and not entered into in contemplation thereof) or (2) applicable law or regulation or to the extent that such security interests would require obtaining the consent of any governmental or regulatory authority, but only to the extent and for so long as a grant of a security interest therein in favor of the Collateral Agent would (x) violate or invalidate such contract, cause the acceleration or the termination thereof or create a right of termination in favor of any other party thereto (other than the Borrower or any of its Subsidiaries) or (y) violate such applicable law or regulation or require such consent;
(k)any intent-to-use trademark application to the extent and for so long as creation by a Pledgor of a security interest therein would result in the loss by such Pledgor of any material rights therein;
(l)except for Equity Interests of Foreign Subsidiaries to the extent required pursuant to Section 8.1.17(a) [Collateral], any foreign collateral or credit support;
(m)any Voting Stock of any CFC or CFC Holdco in excess of 65% of the total voting power of all outstanding Voting Stock of such Subsidiary, it being understood that any Equity Interests constituting “stock entitled to vote” within the meaning of Treasury Regulation Section 1.956-2(c)(2) shall be treated as Voting Stock for purposes of this clause (xi);
(n)Equity Interests of (x) any Excluded Subsidiary (other than a Foreign Subsidiary or a CFC Holdco), (y) any Unrestricted Subsidiary or (z) any Person that is not a Subsidiary;
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(o) assets owned by any Pledgor on the Closing Date or hereafter acquired and any proceeds thereof as to which the Borrower reasonably determines (and the Collateral Agent agrees in writing (which may be by e-mail)) that the cost of obtaining such a security interest or perfection thereof are excessive in relation to the benefit to the Secured Parties of the security to be afforded thereby;
(p)any permit or license issued by an Official Body to any Pledgor or any agreement to which any Pledgor is a party, in each case, only to the extent and for so long as the terms of such permit, license or agreement or any requirement of Law applicable thereto, validly prohibit the creation by such Pledgor of a security interest in such permit, license or agreement in favor of the Collateral Agent;
(q)any right, title and interests in and to all locomotives, rail cars and rolling stock now or hereafter owned or leased by the Loan Parties;
(r)any right, title and interests in and to any ship, boat or other vessel; and
(s)the Loan Parties’ timber to be cut other than to the extent encumbered by any Mortgage;
provided that clauses (vii), (viii) and (xiv) shall be after giving effect to applicable provisions of the Uniform Commercial Code of any applicable jurisdiction or other applicable law, and shall not include proceeds and receivables of assets described in such clauses, the assignment of which is expressly deemed effective under the Uniform Commercial Code of any applicable jurisdiction notwithstanding the prohibition described in such clause.
(34)If reasonably requested by the Administrative Agent, contemporaneously with any such grant of a security interest and lien on any Proved Gas Collateral after the date hereof, to the extent that any Mortgage and as-extracted UCC filing is being recorded in a jurisdiction in which local counsel opinions have not previously been delivered, or to the extent such opinion is otherwise reasonably requested by the Administrative Agent, the Loan Parties shall provide to the Administrative Agent a local counsel opinion in form and substance satisfactory to the Administrative Agent with respect to such Mortgage and as-extracted UCC filing.
(35)No actions in any non-U.S. jurisdiction or required by the laws of any non-U.S. jurisdiction shall be required to be taken (x) to create any security interests in assets located or titled outside of the U.S. or (y) to perfect or make enforceable any security interests in any assets (other than delivery of Equity Interests of any Foreign Subsidiary pursuant to Section 8.1.17) (it being understood that no security agreements or pledge agreements governed under the laws of any non U.S. jurisdiction shall be required).
(36)No Loan Party shall effect any change (i) in any Loan Party’s legal name, (ii) in the location of any Loan Party’s chief executive office, (iii) in any Loan Party’s identity or organizational structure, (iv) in any Loan Party’s Federal Taxpayer Identification Number or organizational identification number, if any, or (v) in any Loan Party’s jurisdiction of organization (in each case, including by merging with or into any other entity, reorganizing, dissolving, liquidating, reorganizing or organizing in any other jurisdiction), until (A) it shall have given the Collateral Agent and the Administrative Agent not less than 5 days’ prior written notice, or such lesser notice period agreed to by the Collateral Agent, of its intention so to do, clearly describing such change and providing such other information in connection therewith as the Collateral Agent or the Administrative Agent may reasonably request and (B) it shall have taken all action reasonably satisfactory to the Collateral Agent to maintain the perfection and priority of the security interest of the Collateral Agent for the benefit of the Secured Parties in the Collateral, if applicable. Each Loan Party agrees to promptly provide the Collateral Agent with certified organizational documents reflecting any of the changes described in the preceding sentence.
(37)Notwithstanding anything to the contrary in any Loan Document, no Mortgages shall be required on any Real Property that is not Proved Gas Collateral; provided that no Mortgages shall
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be released or discharged by reason of any Real Property ceasing to constitute required Proved Gas Collateral as a result of the changes effected in this Agreement by Amendment No. 1.
8.1.iTitle Information.
(38)Notwithstanding anything set forth herein or in the other Loan Documents to the contrary, on or prior to the Closing Date, the Borrower shall satisfy the Minimum Title Requirement with respect to the Borrowing Base Properties evaluated by the Reserve Report delivered to the Lenders prior to the Closing Date. Additionally, on or before the delivery to the Administrative Agent and the Lenders of each Reserve Report delivered after the Closing Date, the Borrower will deliver the Required Title Information covering enough of the Proved Reserves included in the Borrowing Base Properties evaluated by such Reserve Report that were not included in the immediately preceding Reserve Report, so that, together with the Required Title Information previously delivered to the Administrative Agent, the Minimum Title Requirement is satisfied with respect to the Borrowing Base Properties evaluated by such Reserve Report.
(39)At any time that the Borrower has provided the Required Title Information for Proved Gas Collateral under Section 8.1.18(a) [Title Information] or under Section 5.11(a)(i) [Borrowing Base Deficiency], the Borrower shall, within the Title Cure Period with respect to any title defects or exceptions on any such Proved Gas Collateral or additional Oil and Gas Property, either (i) cure to the reasonable satisfaction of the Administrative Agent any such title defects or exceptions (including defects or exceptions as to priority) which are not Permitted Liens raised by such information, (ii) substitute acceptable Proved Reserves with no title defects or exceptions except for Permitted Liens, or (iii) deliver additional Required Title Information so that, together with the Required Title Information previously delivered to the Administrative Agent, the Minimum Title Requirement is satisfied with respect to the Borrowing Base Properties evaluated by the then current Reserve Report.
(40)If the Borrower does not cure any title defect requested by the Administrative Agent or the Lenders to be cured within the Title Cure Period or the Borrower does not satisfy the Minimum Title Requirement with respect to the Borrowing Base Properties evaluated by the then current Reserve Report, such failure shall not be an Event of Default, but instead the Administrative Agent and/or the Required Borrowing Base Lenders shall have the right to exercise the following remedy in their sole discretion from time to time, and any failure to so exercise this remedy at any time shall not be a waiver as to future exercise of the remedy by the Administrative Agent or the Required Borrowing Base Lenders. To the extent that the Administrative Agent or the Required Borrowing Base Lenders are not satisfied with title to any Proved Gas Collateral after the Title Cure Period has elapsed, such unacceptable Proved Gas Collateral shall not count towards the Minimum Title Requirement, and the Administrative Agent may send a notice to the Borrower and the Lenders that the then outstanding Borrowing Base shall be reduced by an amount as determined by the Required Borrowing Base Lenders to cause the Borrower to be in compliance with the Minimum Title Requirement with respect to the Borrowing Base Properties included in such Borrowing Base as so reduced. This new Borrowing Base shall become effective immediately after receipt of such notice.
8.1.xMaintenance of Permits.
The Borrower and the Restricted Subsidiaries shall maintain all Required Permits in full force and effect in accordance with their terms except where the failure to do so would not reasonably be expected to result in a Material Adverse Change.
8.1.xiPost-Closing Matters.
The Loan Parties will execute and deliver to the Administrative Agent the documents and complete the tasks set forth on Schedule 8.1.20, within the time frames set forth therein, unless otherwise waived or extended by the Administrative Agent in its sole discretion.
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8.1.xiiAccounts.
(41)No Loan Party shall establish or maintain an Applicable Account unless it is subject to a Control Agreement; provided that, in the case of any Applicable Account acquired pursuant to a Permitted Acquisition (and which Applicable Account was not established in contemplation of such acquisition), so long as such acquiring Loan Party provides the Administrative Agent with written notice of the existence of such Applicable Account within five (5) Business Days following the date of such acquisition (or such later date as the Administrative Agent may agree in its sole discretion), such Loan Party will have sixty (60) days following the date of such acquisition (or such later date as the Administrative Agent may agree in its discretion; provided that any extension of more than thirty (30) additional days shall require the consent of the Required Lenders) to cause such Applicable Account to be subject to a Control Agreement. As of the date hereof, all Applicable Accounts are subject to a valid and perfected first priority security interest in favor of the Collateral Agent and are subject to a Control Agreement.
(42)Each Loan Party shall maintain, and shall cause each of its Subsidiaries to maintain, at all times its Applicable Accounts with the Administrative Agent, a Lender or an Affiliate of the Administrative Agent or a Lender (a “Permitted Account Counterparty”); provided that in the case of any Applicable Account acquired pursuant to a Permitted Acquisition (and which Applicable Account was not established in contemplation of such acquisition) and not maintained with a Permitted Account Counterparty, the foregoing prohibition shall not apply until the date which is sixty (60) days after such Permitted Acquisition (or such later date as the Administrative Agent may agree in its discretion; provided that any extension of more than thirty (30) additional days shall require the consent of the Required Lenders).
8.bNegative Covenants.
The Loan Parties, jointly and severally, covenant and agree that until Payment in Full of the Loans and Reimbursement Obligations and interest thereon, expiration or termination of all Letters of Credit, satisfaction of all of the Loan Parties’ other Obligations hereunder and termination of the Commitments, the Loan Parties shall comply with the following negative covenants:
8.2.iIndebtedness.
The Borrower shall not, and shall not cause or permit any Restricted Subsidiary to, directly or indirectly, incur, assume or otherwise become liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness, and the Borrower will not issue any Disqualified Stock and will not permit any Restricted Subsidiary to issue any Preferred Stock, except:
(43)Indebtedness under the Loan Documents;
(44)Indebtedness existing on the Closing Date and set forth on Schedule 8.2.1, and Refinancing Indebtedness of such Indebtedness;
(45)Indebtedness owed by (i) a Loan Party to another Loan Party, (ii) a Restricted Subsidiary that is not a Loan Party to another Restricted Subsidiary that is not a Loan Party, (iii) a Restricted Subsidiary to a Loan Party and (iv) any Loan Party to a Restricted Subsidiary that is not a Loan Party; provided that (x) any Indebtedness pursuant to clause (iii) is permitted by Section 8.2.4 [Loans and Investments] and (y) any Indebtedness pursuant to clause (iv) is subordinated to the extent required by, and in accordance with, Section 8.1.12 [Subordination of Intercompany Loans];
(46)Indebtedness represented by mortgage financings, purchase money obligations or other Indebtedness, in each case incurred for the purpose of financing all or any part of the price or cost of acquisition, design, construction, installation, development, repair or improvement of plant, property or equipment used in the business of the Borrower or any Restricted Subsidiary, and Capital Lease Obligations, and Refinancing Indebtedness of any of the foregoing, in an aggregate amount, when taken together with the outstanding amount of all other Indebtedness or
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Refinancing Indebtedness incurred pursuant to this clause (d), not to exceed at any time outstanding under this clause (d) $150,000,000;
(47)Indebtedness of any Person that becomes a Restricted Subsidiary after the Closing Date as permitted by this Agreement, which Indebtedness is existing at the time such Person becomes a Restricted Subsidiary (and was not incurred in connection with or in contemplation of such Person’s becoming a Subsidiary of the Borrower) in an aggregate amount not to exceed $25,000,000 at any time outstanding;
(48)Indebtedness under Swap Agreements permitted under Section 8.2.12 [Swaps];
(49)Indebtedness in respect of self-insurance obligations or bid, plugging and abandonment, appeal, reimbursement, performance, reclamation, employment, surety and similar obligations and completion guarantees provided by or for the account of the Borrower or any Restricted Subsidiary in the ordinary course of business, and any Guaranties and letters of credit functioning as or supporting any of the foregoing in the ordinary course of business;
(50)Permitted Marketing Obligations;
(51)in-kind obligations relating to oil or natural gas balancing positions arising in the ordinary course of business;
(52)[reserved];
(53)liability in respect of the Indebtedness of any Unrestricted Subsidiary or any Joint Venture in an aggregate amount not to exceed $25,000,000 at any time outstanding; provided that, in the case of Indebtedness of an Unrestricted Subsidiary, (i) such liability shall arise only as a result of the pledge of (or a Guaranty limited in recourse solely to) Equity Interests in such Unrestricted Subsidiary held by the Borrower or a Restricted Subsidiary to secure such Indebtedness and (ii) such Indebtedness shall be Non-Recourse Debt;
(54)Indebtedness of the Borrower or any Restricted Subsidiary or the issuance of any Disqualified Stock by the Borrower or Preferred Stock by any Restricted Subsidiary in an aggregate amount not exceeding, at any one time outstanding, $50,000,000;
(55)(x) Permitted Unsecured Notes; provided that (i) (x) unless the requirement for such reduction is waived in writing by the Required Lenders or (y) after giving effect thereto and the application of proceeds thereof, Availability would equal at least 75% of the Commitments, the Borrowing Base shall be reduced by an amount equal to 25% of the aggregate principal amount of such Indebtedness, effective immediately upon issuance of such Permitted Unsecured Notes, (ii) the Borrower shall comply with Section 5.6.4(c) [Mandatory Prepayments] after giving effect to such reduction in the Borrowing Base and (iii) the Borrower shall be in compliance, on a Pro Forma Basis, with the Leverage Maintenance Covenant, and the Borrower shall deliver to the Administrative Agent prior to the incurrence of the Permitted Unsecured Notes an Officer’s Certificate certifying compliance with the requirements of this clause (iii) and setting forth calculations in reasonable detail showing such compliance; and (y) Permitted Unsecured Notes that refinance Permitted Unsecured Notes outstanding on the Closing Date or incurred under clause (x) or this clause (y); and
(56)Indebtedness of one or more Loan Parties secured by a Lien permitted by clause (5) of the definition of “Permitted Liens”; provided that the aggregate amount of Indebtedness under this clause (n) shall not exceed $50,000,000 at any time outstanding.
provided that in the case of clause (l), (m) or (n), at the time of and after giving effect to the incurrence of any such Indebtedness no Potential Default or Event of Default shall exist.
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In the event that an item of Indebtedness meets the criteria of more than one of the categories of Indebtedness described in the clauses of the preceding paragraph, the Borrower shall, in its sole discretion, divide, classify or reclassify (or later divide, classify, redivide or reclassify) such item of Indebtedness in any manner that complies with this covenant (including splitting into multiple exceptions) and will only be required to include the amount and type of such Indebtedness in one of such clauses of the preceding paragraph.
The accrual of interest or Preferred Stock or Disqualified Stock dividends or distributions, 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, the reclassification of Preferred Stock or Disqualified Stock as Indebtedness due to a change in accounting principles, and the payment of dividends or distributions on Preferred Stock or Disqualified Stock in the form of additional securities of the same class of Preferred Stock or Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Preferred Stock or Disqualified Stock for purposes of this covenant.
Notwithstanding anything contained in any Loan Document, the only Indebtedness (or proceeds of Indebtedness) which may, in whole or in part, Refinance any Existing Notes shall be either Permitted Unsecured Notes, Loans or a combination of Permitted Unsecured Notes and Loans.
8.2.iiLiens.
The Borrower shall not, and shall not cause or permit any Restricted Subsidiary to, at any time, directly or indirectly, create, incur, assume or suffer to exist any Lien on any property or assets of the Borrower or any Restricted Subsidiary, tangible or intangible, now owned or hereafter acquired, or agree or become liable to do so, except Permitted Liens, subject to the proviso in Section 6.8(a) [Title to Properties].
8.2.iiiDesignation of Unrestricted Subsidiaries.
(57)The Board of Directors of the Borrower may at any time designate any Restricted Subsidiary as an Unrestricted Subsidiary (including any newly acquired or newly formed Restricted Subsidiary at or prior to the time it is so acquired or formed but excluding any Restricted Subsidiary that was previously an Unrestricted Subsidiary), or any Unrestricted Subsidiary as a Restricted Subsidiary; provided that (i) immediately before and after such designation, no Potential Default or Event of Default shall have occurred and be continuing, (ii) immediately after giving effect to such designation, the Borrower shall be in compliance, on a Pro Forma Basis, with the Financial Covenants and (iii) no Subsidiary may be designated as an Unrestricted Subsidiary if it is a “Restricted Subsidiary” for the purpose of any Permitted Unsecured Notes (unless it is substantially concurrently being designated as an Unrestricted Subsidiary under such Indebtedness). Any (x) designation of a Subsidiary as an Unrestricted Subsidiary or (y) redesignation as a Restricted Subsidiary will be evidenced to the Administrative Agent by delivering to the Administrative Agent a copy of a Board Resolution giving effect to such designation and an Officer’s Certificate certifying that such designation complied with the requirements of this Section 8.2.3. The designation of any Subsidiary as an Unrestricted Subsidiary shall constitute an Investment by the Borrower or the relevant Restricted Subsidiary (as applicable) therein at the date of designation in an amount equal to the Fair Market Value of Borrower’s or such relevant Restricted Subsidiary’s (as applicable) investment therein, as determined in good faith by the Borrower or such relevant Restricted Subsidiary, and the Investment resulting from such designation must otherwise be permitted under Section 8.2.4 [Loans and Investments]. The designation of any Unrestricted Subsidiary as a Restricted Subsidiary shall constitute the incurrence at the time of designation of any Investment, Indebtedness or Liens of such Subsidiary existing at such time.
(58)No Unrestricted Subsidiary shall:
(1) have any Indebtedness other than Non-Recourse Debt;
(2) except as permitted by Section 8.2.8 [Affiliate Transactions], be party to any agreement, contract, arrangement or understanding with the Borrower or any Restricted Subsidiary unless the terms of any such agreement, contract, arrangement or
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understanding are no less favorable to the Borrower or such Restricted Subsidiary than those that might be obtained at the time from Persons that are not Affiliates of the Borrower;
(3) be a Person with respect to which either the Borrower or any Restricted Subsidiary has any direct or indirect obligation (x) to subscribe for additional Equity Interests (except pursuant to an Investment that would be permitted hereunder at the time such obligation is incurred and such Investment is made) or (y) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results; or
(4) Guaranty or otherwise directly or indirectly provide credit support for any Indebtedness of the Borrower or any Restricted Subsidiary (other than pursuant to the Guaranty Agreement), except to the extent such Guaranty would be and is released upon such designation as an Unrestricted Subsidiary.
8.2.iLoans and Investments.
The Borrower shall not, and shall not cause or permit any Restricted Subsidiary to, at any time, directly or indirectly, make or suffer to remain outstanding any Investment or become or remain liable for any Investments, except:
(59)(i) payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business and (ii) loans or advances to officers, directors or employees made in the ordinary course of business; provided that such loans and advances to all such officers, directors and employees do not exceed an aggregate amount of $5,000,000 outstanding at any time;
(60)Temporary Cash Investments;
(61)any transaction permitted under Section 8.2.6 [Liquidations, Mergers, Consolidations, Acquisitions] (including any Permitted Acquisition);
(62)in connection with the management of employee benefit trust funds of the Borrower or any Restricted Subsidiary, investment of such employee benefit trust funds in Investments of a type generally and customarily used in the management of employee benefit trust funds;
(63)such Investments consisting of prepaid expenses, negotiable instruments held for collection and lease, utility and workers’ compensation, performance and other similar deposits made in the ordinary course of business by the Borrower or any Restricted Subsidiary;
(64)any Investment existing on, or made pursuant to binding commitments existing on, the Closing Date and described on Schedule 8.2.4, and any Investment consisting of an extension, modification or renewal of any such Investment existing on, or made pursuant to a binding commitment existing on, the Closing Date; provided that the amount of any such Investment may be increased (i) as required by the terms of such Investment as in existence on the Closing Date or (ii) as otherwise permitted under this Section 8.2.4 [Loans and Investments];
(65)Investments (i) in any Loan Party or (ii) by any Restricted Subsidiary that is not a Loan Party in any other Restricted Subsidiary that is not a Loan Party;
(66)any Investments received in compromise or resolution of (i) obligations of trade creditors or customers that were incurred in the ordinary course of business of the Borrower or any Restricted Subsidiary, including pursuant to any plan of reorganization or similar
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arrangement upon the bankruptcy or insolvency of any trade creditor or customer or (ii) litigation, arbitration or other disputes;
(67)other Investments in an aggregate amount not to exceed $100,000,000 at any one time outstanding;
(68)other Investments; provided that after giving effect thereto and any incurrence of Indebtedness in connection therewith, (i) no Borrowing Base Deficiency exists or would result therefrom, (ii) no Potential Default or Event of Default has occurred and is continuing or would result therefrom, (iii) the Net Leverage Ratio at such time, calculated on a Pro Forma Basis, shall not be greater than 3.00:1.00 and (iv) Availability would equal not less than 20% of the Commitments;
(69)[reserved];
(70)[reserved];
(71)Investments constituting the purchase or acquisition of all of the Equity Interests (not already owned by a Restricted Subsidiary) in another Person substantially all of whose assets consist of Hydrocarbon Interests; provided that Section 8.1.9 [Additional Guarantors] is complied with;
(72)Investments made with Excluded Properties;
(73)an Investment in receivables owing to the Borrower or any Restricted Subsidiary if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms, including such concessionary trade terms as the Borrower or any such Restricted Subsidiary deems reasonable under the circumstances;
(74)Hedging Obligations permitted under Section 8.2.1(f) [Indebtedness];
(75)Permitted Business Investments;
(76)endorsements of negotiable instruments and documents in the ordinary course of business;
(77)any Investment made as a result of the receipt of Designated Non-Cash Consideration in an aggregate amount not to exceed the Threshold Amount at any one time outstanding; and
(78)Guarantees of performance or other obligations (other than for payment of Indebtedness or letter of credit reimbursement obligations) arising in the ordinary course in the Permitted Business, including obligations under oil and natural gas exploration, development, joint operating, and related agreements and licenses, concessions or operating leases related to the Permitted Business;
provided that, in the case of clause (j), (m) or (n) after giving effect to any such Investment no Event of Default or Potential Default shall exist or shall result from any such Investment.
8.2.ivRestricted Payments.
The Borrower shall not, and shall not cause or permit any Restricted Subsidiary to, directly or indirectly, make a Restricted Payment, except:
(79)dividends payable by the Borrower on common stock issued by the Borrower not to exceed an annual rate of $0.10 per share (such amount to be appropriately adjusted to reflect any stock split, reverse stock split, stock dividend or similar transaction occurring after the
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Closing Date so that the aggregate amount of dividends permitted after such transaction is the same as the amount permitted immediately prior to such transaction);
(80)[reserved];
(81)the repurchase, redemption or other acquisition or retirement for value of Equity Interests of the Borrower or any of the Restricted Subsidiaries held by any current or former officer, director or employee of the Borrower or any of the Restricted Subsidiaries (or their respective estates, heirs, family members, spouses, former spouses or beneficiaries under their estates or other permitted transferees), pursuant to the terms of any equity subscription agreement, stock option agreement, shareholders’ agreement, compensation agreement or arrangement or similar agreement; provided that the aggregate amount of such acquisitions or retirements (excluding amounts representing cancellation of Indebtedness) shall not exceed $7,000,000 in any calendar year (with any portion of such $7,000,000 amount that is unused in any calendar year to be carried forward to successive calendar years and added to such amount, provided that the amount carried forward shall not exceed $10,000,000 at any time); provided further that such amount in any calendar year may be increased by an amount not to exceed the cash proceeds of key man life insurance policies received by the Borrower after the Closing Date;
(82)the repurchase of Equity Interests deemed to occur upon the exercise of stock or other equity options to the extent such Equity Interests represent a portion of the exercise price of those stock or other equity options and any repurchase or other acquisition of Equity Interests made in lieu of withholding taxes in connection with any exercise or exchange of stock options, warrants, incentives or other rights to acquire Equity Interests;
(83)payments of cash, dividends, distributions, advances or other Restricted Payments by the Borrower or any Restricted Subsidiary to allow the payment of cash in lieu of the issuance of fractional shares upon (i) the exercise of options or warrants or (ii) the conversion or exchange of Equity Interests of any such Person;
(84)payments to dissenting stockholders of the Borrower not to exceed $5,000,000 in the aggregate made (i) pursuant to applicable law or (ii) in connection with the settlement or other satisfaction of legal claims made pursuant to or in connection with a consolidation, merger or transfer of assets in connection with a transaction not prohibited by this Agreement;
(85)other Restricted Payments; provided after giving effect thereto and any incurrence of Indebtedness in connection therewith, (i) no Borrowing Base Deficiency exists or would result therefrom, (ii) no Potential Default or Event of Default has occurred and is continuing or would result therefrom, (iii) the Net Leverage Ratio at such time, calculated on a Pro Forma Basis, shall not be greater than 3.00:1.00 and (iv) Availability would equal not less than 20% the Commitments;
(86)Restricted Payments (not constituting dividends by the Borrower on common stock issued by the Borrower or purchases or other acquisition or retirement for value of any Equity Interests of the Borrower) in an aggregate amount not to exceed $10,000,000 since the Closing Date;
(87)prepayment of any Subordinated Obligations with Refinancing Indebtedness thereof; and
(88)repurchases of Subordinated Obligations of the Borrower or any Guarantor at a purchase price not greater than 100% of the principal amount of such Subordinated Obligations in the event of an asset disposition, in each case plus accrued and unpaid interest thereon, to the extent required by the terms of such Subordinated Obligations, but only if the Borrower has complied with and fully satisfied its obligations in accordance with Section 8.2.7 [Dispositions].
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8.2.iiLiquidations, Mergers, Consolidations, Acquisitions.
The Borrower shall not, and shall not cause or permit any Restricted Subsidiary to, dissolve, liquidate or wind-up its affairs, or become a party to any merger or consolidation, effect a Division or make any acquisition described in subclause (y) of clause (b) below (including by acquisition of the Equity Interests of another Person); provided that
(89)(i) any Restricted Subsidiary may consolidate or merge into any other Restricted Subsidiary; provided that in the case of a consolidation or merger involving a Loan Party, a Loan Party is the surviving entity, (ii) any Restricted Subsidiary may consolidate or merge into the Borrower; provided that the Borrower is the surviving entity and (iii) any Restricted Subsidiary may effect a division; provided that in the event of any division of a Loan Party, all Persons resulting from such division shall be Loan Parties;
(90)the Borrower or any Restricted Subsidiary may acquire whether by purchase or by merger or consolidation, (x) Equity Interests of another Person or (y) substantially all of the assets of another Person or the assets constituting a business or division of another Person (each, a “Permitted Acquisition”); provided that each of the following requirements is met:
(iv)no Potential Default or Event of Default shall exist immediately prior to and after giving effect to such Permitted Acquisition;
(v)the Borrower shall have, after giving effect to such Permitted Acquisition, at least $200,000,000 of Liquidity; and
(vi)if the Consideration to be paid by the Restricted Subsidiaries for such Permitted Acquisition exceeds the Threshold Amount, the Restricted Subsidiaries shall deliver to the Administrative Agent before or contemporaneously with such Permitted Acquisition: (1) a certificate of the Borrower in substantially the form of Exhibit 8.2.6 evidencing (x) compliance, on a Pro Forma Basis, with the Financial Covenants and (y) compliance with the applicable requirements of clauses (b)(i) and (ii) of this Section 8.2.6 and (2) copies of any agreements entered into or proposed to be entered into by such Loan Parties in connection with such Permitted Acquisition and such other information about such Person or its assets as the Administrative Agent may reasonably require, and the Administrative Agent shall, to the extent it receives any such copies of agreements or information, provide such copies of agreements or information to the Lenders;
(91)the Borrower or any Restricted Subsidiary may make Permitted Business Investments;
(92)Dispositions permitted by Section 8.2.7 [Dispositions] and any liquidation, merger, consolidation or acquisition to effect such Disposition; provided that in the case of a consolidation or merger, the requirements of Section 8.2.6(a) [Liquidations, Mergers, Consolidations, Acquisitions] are complied with, to the extent applicable; and
(93)any Restricted Subsidiary that holds only de minimis assets and is not conducting any material business may dissolve.
8.2.vDispositions.
The Borrower shall not, and shall not cause or permit any Restricted Subsidiary to, make any Disposition, except:
(94)any Disposition between or among the Borrower and the Restricted Subsidiaries; provided that in the case of a consolidation or merger, the requirements of Section 8.2.6(a) [Liquidations, Mergers, Consolidations, Acquisitions] are complied with, to the extent applicable;
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(95)any Disposition that constitutes a Restricted Payment permitted by Section 8.2.5 [Restricted Payments] or an Investment permitted by Section 8.2.4 [Loans and Investments];
(96)an issuance or sale of Equity Interests by a Restricted Subsidiary to the Borrower or to a Restricted Subsidiary;
(97)the sale of extracted Hydrocarbons, other mineral products or other inventory in the ordinary course of business;
(98)any Disposition of surplus, damaged, worn-out or obsolete assets in the ordinary course of business (including the abandonment or other disposition of intellectual property, including seismic data and interpretations thereof, that is, in the reasonable judgment of the Borrower, no longer economically practicable to maintain or useful in the conduct of the business of the Borrower and the Restricted Subsidiaries taken as whole);
(99)licenses and sublicenses by the Borrower or any Restricted Subsidiary of software or intellectual property, including seismic data and interpretations thereof, in the ordinary course of business;
(100)any surrender or waiver of contract rights or settlement, release, recovery on or surrender of contract, tort or other claims in the ordinary course of business;
(101)the granting of Permitted Liens and dispositions in connection with Permitted Liens;
(102)the sale or other disposition of cash or Temporary Cash Investments or other financial instruments;
(103)any Disposition of Equity Interests in an Unrestricted Subsidiary;
(104)the early termination or unwinding of any Swap Agreements;
(105)any Disposition; provided that:
(vii)at the time that the definitive agreement for such Disposition is entered into, no Potential Default or Event of Default is then in existence or will result therefrom;
(viii)the Borrower is in compliance, on a Pro Forma Basis, with the Leverage Maintenance Covenant;
(ix)the Borrower or the Restricted Subsidiary making such Disposition shall receive consideration from the Person or Persons acquiring such assets in such Disposition that is at least equal to the Fair Market Value of the assets Disposed of in such Disposition; and
(x)at least 75% of the consideration received by the Borrower and the Restricted Subsidiary from such Disposition is in the form of cash and Temporary Cash Investments; provided that each of the following will be deemed to be cash: (1) 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 liabilities that are by their terms subordinated to the Obligations or the Guaranty thereof) that are assumed by the transferee by written agreement that releases the Borrower or such Restricted Subsidiary from or indemnifies the Borrower or such Restricted Subsidiary against further liability; (2) any securities, notes or other obligations received by the Borrower or any Restricted Subsidiary from the transferee that are, within 180 days of the Disposition, converted by the Borrower or such Restricted Subsidiary into cash, to the extent of the cash received in that conversion, (3) any Designated Non-Cash Consideration received by the
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Borrower or such Restricted Subsidiary in such Disposition having an aggregate Fair Market Value, taken together with all other Designated Non-Cash Consideration received pursuant to this clause (3), not to exceed the Threshold Amount, with the Fair Market Value of each item of Designated Non-Cash Consideration being measured at the time received and without giving effect to subsequent changes in value and (4) fixed assets and assets reasonably associated with such fixed assets (and, in calculating the 75% threshold set forth in this clause (iv), the value of such assets shall be the Fair Market Value thereof as of the date of receipt of such assets by the Borrower or the applicable Restricted Subsidiary without giving effect to subsequent changes in value) received in exchange for such Disposition; provided that (A) to the extent any Disposition involving consideration as contemplated by this clause (4) is made by a Loan Party, a Loan Party shall receive such assets given as consideration for such Disposition and to the extent such Disposition Disposes of Collateral, the assets received as consideration therefor shall not be considered cash or Temporary Cash Investments for purposes of the foregoing to the extent the amount of Collateral granted as Collateral pursuant to the Security Documents has been reduced by such transaction and (B) the aggregate Fair Market Value of assets received as consideration for all such Dispositions pursuant to this Section 8.2.7(l) in any year that is counted toward the 75% requirement pursuant to this clause (4) shall not exceed the lesser of $250,000,000 and 10% of the Borrowing Base then in effect measured at the time of such Disposition; and
(xi)in the case of any Disposition or series of related Dispositions for at least $20,000,000, the Borrower shall deliver to the Administrative Agent prior to the making of such Disposition an Officer’s Certificate certifying compliance with the requirements of this clause (l) and setting forth calculations in reasonable detail showing compliance with subclause (ii);
(106)any Disposition of Proved Reserves or Equity Interests of a Person that owns Proved Reserves, in accordance with Section 8.2.13 [Sale of Proved Reserves; Pooling]; provided that in the case of the Disposition of Equity Interests in such a Person that owns assets other than Proved Reserves, such other assets (valued at their Fair Market Value) must be permitted to be Disposed of pursuant to another provision of this Section 8.2.7 [Dispositions] to comply herewith;
(107)Dispositions of Hydrocarbon Interests to which no Proved Reserves are attributable and routine farm-outs of undeveloped acreage to which no Proved Reserves are attributable and assignments in connection with such farm-outs;
(108)any Disposition of Excluded Properties; and
(109)any Disposition that is not permitted by the other clauses of this Section 8.2.7 [Dispositions], which is approved by the Required Lenders;
provided that, (i) in the case of clause (o), no Potential Default or Event of Default is then in existence or will result therefrom and (ii) any Disposition of Proved Reserves or interests therein shall comply with Section 8.2.13 [Sale of Proved Reserves; Pooling].
8.2.iAffiliate Transactions.
The Borrower shall not, and shall not cause or permit any Restricted Subsidiary to, enter into or permit to exist any transaction or series of transactions (including the purchase, sale, lease or exchange of any property, employee compensation arrangements or the rendering of any service) with, or for the benefit of, any Affiliate of the Borrower (an “Affiliate Transaction”) unless (i) the terms thereof, taken as a whole, are not materially less favorable to the Borrower or such Restricted Subsidiary than those that could reasonably be obtained at the time of such transaction in arm’s-length dealings with a Person who is not such an Affiliate or (ii) if no comparable transaction is available with which to compare such Affiliate Transaction, such Affiliate Transaction is otherwise fair to the Borrower or the relevant Restricted Subsidiary from a financial point of view; provided, that in the case of this clause (ii) with
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respect to affiliate transactions involving value (in an individual transaction or series of related transactions) of at least $20,000,000, such fairness determination has been made in the good faith judgment of the Board of Directors of the Borrower.
The following items will not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of foregoing paragraph:
(110)any employment agreement, employee benefit plan, officer or director indemnification agreement or any similar arrangement entered into by the Borrower or any Restricted Subsidiary in the ordinary course of business and payments pursuant thereto;
(111)any sale of Hydrocarbons or other mineral products to an Affiliate of the Borrower or the entering into or performance of Hydrocarbon Swap Agreements, contracts for exploring for, producing, gathering, marketing, processing, storing or otherwise handling Hydrocarbons, or activities or services reasonably related or ancillary thereto, or other operational contracts entered into in the ordinary course of business which are fair to the Borrower and the Restricted Subsidiaries taken as a whole, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party, as determined in good faith by the Borrower;
(112)the sale or issuance to an Affiliate of the Borrower of Capital Stock of the Borrower that does not constitute Disqualified Stock, and the sale to an Affiliate of the Borrower of Indebtedness (including Disqualified Stock) of the Borrower in connection with an offering of such Indebtedness in a market transaction and on terms substantially identical to those of other purchasers in such market transaction;
(113)transactions between the Borrower or any Restricted Subsidiary with a Person that is an Affiliate of the Borrower (other than an Unrestricted Subsidiary of the Borrower) solely because of the ownership by the Borrower or any Restricted Subsidiary of Equity Interests in such Person (including the transaction pursuant to which the Borrower or any Restricted Subsidiary acquired such Equity Interests);
(114)transactions between the Borrower or any Restricted Subsidiary and any Person, a director of which is also a director of the Borrower and such director is the sole cause for such Person to be deemed an Affiliate of the Borrower or such Restricted Subsidiary; provided that such director shall abstain from voting as a director of the Borrower on any matter involving such other Person;
(115)the payment of reasonable fees to and reimbursements of expenses (including travel and entertainment expenses and similar expenditures in the ordinary course of business) of employees, officers, directors or consultants of the Borrower or any of its Subsidiaries;
(116)transactions between or among the Borrower and the Restricted Subsidiaries;
(117)payments that are permitted under Section 8.2.5 [Restricted Payments];
(118)transactions effected, and payments made, in accordance with the terms of any agreement to which the Borrower or any Restricted Subsidiary is a party as of the Closing Date as set forth on Schedule 8.2.8, and any amendments, modifications, supplements, extensions, renewals or replacements thereof so long as such amendments, modifications, supplements, extensions, renewals or replacements do not materially and adversely affect the rights, taken as a whole, of the Lenders as compared to the terms of such agreement in effect on the Closing Date, as determined in good faith by the Borrower;
(119)any transaction in which the Borrower or any Restricted Subsidiary, as the case may be, delivers to the Administrative Agent a letter from an accounting, appraisal or investment banking firm of national standing (or otherwise reasonably acceptable to the Administrative Agent) stating that such transaction is fair to the Borrower or such Restricted Subsidiary from a
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financial point of view or that such transaction meets the requirements of the preceding paragraph;
(120)loans or advances to employees, officers or directors in the ordinary course of business and approved by the Borrower’s Board of Directors in an aggregate principal amount not to exceed $5,000,000 outstanding at any one time; and
(121)pledges by the Borrower or any Restricted Subsidiary of (or any Guaranty by the Borrower or any Restricted Subsidiary limited in recourse solely to) Equity Interests in Unrestricted Subsidiaries for the benefit of lenders or other creditors of the Borrower’s Unrestricted Subsidiaries.
8.2.viChange in Business.
The Borrower shall not, and shall not cause or permit any Restricted Subsidiary to, engage in any business other than a Permitted Business.
8.2.viiFiscal Year.
The Borrower shall not, and shall not cause or permit any Restricted Subsidiary to, change its fiscal year from the twelve-month period beginning January 1 and ending December 31.
8.2.viiiAmendments to Organizational Documents; Amendments or Prepayments of Certain Other Indebtedness.
(122)The Borrower shall not, and shall not cause or permit any Restricted Subsidiary to, amend its certificate of incorporation (including any provisions or resolutions relating to Capital Stock), by-laws, certificate of limited partnership, partnership agreement, certificate of formation, limited liability company agreement or other organizational documents in a manner that would be adverse in any material respect to the Lenders.
(123)The Borrower shall not, and shall not cause or permit any of its Subsidiaries to, amend any Permitted Unsecured Notes Indenture in a manner that would be adverse to the Lenders in any material respect.
(124)The Borrower shall not, and shall not cause or permit any Restricted Subsidiary to (in whole or in part), defease or make any prepayments, purchases, repurchases, or redemptions of or in respect of any Existing Notes or any Permitted Unsecured Notes or any Refinancing Indebtedness in respect thereof, except any such prepayment, purchase, repurchase or redemption (i) to the extent effectuated through a Refinancing thereof with Refinancing Indebtedness in respect thereof, (ii) with the Net Cash Proceeds of a substantially concurrent issuance and sale by the Borrower of its Equity Interests (other than Disqualified Stock) that are not used for any other purpose or (iii) if at the time of any such prepayment, purchase, repurchase or redemption (or irrevocable notice thereof), (x) no Event of Default, Potential Default or Borrowing Base Deficiency shall exist or shall result from such prepayment, purchase, repurchase or redemption after giving effect thereto and (y) after giving pro forma effect to any such prepayment, purchase, repurchase, or redemption, Availability would equal not less than 20% of the Commitments.
8.2.iiiSwaps.
(125)The Borrower shall not, and shall not cause or permit any Restricted Subsidiary to, enter into any Swap Agreement, other than (i) Permitted Commodity Swap Agreements and (ii) Swap Agreements not relating to commodities entered into to hedge or mitigate risks to which the Borrower or any Restricted Subsidiary is exposed in the conduct of its business or the management of its liabilities or equity dilution related to Indebtedness permitted under this Agreement; provided that nothing in this Section 8.2.12 shall prohibit the Borrower or any Restricted Subsidiary from entering into Permitted Prepaid Put Transactions.
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(126)Notwithstanding the foregoing, any Loan Party may enter into Swap Agreements with an Approved Counterparty (such Swap Agreements being “Acquisition Swap Agreements”) in anticipation of the acquisition of Oil and Gas Properties in a transaction not prohibited by this Agreement (any such Oil and Gas Properties being referred to herein as the “Target Oil and Gas Properties”) if (x) the Borrower or a Restricted Subsidiary has entered into a definitive purchase and sale agreement for such Target Oil and Gas Properties, (y) the tenor of any such Acquisition Swap Agreement does not exceed a period of, beginning on the expected closing date of such acquisition equal to the remainder of the calendar year in which such Acquisition Swap Agreements are entered into, plus the next six (6) calendar years and (z) the notional volumes hedged pursuant to any such Acquisition Swap Agreement (when aggregated with notional volumes hedged pursuant to all other Acquisition Swap Agreements then in effect other than swaps covering basis differential, puts or floors, in each case on volumes already hedged pursuant to other Acquisition Swap Agreements) do not exceed, as of the date such Acquisition Swap Agreement is executed, 100% of the reasonable anticipated projected production from all Oil and Gas Properties constituting Target Oil and Gas Properties as of such date that are identified by the Borrower’s internal engineers as Proved Reserves for each month of the remainder of the calendar year in which such Acquisition Swap Agreements became effective (beginning on the expected closing date of such acquisition) plus the next five (5) calendar years for each of crude oil and natural gas, calculated separately; provided that (i) should the acquisition fail to close, all derivative transactions associated with the new acquisition will be unwound or otherwise terminated so that the Borrower is in compliance with the hedging restrictions set forth above (such unwinding/termination to be completed within 60 days of the date of the termination of the purchase and sale agreement or such later date as determined by the Administrative Agent in its sole discretion) and (ii) in addition to the limitations set forth above, the total volumes for Acquisition Swap Agreements with respect to any period beyond the remainder of the calendar year in which such Acquisition Swap Agreements became effective plus the next five (5) calendar years shall not exceed 25% of the reasonable anticipated projected production from all Oil and Gas Properties constituting Target Oil and Gas Properties as of such date that are identified by the Borrower’s internal engineers as Proved Developed Producing Reserves for the sixth (6th) calendar year following the calendar year in which such Acquisition Swap Agreements became effective.
(127)If, as of any Test Date that occurs while one or more Acquisition Swap Agreements are in effect, the Borrower determines that all Acquisition Swap Agreements then in effect (when aggregated with other commodity Swap Agreements then in effect other than swaps covering basis differential, puts or floors, in each case on volumes already hedged pursuant to other Swap Agreements) have notional volumes in excess of the Swap Cap, then the Borrower shall (i) have Liquidity of at least $200,000,000 until such time as the Borrower is in compliance with the Swap Cap and (ii) furnish to the Administrative Agent, no later than the close of business on such Test Date, a statement of the Swap Aggregate Exposure as of the last preceding Business Day as of which such amount could be calculated (and in any event, not prior to the Business Day on which written confirmations in respect of any applicable Swap Agreements used in any such calculation are available).
(128)For all purposes of determining the aggregate volumes of Swap Agreements under this Section 8.2.12 [Swaps] there shall be no double counting for transactions and agreements in respect of the same volumes that hedge different risks, including without limitation:
(xii)for price swaps and basis swaps in respect of the same volumes;
(xiii)for financial price swaps that functionally operate as basis swaps in respect of the same volumes; and
(xiv)for basis swaps that hedge different components of basis risk.
8.2.ixSale of Proved Reserves; Pooling.
The Borrower shall not, and shall not cause or permit any Restricted Subsidiary to, Dispose of any interest in any Gas Properties consisting of Proved Reserves (including by way of (x) Production Payments and Reserve Sales, (y) a Disposition of any Equity Interests of any Person that holds interests in Proved Reserves that results in such Person ceasing to be a Loan Party or (z) designation as an Unrestricted Subsidiary of any Loan Party that holds interests in Proves Reserves), or voluntarily pool or
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unitize all or any part of their Gas Properties consisting of Proved Reserves, except, in each case, as follows:
(129)extracted Hydrocarbons sold in the ordinary course of business;
(130)forced pooling or other action whether initiated by or at the request of the Borrower, a Restricted Subsidiary or another Person;
(131)sales, assignments, transfers or conveyances and pooling and unitizing among Loan Parties;
(132)sales, assignments, transfers, conveyances or leases in connection with Joint Operating Agreement or other operating agreements, unitization agreements and pooling arrangements with, or grants of non-exclusive easements, permits, licenses, rights of way, surface leases or other surface rights or interest to, other Persons in each case which are usual and customary in the oil and gas business, excluding, however, any Investments, Indebtedness or Liens unless otherwise allowed by this Agreement;
(133)exchange of any Proved Reserves for other Proved Reserves with Persons that are not Affiliates of the Borrower or any Subsidiary, so long as such exchange of acreage is (i) for Proved Reserves located in the United States, (ii) the consideration received by the Borrower and/or such Restricted Subsidiary in connection with such exchange shall be equal to or greater than the fair market value of the Proved Reserves exchanged by the Borrower and/or such Restricted Subsidiary subject of such exchange (as determined in good faith by an Authorized Officer) and (iii) the Proved Reserves received by the Borrower and/or such Restricted Subsidiary would have a value attributed thereto if included in the Borrowing Base that is reasonably equivalent to the Proved Reserves conveyed by such Person, as determined by the Administrative Agent; provided that (A) the Borrower shall have provided to the Administrative Agent written notice of such exchange no later than 15 days prior to the consummation thereof (or such shorter period as may be agreed by the Administrative Agent) (which notice shall certify compliance with the requirements of this clause (e), describe in good faith and in reasonable detail the Proved Reserves being exchanged by the Borrower and its Restricted Subsidiaries and those being received by the Borrower and its Restricted Subsidiaries in exchange therefor, and the Borrower shall also provide the Administrative Agent such information as the Administrative Agent may request related to the value of the Proved Reserves to be so received; provided that the information in such notice and such other information provided to the Administrative Agent are subject to change and the Borrower shall use reasonable efforts to provide updates in good faith prior to consummation of such exchange) and (B) within the timeframes specified therein, the requirements of Section 8.1.17(a)(ii) and (c) [Collateral] and the Minimum Title Requirement shall be satisfied (subject to the Title Cure Period); or
(134)any Disposition of Proved Reserves (whether directly or indirectly by means of the Disposition of Equity Interests of a Restricted Subsidiary or otherwise) other than those permitted in clauses (a) through (e) above; provided that, unless the requirement for such reduction is waived in writing by the Required Lenders, if the aggregate Borrowing Base Value of all Borrowing Base Properties Disposed of under this clause (f) since the last redetermination of the Borrowing Base exceeds 5% of the Borrowing Base then in effect, the Borrowing Base shall be reduced, effective immediately upon such Disposition, by an amount equal to the Borrowing Base Value of the Borrowing Base Properties so Disposed of (it being understood that any Person that holds interests in Borrowing Base Properties ceasing to be a Loan Party shall be deemed a Disposition of such Borrowing Base Properties); provided, after giving effect to any of the foregoing, the Collateral Agent shall have the Lien required by Section 8.1.17 [Collateral] in the Proved Gas Collateral.
8.2.iiFinancial Covenants.
(135)Maximum Net Leverage Ratio. The Borrower shall not permit the Net Leverage Ratio, calculated as of the end of each fiscal quarter, to be greater than 3.50:1.00.
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(136)Minimum Current Ratio. The Borrower shall not permit the ratio of (I) the current assets of the Borrower and the Restricted Subsidiaries (including (A) the lesser of (x) the Commitments and (y) the Borrowing Base, minus (B) the Revolving Exposures, but excluding non-cash assets under FAS 133) to (II) current liabilities of the Borrower and the Restricted Subsidiaries (excluding (x) non-cash obligations under FAS 133, (y) current maturities of obligations under this Agreement and (z) current maturities of Existing Notes or Permitted Unsecured Notes which have been tendered for or with respect to which the Borrower has exercised a redemption right and which are required by GAAP to be current), determined on a consolidated basis, calculated as of the end of each fiscal quarter, to be less than 1.00:1.00; provided that Convertible Indebtedness that at any date would constitute a current liability under GAAP shall not constitute a current liability at such date for purposes of this Section 8.2.14(b) if (i) such Convertible Indebtedness does not have a scheduled maturity date or other scheduled repayment of principal at any time within 12 months following such date, and (ii) neither the Borrower nor any of its Subsidiaries may be obligated to make any payment (unless such payment may be satisfied by the issuance of common equity of the Borrower) in respect of the principal of such Convertible Indebtedness at any time within 12 months following such date, whether upon conversion, redemption or repurchase thereof or otherwise (other than due to a fundamental change provision customary for convertible notes issued by public companies, as in the Specified Existing Notes).
8.2.xRestrictions on Distributions from Restricted Subsidiaries.
The Borrower shall not, and shall not cause or permit any Restricted Subsidiary to, create or otherwise cause 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 or pay any Indebtedness owed to the Borrower or any Restricted Subsidiary (provided that (x) the priority that any series of Preferred Stock of a Restricted Subsidiary has in receiving dividends or liquidating distributions shall not be deemed to be a restriction on the ability to pay dividends or make other distributions on its Capital Stock for purposes of this covenant and (y) the subordination of Indebtedness owed to the Borrower or any Restricted Subsidiary to other Indebtedness incurred by any Restricted Subsidiary shall not be deemed a restriction on the ability to pay Indebtedness);
(2) make any loans or advances to the Borrower or a Restricted Subsidiary (it being understood that the subordination of loans or advances made to the Borrower or any Restricted Subsidiary to other Indebtedness incurred by the Borrower or any Restricted Subsidiary shall not be deemed a restriction on the ability to make loans or advances); or
(3) sell, lease or transfer any of its property or assets to the Borrower or a Restricted Subsidiary.
The foregoing restrictions of this Section 8.2.15 [Restrictions on Distributions from Restricted Subsidiaries] will not apply to encumbrances or restrictions existing under or by reason of:
(137)any encumbrance or restriction in any agreement in effect on the Closing Date and (to the extent not otherwise permitted by this Section 8.2.15) set forth on Schedule 8.2.15;
(138)any encumbrance or restriction with respect to a Restricted Subsidiary pursuant to an agreement relating to any Indebtedness incurred by such Restricted Subsidiary on or prior to the date on which such Restricted Subsidiary was acquired by the Borrower or became a Restricted Subsidiary (other than Indebtedness incurred as consideration in, or to provide all or any portion of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was acquired by the Borrower) and outstanding on such date;
(139)any encumbrance or restriction pursuant to an agreement effecting a Refinancing of Indebtedness incurred pursuant to an agreement referred to in clause (a) or (b) of this paragraph or this clause (c) or contained in any amendment to an agreement referred to in clause
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(a) or (b) of this paragraph or this clause (c); provided that the encumbrances and restrictions with respect to such Restricted Subsidiary contained in any such refinancing agreement or amendment are no less favorable to the Lenders than encumbrances and restrictions with respect to such Restricted Subsidiary contained in such agreements, as determined in good faith by the Borrower;
(140)(i) customary non-assignment provisions in any contract, license, lease, easement or sale or exchange agreement and (ii) cash, other deposits, or net worth or similar requirements, in each case, imposed by suppliers, customers, lessors or grantors under contracts, leases or other agreements, in the case of each of clauses (i) and (ii), entered into in the ordinary course of business;
(141)in the case of clause (3) of the preceding paragraph, restrictions contained in Capital Lease Obligations, purchase money obligations, security agreements or mortgages securing Indebtedness of a Restricted Subsidiary to the extent such restrictions restrict the transfer of the property subject to such Capital Lease Obligations, purchase money obligations, security agreements or mortgages;
(142)any restriction with respect to a Restricted Subsidiary imposed pursuant to an agreement entered into for the sale or disposition of all or substantially all the Capital Stock or assets of such Restricted Subsidiary pending the closing of such sale or disposition;
(143)[reserved];
(144)Liens otherwise permitted to be incurred under the provisions of Section 8.2.2 [Liens] that limit the right of the debtor to Dispose of the assets subject to such Liens;
(145)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 (including, without limitation, agreements entered into in connection with an Investment) entered into with the approval of the Borrower’s Board of Directors, which limitation is applicable only to the assets that are the subject of such agreements;
(146)encumbrances or restrictions applicable only to a Foreign Subsidiary;
(147)customary encumbrances and restrictions contained in agreements of the types described in the definition of “Permitted Business Investments”;
(148)Swap Agreements permitted under Section 8.2.12 [Swaps];
(149)any encumbrance or restriction with respect to an Unrestricted Subsidiary pursuant to or by reason of an agreement that the Unrestricted Subsidiary is a party to or entered into before the date on which such Unrestricted Subsidiary became a Restricted Subsidiary; provided that such agreement was not entered into in anticipation of the Unrestricted Subsidiary becoming a Restricted Subsidiary and any such encumbrance or restriction does not extend to any assets or property of the Borrower or any other Restricted Subsidiary other than the assets and property of such Unrestricted Subsidiary; and
(150)any encumbrances or restrictions imposed by any amendments of the contracts, instruments or obligations referred to in clauses (a) through (m) of this paragraph; provided that such amendments are not materially more restrictive with respect to such encumbrances and restrictions than those prior to such amendment or refinancing, as determined in good faith by the Borrower.
8.2.ivNegative Pledge Agreements.
The Borrower shall not, and shall not cause or permit any Restricted Subsidiary to, enter into or permit to exist any Contractual Requirement (other than this Agreement or any other Loan
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Document) that limits the ability of the Borrower or any Restricted Subsidiary to create, incur, assume or suffer to exist Liens on property of such Person (other than property specifically excluded from the Collateral requirements pursuant to Section 8.1.17(b) [Collateral]) for the benefit of the Secured Parties with respect to the Obligations or under the Loan Documents; provided that the foregoing shall not apply to each of the following Contractual Requirements that:
(151)(i) exist on the Closing Date and (to the extent not otherwise permitted by this Section 8.2.16) are listed on Schedule 8.2.16 and (ii) to the extent Contractual Requirements permitted by subclause (i) are set forth in an agreement evidencing Indebtedness or other obligations, are set forth in any agreement evidencing any Refinancing Indebtedness of such Indebtedness or obligation so long as such Refinancing Indebtedness does not expand the scope of such Contractual Requirement;
(152)are binding on a Restricted Subsidiary at the time such Restricted Subsidiary first becomes a Restricted Subsidiary, so long as such Contractual Requirements were not entered into solely in contemplation of such Person becoming a Restricted Subsidiary;
(153)arise pursuant to agreements entered into with respect to any Disposition permitted by Section 8.2.7 [Dispositions] and applicable solely to assets under such Disposition;
(154)are customary provisions in joint venture agreements and other similar agreements permitted by Section 8.2.4 [Loans and Investments] and applicable to joint ventures or otherwise arise in agreements which restrict the Disposition or distribution of assets or property in oil and gas leases, joint operating agreements, joint exploration and/or development agreements, participation agreements and other similar agreements entered into in the ordinary course of the oil and gas exploration and development business;
(155)are negative pledges and restrictions on Liens in favor of any holder of Indebtedness permitted under Section 8.2.1 [Indebtedness], but solely to the extent any negative pledge relates to the property financed by or the subject of such Indebtedness;
(156)are customary restrictions on leases, subleases, licenses, easements or asset sale agreements otherwise permitted hereby so long as such restrictions relate to the assets subject thereto;
(157)comprise restrictions imposed by any agreement relating to secured Indebtedness permitted pursuant to Section 8.2.1 [Indebtedness] to the extent that such restrictions apply only to the property or assets securing such Indebtedness;
(158)are customary provisions restricting subletting or assignment of any lease or easement governing a leasehold or easement interest of the Borrower or any Restricted Subsidiary;
(159)are customary provisions restricting assignment of any agreement entered into in the ordinary course of business;
(160)restrict the use of cash or other deposits imposed by customers under contracts entered into in the ordinary course of business;
(161)are imposed by requirements of Law;
(162)are customary net worth provisions contained in real property leases entered into by any Restricted Subsidiary, so long as the Borrower has determined in good faith that such net worth provisions would not reasonably be expected to impair the ability of the Borrower and the Restricted Subsidiaries to meet their ongoing obligation;
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(163)are customary restrictions and conditions contained in the document relating to any Lien, so long as (i) such Lien is a Permitted Lien that does not secure Indebtedness for borrowed money and such restrictions or conditions relate only to the specific asset subject to such Lien and (ii) such restrictions and conditions are not created for the purpose of avoiding the restrictions imposed by this Section 8.2.16;
(164)are restrictions imposed by any agreement relating to Indebtedness incurred pursuant to Section 8.2.1 [Indebtedness] or Refinancing Indebtedness in respect thereof, to the extent such restrictions are not materially more restrictive, taken as a whole, than the restrictions contained in the Loan Documents as determined by the Borrower in good faith and do not restrict Liens on the Collateral to secure the Obligations;
(165)are restrictions regarding licenses or sublicenses by the Borrower and the Restricted Subsidiaries of intellectual property in the ordinary course of business (in which case such restriction shall relate only to such intellectual property);
(166)are encumbrances or restrictions contained in an agreement or other instrument of a Person acquired by or merged or consolidated with or into the Borrower or any Restricted Subsidiary, or of an Unrestricted Subsidiary that is designated a Restricted Subsidiary, or that is assumed in connection with the acquisition of assets from such Person, in each case that is in existence at the time of such transaction (but not created in contemplation thereof), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person and its Subsidiaries, or the property or assets of the Person and its Subsidiaries, so acquired or designated; and
(167)are encumbrances or restrictions imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (a) through (p) above; provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of the Borrower’s Board of Directors, no more restrictive in any material respect with respect to such encumbrance and other restrictions taken as a whole than those prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing.
8.2.xiAnti-Hoarding.
(168)If any Loans are outstanding and the aggregate amount of Excess Balance Sheet Cash exceeds $150,000,000 for a period of three (3) consecutive Business Days, then not later than the following Business Day, the Borrower shall prepay the Loans in an amount equal to the lesser of (i) the outstanding amount of the Loans at such time and (ii) the aggregate amount of Excess Balance Sheet Cash in excess of $150,000,000 on such third Business Day. Such prepayment may be waived, extended or amended with the consent of the Required Lenders and the Borrower.
(169)The Borrower agrees to use all Designated Cash for the exclusive purposes set forth in the definition of “Designated Cash.” The Borrower shall cause to be cancelled all Existing Notes that are purchased or repurchased by it or any of its Subsidiaries.
8.cReporting Requirements.
The Loan Parties, jointly and severally, covenant and agree that until Payment in Full of the Loans and Reimbursement Obligations and interest thereon, expiration or termination of all Letters of Credit, satisfaction of all of the Loan Parties’ other Obligations hereunder and under the other Loan Documents and termination of the Commitments, the Loan Parties will furnish or cause to be furnished to the Administrative Agent and each of the Lenders:
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8.3.iQuarterly Financial Statements.
As soon as available and in any event within 45 calendar days after the end of each of the first three fiscal quarters in each fiscal year, financial statements of the Borrower, consisting of a consolidated balance sheet as of the end of such fiscal quarter and related consolidated statements of income, stockholders’ equity and cash flows for the fiscal quarter then ended and the fiscal year through that date, all in reasonable detail and certified (subject to normal year-end audit adjustments) by the Chief Financial Officer or Treasurer of the Borrower as having been prepared in accordance with GAAP, consistently applied, and setting forth in comparative form the respective financial statements for the corresponding date and period in the previous fiscal year.
8.3.iiAnnual Financial Statements.
As soon as available and in any event within 90 days after the end of each fiscal year of the Borrower, financial statements of the Borrower consisting of a consolidated balance sheet as of the end of such fiscal year, and related consolidated statements of income, stockholders’ equity and cash flows for the fiscal year then ended, all in reasonable detail and setting forth in comparative form the financial statements as of the end of and for the preceding fiscal year, and certified by independent certified public accountants of nationally recognized standing reasonably satisfactory to the Administrative Agent. The certificate or report of accountants shall be free of qualifications (other than any consistency qualification that may result from a change in the method used to prepare the financial statements as to which such accountants concur) or explanation statement as to “going concern” or similar matter or the scope of such audit.
8.3.iiiSEC Website.
Reports or other information required to be delivered pursuant to Section 8.3.1 [Quarterly Financial Statements], Section 8.3.2 [Annual Financial Statements] and Sections 8.3.7(a) and (b) [Budgets, Forecasts, Other Reports and Information] shall be deemed to have been delivered on the date on which such report or other information is posted on the SEC’s website at www.sec.gov, and such posting shall be deemed to satisfy the reporting and delivery requirements of Sections 8.3.1 [Quarterly Financial Statements], 8.3.2 [Annual Financial Statements] and 8.3.7(a) and (b) [Budgets, Forecasts, Other Reports and Information].
8.3.ivCertificate of the Borrower.
On the date that the financial statements of the Borrower furnished to the Administrative Agent and to the Lenders pursuant to Section 8.3.1 [Quarterly Financial Statements] and Section 8.3.2 [Annual Financial Statements] are required to be furnished, a certificate (each a “Compliance Certificate”) of the Borrower signed by the Chief Financial Officer or Treasurer of the Borrower, in the form of Exhibit 8.3.4, to the effect that, except as described pursuant to Section 8.3.5 [Notice of Default], (i) no Event of Default or Potential Default exists and is continuing on the date of such certificate and, if an Event of Default or Potential Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (ii) containing calculations in sufficient detail to demonstrate compliance as of the date of such financial statements with the Financial Covenants and (iii) describing the commodity Swap Agreements in place to which any Loan Party is a party and confirming that all such Swap Agreements are Swap Agreements that the Loan Parties are permitted to enter under Section 8.2.12 [Swaps].
8.3.vNotice of Default.
Promptly after any Responsible Officer of the Borrower has learned of the occurrence of an Event of Default or Potential Default, a certificate signed by a Responsible Officer of the Borrower setting forth the details of such Event of Default or Potential Default and the action that the Borrower proposes to take with respect thereto.
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8.3.viCertain Events.
Written notice to the Administrative Agent, for provision to the Lenders:
(170)promptly after any Responsible Officer of the Borrower has learned of the commencement thereof, notice of all actions, suits, proceedings or investigations before or by any Official Body or any other Person against the Borrower or any of its Subsidiaries (that would reasonably be expected to result in a liability against such Person) (i) relating to the Collateral involving a claim or series of claims in excess of the Threshold Amount or (ii) which if adversely determined would constitute a Material Adverse Change;
(171)promptly after any Responsible Officer of the Borrower has knowledge thereof, any event which could reasonably be expected to have a Material Adverse Change;
(172)promptly after any Loan Party incurs obligations or liabilities that are due and payable arising in connection with or as a result of the early or premature termination of Swap Agreements (whether or not occurring as a result of a default thereunder), which would exceed the Threshold Amount in the aggregate;
(173)within five (5) Business Days after any Responsible Officer of the Borrower has knowledge thereof, of the occurrence of any ERISA Event that would reasonably be expected to constitute a Material Adverse Change; and
(174)any change in the information provided in the Beneficial Ownership Certification that would result in a change to the list of beneficial owners identified in parts (c) or (d) of such certification.
8.3.viiBudgets, Forecasts, Other Reports and Information.
Deliver to the Administrative Agent, for provision to the Lenders:
(175)Any reports, notices or proxy statements generally distributed by the Borrower to its stockholders on a date no later than the date supplied to such stockholders;
(176)Regular or periodic reports, including Forms 10-K, 10-Q and 8-K, registration statements and prospectuses, filed by the Borrower or any of its Subsidiaries with the SEC;
(177)Within seven (7) days after each delivery of financial statements referred to in Sections 8.3.1 [Quarterly Financial Statements] and 8.3.2 [Annual Financial Statements], the related consolidating financial statements reflecting the adjustments necessary to eliminate from such consolidated financial statements the accounts of Unrestricted Subsidiaries on a combined basis;
(178)Simultaneously with each delivery of financial statements referred to in Section 8.3.2 [Annual Financial Statements], a certificate of an Authorized Officer of the Borrower setting forth the information required pursuant to the Perfection Certificate Supplement or confirming that there has been no change in such information since the date of the Perfection Certificate or latest Perfection Certificate Supplement;
(179)Promptly upon their becoming available to the Borrower, a copy of any order in any proceeding to which the Borrower or any of its Subsidiaries is a party issued by any Official Body to the extent it could reasonably be expected to have a Material Adverse Change; and
(180)Promptly upon request, such other reports and information as any of the Lenders may from time to time reasonably request, including, without limitation, (i) annual budgets and five year projections of the Borrower or (ii) information and documentation for purposes of compliance with applicable “know your customer” requirements under the USA PATRIOT Act or other applicable anti-money laundering laws.
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8.3.iReserve Reports.
(181)Independent Engineer. As soon as available and in any event within 90 days after December 31 of each year (commencing with the year ending December 31, 2021), a reserve report in form and substance meeting the requirements of the SEC for financial reporting purposes, certified by the Independent Engineer (each, a “December 31 Reserve Report”), setting forth the Loan Parties’ estimates of the Proved Reserves on the Borrowing Base Properties and the future gross revenue and future net income to be derived from such Proved Reserves as of such December 31 (and audited by such Independent Engineers). Each December 31 Reserve Report shall estimate the Proved Reserves and income data for the Proved Developed Producing Reserves, the Proved Developed Non-Producing Reserves and the Proved Undeveloped Reserves, and shall, in each case, report only the Proved Reserves and income data attributable to each Loan Party’s working interest percentage in or each Loan Party’s pro rata share of, as the case may be, any Proved Reserves located on the Borrowing Base Properties, less each Loan Party’s obligations or pro rata share of such obligations, as the case may be, for advance payments for each such property. All calculations in each December 31 Reserve Report shall be made on a property-by-property and an interest-by-interest basis in order to reflect the varying royalties, costs and expenses, working interests and advance payments applicable to the various Borrowing Base Properties covered by the December 31 Reserve Report. Except as otherwise specifically required herein, each December 31 Reserve Report shall be prepared and presented in accordance with the requirements of the SEC from time to time in effect.
(182)Internal Engineer. As soon as available and in any event within 90 days after June 30 of each year (commencing with June 30, 2022), an engineering report in form and substance meeting the requirements of the SEC for financial reporting purposes, certified by a petroleum engineer who is an employee or agent of any Loan Party (each, a “June 30 Reserve Report”), setting forth such engineer’s estimates of the Proved Reserves on the Borrowing Base Properties and the future gross revenue and future net income to be derived from such Proved Reserves as of such June 30. Each June 30 Reserve Report shall estimate the Proved Reserves and income data for the Proved Developed Producing Reserves, the Proved Developed Non-Producing Reserves and the Proved Undeveloped Reserves, and shall, in each case, report only the Proved Reserves and income data attributable to each Loan Party’s working interest percentage in or each Loan Party’s pro rata share of, as the case may be, any Proved Reserves located on the Borrowing Base Properties, less each Loan Party’s obligations or pro rata share of such obligations, as the case may be, for advance payments for each such property. All calculations in each June 30 Reserve Report shall be made on a property-by-property and an interest-by-interest basis in order to reflect the varying royalties, costs and expenses, working interests and advance payments applicable to the various Borrowing Base Properties covered by such June 30 Reserve Report. Except as otherwise specifically required herein, such June 30 Reserve Report shall be prepared and presented in accordance with the requirements of the SEC from time to time in effect.
(183)Borrower’s Certificate as to Proved Reserves and Proved Gas Collateral. With the delivery of each Reserve Report, a certificate of a Responsible Officer certifying that a Loan Party owns good and defensible title (i) to the Proved Reserves evaluated by such Reserve Report free and clear of all Liens except Permitted Liens and subject to the proviso in Section 6.8(a) [Title to Properties], and (ii) to the Proved Gas Collateral evaluated by such Reserve Report free and clear of all Liens except Permitted Liens and subject to the proviso in Section 6.8(a) [Title to Properties] and attaching thereto a schedule of the Proved Reserves (and identifying all wells thereon) evaluated by such Reserve Report that are part of the Proved Gas Collateral, and demonstrating the percentage of the Borrowing Base Properties that the value of such Proved Gas Collateral represents, identifying which Borrowing Base Properties are subject to a Mortgage (in the case of Borrowing Base Properties that became subject to a Mortgage on or after July 1, 2017) and identifying the title reports and information then or previously delivered to the Administrative Agent with respect to the Proved Gas Collateral and verifying that title reports and information have been then or previously provided for Proved Reserves having PV-9 no less than the lesser of (x) 85% of the PV-9 of the Proved Reserves and (y) 2.25 multiplied by the Loan Limit. Such certificate of Responsible Officer shall also certify that the Borrower has reviewed the Reserve Report and the then-current Borrowing Base Properties that are subject to a Mortgage and has ascertained that such Borrowing Base Properties subject to a Mortgage have PV-9 at least equal to the lesser of (x) 85% of the PV-9 of the Proved Reserves and (y) 2.25 multiplied by the Loan Limit; provided that if the Borrower has ascertained that the then-current Borrowing Base Properties subject to a Mortgage do not meet these
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thresholds, it shall set forth the percentages that they meet and shall grant, or cause to be granted, Mortgages on additional Borrowing Base Properties within the time set forth in Section 8.1.17(a)(ii) [Collateral], such that, after giving effect thereto, the Administrative Agent shall have a Mortgage lien on Proved Reserves having PV-9 at least equal to the lesser of (x) 85% of the PV-9 of the Proved Reserves and (y) 2.25 multiplied by the Loan Limit.
(ix. DEFAULT
9.aEvents of Default.
An Event of Default shall mean the occurrence or existence of any one or more of the following events or conditions (whatever the reason therefor and whether voluntary, involuntary or effected by operation of Law):
9.1.iPayments Under Loan Documents.
(184)The Borrower shall fail to make (i) any payment of principal on any Loan when due or (ii) payment of any Reimbursement Obligation within one (1) Business Day after such amount becomes due;
(185)The Borrower shall fail to pay any interest on any Loan or any Reimbursement Obligation within three (3) Business Days after such interest becomes due in accordance with the terms hereof; or
(186)The Borrower shall fail to pay any other amount owing hereunder (specifically excluding amounts that are addressed in subparagraphs (a) and (b) above) or under the other Loan Documents within three (3) Business Days after the time period specified herein or therein and, if no time period is specified, then within ten (10) Business Days after a demand or notice has been provided to the Borrower requesting payment of such amount;
9.1.iiBreach of Warranty.
Any representation or warranty made at any time by any of the Loan Parties herein or by any of the Loan Parties in any other Loan Document, or in any certificate, other instrument or statement furnished pursuant to the provisions hereof or thereof, shall prove to have been false or incorrect in any material respect as of the time it was made or furnished;
9.1.iiiBreach of Certain Covenants.
Any of the Loan Parties shall default in the observance or performance of any covenant contained in Section 8.1.1 [Preservation of Existence, Etc.] (with respect to the legal existence of the Borrower only), Section 8.1.6 [Visitation Rights], Section 8.1.11 [Use of Proceeds], Section 8.1.13 [Anti-Terrorism Laws; Anti-Corruption Laws], Section 8.2 [Negative Covenants] or Section 8.3.5 [Notice of Default];
9.1.ivBreach of Other Covenants.
Any of the Loan Parties shall default in the observance or performance of any covenant, condition or provision hereof or of any other Loan Document that is not covered by any other subsection of this Section 9.1 and such default shall continue unremedied for a period of 30 days after any Responsible Officer of any Loan Party becomes aware of the occurrence thereof;
9.1.vDefaults in Other Agreements or Indebtedness.
A breach, default or event of default shall occur at any time under the terms of (i) any of the Permitted Unsecured Notes Indentures or (ii) any other agreement (other than any Loan Document) involving borrowed money or the extension of credit or any other Indebtedness under which the Borrower
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or any Restricted Subsidiary for all such Indebtedness may be obligated as a borrower or guarantor in excess of the Threshold Amount in the aggregate for such Indebtedness and, in the case of clauses (i) and (ii), such breach, default or event of default consists of the failure to pay (beyond any period of grace permitted with respect thereto) any Indebtedness when due (whether at stated maturity, by acceleration or otherwise) or such breach or default permits or causes the acceleration of any Indebtedness or the termination of any commitment to lend, in excess of the Threshold Amount in the aggregate for all such Indebtedness and commitments;
9.1.viFinal Judgments or Orders.
Any final judgments, awards or orders not covered by insurance for the payment of money in excess of the Threshold Amount in the aggregate shall be entered against the Borrower or any Restricted Subsidiary by a court having jurisdiction in the premises, which judgment is not discharged, vacated, bonded or stayed pending appeal within a period of sixty (60) days from the date of entry;
9.1.viiLoan Document Unenforceable.
(a) Any of the Loan Documents to which any Loan Party is a party (i) shall cease to be a legal, valid and binding agreement enforceable against such Person executing the same or such Person’s successors and assigns (as permitted under the Loan Documents) in accordance with the respective terms thereof or shall cease to be in full force and effect (in either case except by operation of its terms), or (ii) shall be contested or challenged by any Loan Party or any agent thereof or (iii) cease to give or provide the respective Liens, security interests, rights, titles, interests, remedies, powers or privileges intended to be created thereby on assets with an aggregate value (for all assets as to which an event described in this clause (iii) or clause (b) below has occurred and is continuing) in excess of the Threshold Amount (except by operation of its terms) or (b) any security interest and Lien purported to be created by any Security Document on assets with an aggregate value (for all assets as to which an event described in this clause (b) or clause (a)(iii) above has occurred and is continuing) in excess of the Threshold Amount shall cease to be in full force and effect, or shall cease to give the Collateral Agent, for the benefit of the Secured Parties, the Liens, rights, powers and privileges purported to be created and granted under such Security Document (except as otherwise expressly provided in such Security Document);
9.1.viiiInability to Pay Debts.
(i) The Borrower or any Restricted Subsidiary becomes unable or admits in writing its inability or fails generally to pay its debts as they become due or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any substantial part of the property of any such Person with an aggregate value (for all property described in this clause (ii)) in excess of the Threshold Amount and is not released, vacated, stayed, dismissed or fully bonded within 60 days after its issue or levy;
9.1.ixERISA.
The occurrence of any of the following events that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Change: (i) an ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan;
9.1.xChange of Control.
A Change of Control shall occur;
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9.1.xi[Reserved].
9.1.xiiInvoluntary Proceedings.
A proceeding shall have been instituted in a court having jurisdiction in the premises seeking a decree or order for relief in respect of any Loan Party in an involuntary case under any applicable bankruptcy, insolvency, reorganization or other similar law now or hereafter in effect, or for the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator (or similar official) of any Loan Party for any substantial part of its property, or for the winding-up or liquidation of its affairs, and such proceeding shall remain undismissed or unstayed and in effect for a period of sixty (60) consecutive days or such court shall enter a decree or order granting any of the relief sought in such proceeding; or
9.1.xiiiVoluntary Proceedings.
Any Loan Party shall commence a voluntary case under any applicable bankruptcy, insolvency, reorganization or other similar law now or hereafter in effect, shall consent to the entry of an order for relief in an involuntary case under any such law, or shall consent to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator (or other similar official) of itself or for any substantial part of its property, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any action in furtherance of any of the foregoing.
9.bConsequences of Event of Default.
9.2.iEvents of Default Other Than Bankruptcy, Insolvency or Reorganization Proceedings.
If an Event of Default (other than under Section 9.1.12 [Involuntary Proceedings] or 9.1.13 [Voluntary Proceedings]) shall occur and be continuing, the Administrative Agent may, and upon the request of the Required Lenders, shall, (i) terminate all obligations on the part of the Lenders to make Loans or any Issuing Lender to issue Letters of Credit, as the case may be, (ii) by written notice to the Borrower, declare the unpaid principal amount of the Loans then outstanding and all interest accrued thereon, any unpaid fees and all other Obligations (other than Obligations under Specified Swap Agreements and Other Lender Provided Financial Service Products) to be forthwith due and payable, and the same shall thereupon become and be immediately due and payable to the Administrative Agent for the benefit of the Persons entitled thereto without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, and (iii) require the Borrower to, and the Borrower shall thereupon, Cash Collateralize all Letter of Credit Obligations comprised of the aggregate undrawn amount of Letters of Credit (to the extent not otherwise Cash Collateralized by the Borrower pursuant to this Agreement). Moneys in such account shall be applied by the Administrative Agent (x) first, to reimburse each of the Issuing Lenders for LC Disbursements for which it has not been reimbursed and (y) second, after the Letter of Credit Obligations have been paid in full and otherwise terminated or expired, to satisfy other outstanding Obligations. Upon the curing of all existing Events of Default to the satisfaction of the Required Lenders, the Administrative Agent shall return the cash collateral to the Borrower.
9.2.iiBankruptcy, Insolvency or Reorganization Proceedings.
If an Event of Default specified under Section 9.1.12 [Involuntary Proceedings] or Section 9.1.13 [Voluntary Proceedings] shall occur, no further obligation shall exist on the Lenders to make any Loans or any Issuing Lender to issue any Letters of Credit hereunder, and the unpaid principal amount of the Loans then outstanding and all interest accrued thereon, any unpaid fees and all other Obligations (other than Obligations under Specified Swap Agreements and Other Lender Provided Financial Service Products) shall be immediately due and payable, and the Borrower shall immediately Cash Collateralize all Letter of Credit Obligations comprised of the aggregate undrawn amount of Letters of Credit (to the extent not otherwise Cash Collateralized by the Borrower pursuant to this Agreement), in
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each case, without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived.
9.2.iiiSet-off.
If an Event of Default shall occur and be continuing, any Secured Party to whom any Obligation is owed by any Loan Party hereunder or under any other Loan Document or any participant of any Lender which has agreed in writing to be bound by the provisions of Section 5.3 [Sharing of Payments by Lenders] and any branch, Subsidiary or Affiliate of such Secured Party anywhere in the world shall have the right (to the extent permitted by applicable Law), in addition to all other rights and remedies available to it, without notice to such Loan Party, to set-off against and apply to the then unpaid balance of all the Loans and all other Obligations of the Borrower and the other Loan Parties hereunder or under any other Loan Document any debt owing to, and any other funds held in any manner for the account of, the Borrower or such other Loan Party by such Secured Party or participant or by such branch, Subsidiary or Affiliate, including all funds in all deposit accounts (whether time or demand, general or special, provisionally credited or finally credited, or otherwise) now or hereafter maintained by the Borrower or such other Loan Party for its own account (but not including funds held in custodian or trust accounts or funds not otherwise beneficially owned by the Borrower or such other Loan Party) with such Secured Party or participant or such branch, Subsidiary or Affiliate; provided, that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.13 [Defaulting Lenders] and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent and the Lenders, and (y) such Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. Such right shall exist whether or not any Secured Party shall have made any demand under this Agreement or any other Loan Document, whether or not such debt owing to or funds held for the account of the Borrower or such other Loan Party is or are matured or unmatured and regardless of the existence or adequacy of any Collateral, Guaranty or any other security, right or remedy available to any Secured Party.
9.2.iv[Reserved].
9.2.vApplication of Proceeds.
From and after the date on which the Administrative Agent has taken any action pursuant to this Section 9.2 [Consequences of Event of Default] and until all Obligations of the Loan Parties have been Paid in Full, any and all proceeds received by the Administrative Agent from any sale or other disposition of the Collateral, or any part thereof, or the exercise of any other remedy by the Collateral Agent or the Administrative Agent, shall be applied as follows:
(187)First, to payment of that portion of the Obligations constituting fees, indemnities, out-of-pocket expenses and other amounts (including reasonable fees, charges and disbursements of counsel to the Administrative Agent and the Collateral Agent) payable to the Administrative Agent or the Collateral Agent in their respective capacities as such;
(188)Second, to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal, interest and Letter of Credit Fees) payable to the Lenders and the Issuing Lenders (including fees, charges and disbursements of counsel to the respective Lenders and the Issuing Lenders) arising under the Loan Documents, ratably among them in proportion to the respective amounts described in this clause (b) payable to them;
(189)Third, to payment of that portion of the Obligations constituting accrued and unpaid Letter of Credit Fees and interest on the Loans, Reimbursement Obligations and other Obligations arising under the Loan Documents, ratably among the Lenders and the Issuing Lenders in proportion to the respective amounts described in this clause (c) payable to them;
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(190)Fourth, to the Administrative Agent for the account of the Issuing Lenders, to Cash Collateralize that portion of Letter of Credit Obligations comprised of the aggregate undrawn amount of Letters of Credit to the extent not otherwise Cash Collateralized by the Borrower pursuant to this Agreement;
(191)Fifth, to payment of that portion of the Obligations constituting unpaid principal of the Loans, Reimbursement Obligations and Obligations then owing under Specified Swap Agreements and Other Lender Provided Financial Service Products, ratably among the Lenders, the Issuing Lenders and the providers of Specified Swap Agreements and Other Lender Provided Financial Service Products in proportion to the respective amounts described in this clause (e) held by them; and
(192)Last, the balance, if any, after all of the Obligations have been indefeasibly Paid in Full, to the Borrower or as otherwise required by Law.
Notwithstanding the foregoing, (a) amounts received from the Borrower or any Guarantor that is not a Qualified ECP Loan Party shall not be applied to the Obligations that are Excluded Swap Obligations (it being understood, that in the event that any amount is applied to Obligations other than Excluded Swap Obligations as a result of this clause (a), the Administrative Agent shall make such adjustments as it determines are appropriate to distributions pursuant to clause Fifth above from amounts received from Qualified ECP Loan Party to ensure, as nearly as possible, that the proportional aggregate recoveries with respect to Obligations described in clause Fifth above by the holders of any Excluded Swap Obligations are the same as the proportional aggregate recoveries with respect to other Obligations pursuant to clause Fifth above) and (b) Obligations arising under Specified Swap Agreements and Other Lender Provided Financial Service Products shall be excluded from the application described above if the Administrative Agent has not received written notice thereof, together with such supporting documentation as the Administrative Agent may request, from the counterparty to such Specified Swap Agreement or Other Lender Provided Financial Service Product, as the case may be. Each counterparty to a Specified Swap Agreements and Other Lender Provided Financial Service Products not a party to this Agreement that has given the notice contemplated by the preceding sentence shall, by such notice, be deemed to have acknowledged and accepted the appointment of the Administrative Agent pursuant to the terms of Section 10 [The Agents] hereof for itself and its Affiliates as if a “Lender” party hereto.
9.2.viCollateral Agent.
All Liens granted as security for the Obligations under the Security Documents and any other Loan Document shall secure the Obligations on a pari passu basis in favor of the Collateral Agent for the benefit of the Secured Parties. No Lender-Related Person or provider of a Specified Swap Agreement or Other Lender Provided Financial Service Product (except in its capacity as a Lender hereunder (to the extent that this Agreement or any other Loan Document empowers the Lenders to direct the Administrative Agent)) shall be entitled or have the power to direct or instruct the Collateral Agent on any such matters or to control or direct in any manner the maintenance or disposition of the Collateral.
9.2.viiOther Rights and Remedies.
In addition to all of the rights and remedies contained in this Agreement or in any of the other Loan Documents (including each Mortgage), the Administrative Agent and the Collateral Agent shall have all of the rights and remedies of a secured party under the Uniform Commercial Code or other applicable Law, all of which rights and remedies shall be cumulative and non-exclusive to the extent permitted by Law. The Administrative Agent and the Collateral Agent may, and upon the request of the Required Lenders shall, exercise all post-default rights granted to the Administrative Agent and the Lenders under the Loan Documents or applicable Law.
9.cNotice of Sale.
Any notice required to be given by the Collateral Agent of a sale, lease, or other disposition of the Collateral or any other intended action by the Collateral Agent, if given to the Borrower
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at least ten (10) days prior to such proposed action, shall constitute commercially reasonable and fair notice thereof to the Borrower.
- THE AGENTS
10.aAppointment and Authority.
Each Lender (including each in its capacity as a counterparty to a Specified Swap Agreement or Other Lender Provided Financial Service Product or an Affiliate of such counterparty on behalf of such Affiliate) and Issuing Lender hereby irrevocably designates, appoints and authorizes PNC to act as Administrative Agent and Collateral Agent for such Lender under the Loan Documents and to execute and deliver or accept on behalf of each of the Lenders the other Loan Documents. Each Lender hereby irrevocably authorizes, and each holder of any Note by the acceptance of a Note shall be deemed irrevocably to authorize, the Agents to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and any other instruments and agreements referred to herein, and to exercise such powers and to perform such duties hereunder as are specifically delegated to or required of the Agents or any of them by the terms hereof, together with such powers as are reasonably incidental thereto. PNC agrees to act as the Administrative Agent and the Collateral Agent on behalf of the Lenders to the extent provided in the Loan Documents. The provisions of this Section 10 are solely for the benefit of the Agents, the Lenders and the Issuing Lender, and neither the Borrower nor any other Loan Party shall have rights as a third party beneficiary of any such provisions, except as set forth in Section 10.10 [Authorization to Release Collateral and Guarantors].
10.bRights as a Lender.
Each Person serving as an Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not an Agent, and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Persons serving as an Agent hereunder in its individual capacity. Such Persons and their Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if such Persons were not an Agent hereunder and without any duty to account therefor to the Lenders.
10.cExculpatory Provisions.
The Agents shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents. Without limiting the generality of the foregoing, the Agents:
(1)shall not be subject to any fiduciary or other implied duties, regardless of whether a Potential Default or Event of Default has occurred and is continuing;
(2) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that such Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents); provided that no Agent shall be required to take any action that, in its opinion or the opinion of its counsel, may expose such Agent to liability or that is contrary to any Loan Document or applicable Law;
(3)shall be entitled to seek the direction or confirmation from the Required Lenders (or other applicable group of Lenders) before taking any action under the Loan Documents; and
(4)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 any Person serving as an Agent or any of its Affiliates in any capacity.
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No Agent shall be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as such Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 11.1 [Modifications, Amendments or Waivers] and 9.2 [Consequences of Event of Default]) or (ii) in the absence of its own gross negligence or willful misconduct. No Agent shall be deemed to have knowledge of any Potential Default or Event of Default unless and until notice describing such Potential Default or Event of Default is given to such Agent by the Borrower, a Lender or the Issuing Lender.
No Agent shall be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Potential Default or Event of Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or the creation, perfection or priority of any Lien purported to be created by the Security Documents or that the Liens granted to the Collateral Agent pursuant to any Security Document have been properly or sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority, (v) the value or the sufficiency of the Collateral or (vi) the satisfaction of any condition set forth in Section 7 [Conditions of Lending and Issuance of Letters of Credit] or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to such Agent.
10.aReliance by Agents.
Each 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. Each Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the Issuing Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender or the Issuing Lender unless the Administrative Agent shall have received notice to the contrary from such Lender or the Issuing Lender prior to the making of such Loan or the issuance of such Letter of Credit. Each Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.
10.bDelegation of Duties.
Each Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by such Agent. Each Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Section 10 shall apply to any such sub-agent and to the Related Parties of each Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Agent.
10.cResignation of Agents.
Each Agent may at any time give notice of its resignation to the Lenders, the Issuing Lenders, the other Agents and the Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, with approval from the Borrower (so long as no Event of Default has occurred and is continuing), to appoint a successor, such approval not to be unreasonably withheld or delayed. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after the retiring Agent gives notice of its resignation,
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then such retiring Agent may on behalf of the Lenders and the Issuing Lenders, appoint a successor Agent meeting the qualifications set forth above; provided that if such retiring Agent shall notify the Borrower and the Lenders that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (i) the retiring Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that, in the case of resignation by the Collateral Agent, in the case of any collateral security held by the Collateral Agent on behalf of the Lenders or the Issuing Lenders under any of the Loan Documents, the retiring Collateral Agent shall continue to hold such collateral security until such time as a successor Collateral Agent is appointed) and (ii) all payments, communications and determinations provided to be made by, to or through a retiring Administrative Agent shall instead be made by or to each Lender and the Issuing Lenders directly, until such time as the Required Lenders appoint a successor Administrative Agent as provided for above in this Section 10.6. Upon the acceptance of a successor’s appointment as Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Agent, and the retiring Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section 10.6). The fees payable by the Borrower to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring Agent’s resignation hereunder and under the other Loan Documents, the provisions of this Section 10.6 and Section 11.3 [Expenses; Indemnity; Damage Waiver] shall continue in effect for the benefit of such retiring Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Agent was acting as Agent.
If PNC resigns as Administrative Agent under this Section 10.6, PNC shall also resign as Swingline Lender and as an Issuing Lender. If PNC resigns as an Issuing Lender, it shall retain all the rights, powers, privileges and duties of an Issuing Lender with respect to all Letters of Credit issued by it that remain outstanding as of the effective date of its resignation as Issuing Lender and all Letter of Credit Obligations with respect thereto, including the right to require the Lenders to make Participation Advances pursuant to Section 2.10.3 [Participations, Disbursements, Reimbursement]. If PNC resigns as Swingline Lender, the Borrower shall repay any outstanding Swing Loans on or prior to the effective date of such resignation and, to the extent any Swing Loans remain outstanding as of the effective date of its resignation as Swingline Lender, PNC shall retain all the rights, powers, privileges and duties of a Swingline Lender with respect to such Swing Loans, including the right to require the Lenders to make Base Rate Loans pursuant to Section 2.11 [Borrowings to Repay Swing Loans]. Upon the appointment of a successor Administrative Agent hereunder, such successor shall (i) succeed to all of the rights, powers, privileges and duties of PNC as a retiring Swingline Lender and Issuing Lender, Administrative Agent and Collateral Agent and PNC shall be discharged from all of its respective duties and obligations as Swingline Lender and Issuing Lender, Administrative Agent and Collateral Agent under the Loan Documents, and (ii) issue letters of credit in substitution for the Letters of Credit issued by PNC, if any, outstanding at the time of such succession or make other arrangements satisfactory to PNC to effectively assume the obligations of PNC with respect to such Letters of Credit.
If the Person serving as Administrative Agent is a Defaulting Lender pursuant to clause (d) of the definition thereof, the Required Lenders may, to the extent permitted by applicable law, by notice in writing to the Borrower and such Person remove such Person as Administrative Agent and, in consultation with the Borrower, appoint a successor. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days (or such earlier day as shall be agreed by the Required Lenders) (the “Removal Effective Date”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date.
10.dNon-Reliance on Agents and Other Lenders.
Each Lender and the Issuing Lender acknowledges that it has, independently and without reliance upon any Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender and the Issuing Lender also acknowledges that it will, independently and without reliance upon any Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own
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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.
10.eNo Other Duties, Etc.
Anything herein to the contrary notwithstanding, none of the “Joint Lead Arrangers,” “Joint Bookrunners,” or “Co-Syndication Agent” or Lenders listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent, the Collateral Agent, the Swingline Lender, a Lender or an Issuing Lender hereunder.
10.fAdministrative Agent’s Fee.
The Borrower shall pay to the Administrative Agent a nonrefundable fee (the “Administrative Agent’s Fee”) under the terms of a letter (the “Administrative Agent’s Letter”) between the Borrower and the Administrative Agent, as amended from time to time.
10.gAuthorization to Release Collateral and Guarantors.
Each Secured Party expressly authorizes the Agents:
(5)in the case of the Agents, to execute such documents as are reasonably requested to evidence the termination of this Agreement and release the Guaranty and the Liens created by the Security Documents upon Payment in Full as contemplated by Section 11.7 [Duration; Survival];
(6)in the case of the Administrative Agent, to execute a release in a form reasonably satisfactory to it of any Person from the Guaranty Agreement (x) if such Person ceases to be a Subsidiary of the Borrower or (y) if such Person is or becomes an Excluded Subsidiary, in either case, pursuant to a transaction permitted by the Loan Documents; provided that no Person shall be released from the Guaranty Agreement unless such Person is not, or substantially concurrently with such release, shall cease to be, an obligor under any Permitted Unsecured Notes Indenture; and
(7)in the case of the Collateral Agent, to (i) execute any document in a form reasonably satisfactory to it, evidencing the release of any asset from the Lien of any Security Document upon (x) the Disposition (other than any lease) of such asset permitted by the Loan Documents (other than a Disposition to a Loan Party), (y) a Person being released from the Guaranty Agreement (A) if pursuant to clause (b)(x) above, with respect to any Lien on the assets of such Person and the Equity Interests of such Person and (B) if pursuant to clause (b)(y) above, with respect to any Lien on the assets of such Person, and to the extent constituting Excluded Assets, the Equity Interests of such Person or (z) such assets becoming Excluded Assets, (ii) enter into any subordination agreement, non-disturbance agreement or grant of an option with respect to assets, in each case, in a form reasonably satisfactory to it, in connection with (x) any easements, permits, licenses, rights of way, options, surface leases or other surface rights or interests permitted by the Loan Documents to be granted or a Disposition permitted by the Loan Documents or (y) Liens permitted under clause (10) of the definition of “Permitted Liens” and (iii) in connection with an incurrence of Indebtedness referred to in Section 8.2.1(n) [Indebtedness], enter into an intercreditor agreement reasonably satisfactory to the Administrative Agent.
Each Secured Party agrees to be bound by each intercreditor agreement entered into in accordance with this Section 10.10.
The Borrower shall deliver to the Administrative Agent or the Collateral Agent such certificates and other documentation as such Agent(s) may reasonably request to evidence compliance with the applicable provisions of the Loan Documents (including with respect to their authority
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hereunder), and the Administrative Agent and Collateral Agent may rely, without independent investigation, on such certificates and other documents.
10.dNo Reliance on Administrative Agent’s Customer Identification Program.
Each Lender acknowledges and agrees that neither such Lender, nor any of its Affiliates, participants or assignees, may rely on the Administrative Agent to carry out such Lender’s, Affiliate’s, participant’s or assignee’s customer identification program, or other obligations required or imposed under or pursuant to the USA PATRIOT Act or the regulations thereunder, including the regulations contained in 31 CFR 103.121 (as hereafter amended or replaced, the “CIP Regulations”), or any other Anti-Terrorism Law, including any programs involving any of the following items relating to or in connection with any of the Loan Parties, their Affiliates or their agents, the Loan Documents or the transactions hereunder or contemplated hereby: (i) any identity verification procedures, (ii) any recordkeeping, (iii) comparisons with government lists, (iv) customer notices or (v) other procedures required under the CIP Regulations or such other Laws.
10.eWithholding Tax.
To the extent required by any applicable Law (as determined in good faith by the Administrative Agent), the Administrative Agent may withhold from any payment to any Lender under any Loan Document an amount equivalent to any applicable withholding Tax. Without limiting or expanding the provisions of Section 5.8 [Taxes], each Lender shall indemnify and hold harmless the Administrative Agent against, and shall make payable in respect thereof within 10 days after demand therefor, all Taxes and all related losses, claims, liabilities and expenses (including fees, charges and disbursements of any counsel for the Administrative Agent) incurred by or asserted against the Administrative Agent by the IRS or any other Official Body as a result of the failure of the Administrative Agent to properly withhold Tax from amounts paid to or for the account of such Lender for any reason (including because the appropriate form was not delivered or not properly executed, or because such Lender failed to notify the Administrative Agent of a change in circumstance that rendered the exemption from, or reduction of withholding Tax ineffective). A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under this Agreement, any other Loan Document or otherwise against any amount due the Administrative Agent under this Section 10.12 [Withholding Tax]. The agreements in this Section 10.12 [Withholding Tax] shall survive the resignation and/or replacement of the Administrative Agent, any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all other obligations. For the avoidance of doubt, the term “Lender” shall, for purposes of this Section 10.12 [Withholding Tax], include any Issuing Lender and any Swingline Lender.
10.fCertain ERISA Matters.
(8)Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that at least one of the following is and will be true:
(i)such Lender is not using “plan assets” (within the meaning of Section 3(42) of ERISA or otherwise) of one or more Benefit Plans with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments or this Agreement,
(ii)the transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class
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exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement,
(iii)(A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform the Loans, the Letters of Credit, the Commitments and this Agreement, (C) the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement, or
(iv)such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent, in its sole discretion, and such Lender.
(9)In addition, unless either (1) sub-clause (i) in the immediately preceding paragraph (a) is true with respect to a Lender or (2) a Lender has provided another representation, warranty and covenant in accordance with sub-clause (iv) in the immediately preceding paragraph (a), such Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that the Administrative Agent is not a fiduciary with respect to the assets of such Lender involved in such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement (including in connection with the reservation or exercise of any rights by the Administrative Agent under this Agreement, any Loan Document or any documents related hereto or thereto).
10.aErroneous Payments.
(10)If the Administrative Agent notifies a Lender, Issuing Lender or Secured Party, or any Person who has received funds on behalf of a Lender, Issuing Lender or Secured Party (any such Lender, Issuing, Secured Party or other recipient, a “Payment Recipient”) that the Administrative Agent has determined in its sole discretion (whether or not after receipt of any notice under immediately succeeding clause (b)) that any funds received by such Payment Recipient from the Administrative Agent or any of its Affiliates were erroneously transmitted to, or otherwise erroneously or mistakenly received by such Payment Recipient (whether or not known to such Lender, Issuing Lender, Secured Party or other Payment Recipient on its behalf) (any such funds, whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise, individually and collectively, an “Erroneous Payment”) and demands the return of such Erroneous Payment (or a portion thereof), such Erroneous Payment shall at all times remain the property of the Administrative Agent and shall be segregated by the Payment Recipient and held in trust for the benefit of the Administrative Agent, and such Lender, Issuing Lender or Secured Party shall (or, with respect to any Payment Recipient who received such funds on its behalf, shall cause such Payment Recipient to) promptly, but in no event later than two Business Days thereafter, return to the Administrative Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was made, in same day funds (in the currency so received), together with interest thereon in respect of each day from and including the date such Erroneous Payment (or portion thereof) was received by such Payment Recipient to the date such amount is repaid to the Administrative Agent in same day funds at the greater of the [Overnight Rate/Federal Funds Rate] and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect. A notice of the Administrative Agent to any Payment Recipient under this clause (a) shall be conclusive, absent manifest error.
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(11)Without limiting immediately preceding clause (a), each Lender, Issuing Lender or Secured Party, or any Person who has received funds on behalf of a Lender, Issuing Lender or Secured Party, hereby further agrees that if it receives a payment, prepayment or repayment (whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise) from the Administrative Agent (or any of its Affiliates) (x) that is in a different amount than, or on a different date from, that specified in a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates) with respect to such payment, prepayment or repayment, (y) that was not preceded or accompanied by a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates), or (z) that such Lender, Issuing Lender or Secured Party, or other such recipient, otherwise becomes aware was transmitted, or received, in error or by mistake (in whole or in part) in each case:
(v)(A) in the case of immediately preceding clauses (x) or (y), an error shall be presumed to have been made (absent written confirmation from the Administrative Agent to the contrary) or (B) an error has been made (in the case of immediately preceding clause (z)), in each case, with respect to such payment, prepayment or repayment; and
(vi)such Lender, Issuing Lender or Secured Party shall (and shall cause any other recipient that receives funds on its respective behalf to) promptly (and, in all events, within one Business Day of its knowledge of such error) notify the Administrative Agent of its receipt of such payment, prepayment or repayment, the details thereof (in reasonable detail) and that it is so notifying the Administrative Agent pursuant to this Section 10.14(b).
(12)Each Lender, Issuing Lender or Secured Party hereby authorizes the Administrative Agent to set off, net and apply any and all amounts at any time owing to such Lender, Issuing Lender or Secured Party under any Loan Document, or otherwise payable or distributable by the Administrative Agent to such Lender, Issuing Lender or Secured Party from any source, against any amount due to the Administrative Agent under immediately preceding clause (a) or under the indemnification provisions of this Agreement.
(13)In the event that an Erroneous Payment (or portion thereof) is not recovered by the Administrative Agent for any reason, after demand therefor by the Administrative Agent in accordance with immediately preceding clause (a), from any Lender or Issuing Lender that has received such Erroneous Payment (or portion thereof) (and/or from any Payment Recipient who received such Erroneous Payment (or portion thereof) on its respective behalf) (such unrecovered amount, an “Erroneous Payment Return Deficiency”), upon the Administrative Agent’s notice to such Lender or Issuing Lender at any time, (i) such Lender or Issuing Lender shall be deemed to have assigned its Loans (but not its Commitments) of the relevant Class with respect to which such Erroneous Payment was made (the “Erroneous Payment Impacted Class”) in an amount equal to the Erroneous Payment Return Deficiency (or such lesser amount as the Administrative Agent may specify) (such assignment of the Loans (but not Commitments) of the Erroneous Payment Impacted Class, the “Erroneous Payment Deficiency Assignment”) at par plus any accrued and unpaid interest (with the assignment fee to be waived by the Administrative Agent in such instance), and is hereby (together with the Borrower) deemed to execute and deliver an Assignment and Assumption with respect to such Erroneous Payment Deficiency Assignment, and such Lender or Issuing Lender shall deliver any Notes evidencing such Loans to the Borrower or the Administrative Agent, (ii) the Administrative Agent as the assignee Lender shall be deemed to acquire the Erroneous Payment Deficiency Assignment, (iii) upon such deemed acquisition, the Administrative Agent as the assignee Lender shall become a Lender or Issuing Lender, as applicable, hereunder with respect to such Erroneous Payment Deficiency Assignment and the assigning Lender or assigning Issuing Lender shall cease to be a Lender or Issuing Lender, as applicable, hereunder with respect to such Erroneous Payment Deficiency Assignment, excluding, for the avoidance of doubt, its obligations under the indemnification provisions of this Agreement and its applicable Commitments which shall survive as to such assigning Lender or assigning Issuing Lender and (iv) the Administrative Agent may reflect in the Register its ownership interest in the Loans subject to the Erroneous Payment Deficiency Assignment. The Administrative Agent may, in its discretion, sell any Loans acquired pursuant to an Erroneous Payment Deficiency Assignment and upon receipt of the proceeds of such sale,
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the Erroneous Payment Return Deficiency owing by the applicable Lender or Issuing Lender shall be reduced by the net proceeds of the sale of such Loan (or portion thereof), and the Administrative Agent shall retain all other rights, remedies and claims against such Lender or Issuing Lender (and/or against any recipient that receives funds on its respective behalf). For the avoidance of doubt, no Erroneous Payment Deficiency Assignment will reduce the Commitments of any Lender or Issuing Lender and such Commitments shall remain available in accordance with the terms of this Agreement. In addition, each party hereto agrees that, except to the extent that the Administrative Agent has sold a Loan (or portion thereof) acquired pursuant to an Erroneous Payment Deficiency Assignment, and irrespective of whether the Administrative Agent may be equitably subrogated, the Administrative Agent shall be contractually subrogated to all the rights and interests of the applicable Lender, Issuing Lender or Secured Party under the Loan Documents with respect to each Erroneous Payment Return Deficiency (the “Erroneous Payment Subrogation Rights”).
(14)The parties hereto agree that an Erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Obligations owed by the Borrower or any other Loan Party, except, in each case, to the extent such Erroneous Payment is, and solely with respect to the amount of such Erroneous Payment that is, comprised of funds received by the Administrative Agent from the Borrower or any other Loan Party for the purpose of making such Erroneous Payment.
(15)To the extent permitted by applicable Law, no Payment Recipient shall assert any right or claim to an Erroneous Payment, and hereby waives, and is deemed to waive, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Erroneous Payment received, including without limitation waiver of any defense based on “discharge for value” or any similar doctrine.
(16)Each party’s obligations, agreements and waivers under this Section 10.14 shall survive the resignation or replacement of the Administrative Agent, the termination of the Commitments and/or the repayment, satisfaction or discharge of all Obligations (or any portion thereof) under any Loan Document.
- MISCELLANEOUS
11.aModifications, Amendments or Waivers.
11.1.iRequired Consents.
Subject to Section 4.1.4 [Conforming Changes Relating to Term SOFR Rate], Section 4.6 [Benchmark Replacement Setting], Section 10.10 [Authorization to Release Collateral and Guarantors], Section 11.1.2 [Certain Amendments] and Section 11.1.3 [Amendments Affecting the Administrative Agent, Etc.], the Administrative Agent, with the written consent of the Required Lenders, and the Borrower, on behalf of the Loan Parties, may from time to time enter into written agreements amending or changing any provision of this Agreement or any other Loan Document or the rights of the Lenders or the Loan Parties hereunder or thereunder, or may grant written waivers or consents hereunder or thereunder. Any such agreement, waiver or consent made with such written consent shall be effective to bind all the Lenders and the Loan Parties; provided that no such agreement, waiver or consent may be made which will:
(17)increase (i) the amount of the Revolving Credit Commitment of any Lender hereunder without the consent of such Lender or (ii) increase the amount of the Revolving Credit Commitments under this Agreement to an amount greater than the Maximum Facility Amount as in effect on the Closing Date (or as reduced after the Closing Date) without the consent of all Lenders;
(18)whether or not any Loans are outstanding, extend the Expiration Date or the time for payment of principal or interest of any Loan, the Commitment Fee or any other fee payable to any Lender, or reduce the principal amount of, or the rate of interest borne by any Loan or reduce the Commitment Fee or any other fee payable to any Lender, without the consent of each Lender directly affected thereby (it being understood that the waiver of (or amendment to the terms of)
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any mandatory prepayment of the Loans, changes to Section 8.2.14 [Financial Covenants] or definitions used therein or the application (or waiver of application) of any rate increase described in Section 4.3 [Interest After Default] shall not constitute a postponement of any date scheduled for the payment of principal or interest or a reduction of principal, interest or fees);
(19)except as otherwise provided in this Agreement, without the written consent of all the Lenders (other than Defaulting Lenders), release all or substantially all of the Guarantors (as measured by fair market value of their assets) from their Obligations under the Guaranty Agreement;
(20)except as otherwise provided in this Agreement, without the written consent of all the Lenders (other than Defaulting Lenders), release all or substantially all of the Collateral; provided that in the event that the Borrower provides any applicable Issuing Lender with Cash Collateral to secure any Letters of Credit with an expiry date beyond the Expiration Date pursuant to Section 2.10.10 [Cash Collateral Prior to the Expiration Date] such Issuing Lender is permitted to release such Cash Collateral without the consent of any Lender once such Letter of Credit has terminated, expired or has otherwise been returned to such Issuing Lender undrawn; or
(21)increase the Borrowing Base, or amend Section 2.9 [Borrowing Base] in a manner that has the effect of allowing an increase of the Borrowing Base, in each case, without the consent of the Required Increasing Borrowing Base Lenders; it being understood that any postponement of a redetermination of the Borrowing Base pursuant to Section 2.9(b) [Borrowing Base] beyond the timeframe contemplated therein or the delivery of a Reserve Report shall be governed by the first sentence of this Section 11.1.1 and therefore require the consent of only the Required Lenders;
(22)reaffirm or decrease the Borrowing Base, or amend Section 2.9 [Borrowing Base] in a manner that has the effect of allowing a reaffirmation or decrease of the Borrowing Base, in each case, without the consent of the Required Borrowing Base Lenders; it being understood that (x) any postponement of a redetermination of the Borrowing Base pursuant to Section 2.9(b) [Borrowing Base] beyond the timeframe contemplated therein or the delivery of a Reserve Report shall be governed by the first sentence of this Section 11.1.1 and therefore require the consent of only the Required Lenders and (y) any waiver (or amendment or modification that would have the effect of a waiver) of the right of the Required Lenders to adjust (through a reduction of) the Borrowing Base or the amount of such adjustment in the form of a reduction to the Borrowing Base pursuant to Section 2.9(e) [Borrowing Base] shall require the consent of only the Required Lenders as set forth in such Section 2.9(e) [Borrowing Base];
(23)amend Section 5.2 [Pro Rata Treatment of Lenders], Section 5.3 [Sharing of Payments by Lenders] or alter any provision regarding pro rata treatment of the Lenders or requiring all Lenders to authorize the taking of any action or reduce any percentage specified in the definitions of “Required Lenders,” “Required Borrowing Base Lenders” or “Required Increasing Borrowing Base Lenders,” in each case without the consent of all affected Lenders;
(24)(x) subordinate any of the Obligations in right of payment to any Indebtedness or (y) subordinate the Lien on a material portion of the Collateral securing any of the Obligations to the Lien securing any other obligation, in each case without the consent of all affected Lenders; or
(25)amend this Section 11.1 [Modifications, Amendments or Waivers] in a manner that would reduce the voting rights of any Lender without consent of such affected Lender.
11.1.iiCertain Amendments.
Notwithstanding Section 11.1.1(a) [Required Consents] or any other provision in any Loan Document to the contrary, the Borrower and the Administrative Agent (or to the extent relating to Collateral, the Collateral Agent), on behalf of the Lenders and without any consent or action by any Lender, may amend, modify, supplement or restate in whole or in part any of the Loan Documents from time to time or consent to such action by the Collateral Agent to (i) cure any defect or error, (ii) comply
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with any provision hereunder or under any other Loan Document, (iii) add Guarantors of the Obligations, (iv) add property or other assets as Collateral, (v) add covenants of the Borrower or the other Loan Parties for the benefit of the Lenders or to surrender any right or power herein conferred upon the Borrower or any of the other Loan Parties, (vi) approve of any correction or update to any Schedule hereto or to any other Loan Document to the extent such Schedule is being corrected in any manner that is not material or is being updated to reflect the consummation of any transaction or exercise of any rights of the Loan Parties permitted hereunder for which no consent is required or for which the required consent has been received or (vii) take any action authorized by Section 10.10 [Authorization to Release Collateral and Guarantors]. Notwithstanding Section 11.1.1(a) [Required Consents], (x) only the consent of the respective parties thereto shall be required for any amendments or waivers of the Administrative Agent’s Letter and (y) only the consent of the applicable Lender, the Borrower and the Administrative Agent shall be required for any amendments or waivers of the notice referenced in the definition of “Issuing Lenders.”
11.1.iiiAmendments Affecting the Administrative Agent, Etc.
No agreement, waiver or consent which would modify the interests, rights or obligations of an Agent, the Swingline Lender or any Issuing Lender may be made without the written consent of such Agent, the Swingline Lender or such Issuing Lender, as applicable.
11.1.ivNon-Consenting Lenders.
If in connection with any proposed waiver, amendment or modification referred to in any of the clauses (a) through (f) of Section 11.1.1 [Required Consents], the consent of the Required Lenders is obtained but the consent of one or more other Lenders whose consent is required is not obtained (each a “Non-Consenting Lender”), then the Borrower shall have the right to replace any such Non-Consenting Lender with one or more replacement Lenders pursuant to Section 5.6.2 [Replacement of a Lender].
11.1.vDefaulting Lenders.
Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that (i) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Lender and (ii) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender disproportionately adversely relative to other affected Lenders shall require the consent of such Defaulting Lender.
11.bNo Implied Waivers; Cumulative Remedies.
No course of dealing and no delay or failure of the Administrative Agent or any Lender in exercising any right, power, remedy or privilege under this Agreement or any other Loan Document shall affect any other or future exercise thereof or operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any further exercise thereof or of any other right, power, remedy or privilege. The rights and remedies of the Administrative Agent and the Lenders under this Agreement and any other Loan Documents are cumulative and not exclusive of any rights or remedies which they would otherwise have.
11.cExpenses; Indemnity; Damage Waiver.
11.3.iCosts and Expenses.
The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the Lead Arrangers, the Administrative Agent, the Collateral Agent and their respective Affiliates (including the reasonable fees, charges and disbursements of outside counsel for the Administrative Agent and the Collateral Agent), and shall pay all reasonable fees in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this
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Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by any Issuing Lender in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder, (iii) all reasonable out-of-pocket expenses incurred by the Administrative Agent, the Collateral Agent, any Lender or any Issuing Lender (including the reasonable fees, charges and disbursements of any counsel for the Administrative Agent, the Collateral Agent, any Lender or any Issuing Lender), in connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section 11.3 [Expenses; Indemnity; Damage Waiver], or (B) in connection with the Loans made or Letters of Credit issued hereunder, including all such reasonable out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit, and (iv) all reasonable out-of-pocket expenses of an Agent’s regular employees and agents engaged periodically to perform audits of the Loan Parties’ books, records and business properties.
11.3.iiIndemnification by the Borrower.
The Borrower shall indemnify the Lead Arrangers, each Agent (and any sub-agent thereof), each Lender and each Issuing Lender, and each Related Party of any of the foregoing Persons (each such Person being called a “Lender-Related Person”) against, and hold each Lender-Related Person harmless from, any and all losses, claims, damages, liabilities and reasonable out-of-pocket related expenses (including the fees, charges and disbursements of any outside counsel for any Lender-Related Person), incurred by any Lender-Related Person or asserted against any Lender-Related Person by any third party or by the Borrower or any other Loan Party or any Subsidiary of Borrower arising out of, in connection with, or as a result of (i) the execution, enforcement or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance or nonperformance by the Loan Parties of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the Issuing Lender to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) breach of representations, warranties or covenants of any Loan Party under the Loan Documents or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, including any such items or losses relating to or arising under Environmental Laws or pertaining to environmental matters, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrower or any of its Subsidiaries, and regardless of whether any Lender-Related Person is a party thereto; provided that the Borrower shall not be liable for any portion of any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements with respect to a Lender-Related Person (A) if the same is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Lender-Related Person’s gross negligence or willful misconduct, (B) if the Borrower was not given notice of the subject claim and the opportunity to participate in the defense thereof, at its expense (except that the Borrower shall remain liable to the extent such failure to give notice does not result in a material loss to the Borrower), (C) if the same results from a compromise or settlement agreement entered into without notice to or the consent of the Borrower, which consent shall not be unreasonably withheld, conditioned or delayed or (D) results from a dispute solely among Lender-Related Persons (other than any claims against an Lender-Related Person in its capacity or in fulfilling its role as an Agent or arranger, bookrunner or any similar role under this Agreement and other than any claims arising out of any act or omission of the Borrower or any of its Affiliates). The Lender-Related Persons will attempt to minimize the fees and expenses of legal counsel for the Lender-Related Persons which are subject to reimbursement by the Borrower hereunder by considering the usage of one law firm to represent the Lender-Related Persons if appropriate under the circumstances. This Section 11.3.2 [Indemnification by the Borrower] shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.
11.3.iiiReimbursement by Lenders.
To the extent that the Borrower for any reason fails to indefeasibly pay any amount required under Section 2.10.8 [Indemnity], Section 11.3.1 [Costs and Expenses] or Section 11.3.2 [Indemnification by the Borrower] to be paid by it to any Agent (or any sub-agent thereof), the Issuing
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Lenders or any Related Party of any of the foregoing, each Lender severally agrees to pay to such Agent (or any such sub-agent), the Issuing Lenders or such Related Party, as the case may be, such Lender’s Ratable Share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount, provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against an Agent (or any such sub-agent) or an Issuing Lender in its capacity as such, or against any Related Party of any of the foregoing acting for such Agent (or any such sub-agent), or such Issuing Lender in connection with such capacity.
11.3.ivWaiver of Consequential Damages, Etc.
No Lender-Related Person shall be liable for any damages arising from the use by others of any information or other materials obtained through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby, except to the extent such damages are found in a final, non-appealable judgment of a court of competent jurisdiction to arise from the gross negligence or willful misconduct of such Lender-Related Person, nor shall any Lender-Related Person, Loan Party or any Subsidiary have any liability for any special, punitive, indirect or consequential damages (as opposed to direct or actual damages) relating to this Agreement or any other Loan Document or arising out of its activities in connection herewith or therewith (whether before or after the Closing Date); it being agreed that this sentence shall not limit the indemnification obligations of the Loan Parties pursuant to Section 11.3.2 [Indemnification by the Borrower].
11.3.vPayments.
All amounts due under this Section 11.3 [Expenses; Indemnity; Damage Waiver] shall be payable not later than ten (10) days after demand therefor.
11.dHolidays.
Whenever payment of a Loan to be made or taken hereunder shall be due on a day which is not a Business Day such payment shall be due on the next Business Day (except as provided in Section 4.2 [Interest Periods]) and such extension of time shall be included in computing interest and fees, except that the Loans shall be due on the Business Day preceding the Expiration Date if the Expiration Date is not a Business Day. Unless otherwise specified, whenever any payment or action to be made or taken hereunder (other than payment of the Loans) shall be stated to be due on a day which is not a Business Day, such payment or action shall be made or taken on the next following Business Day, and such extension of time shall not be included in computing interest or fees, if any, in connection with such payment or action.
11.eNotices; Effectiveness; Electronic Communication.
11.5.iNotices Generally.
Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in Section 11.5.2 [Electronic Communications]), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier (i) if to a Lender, to it at its address set forth in its administrative questionnaire, or (ii) if to the Administrative Agent or any Loan Party, to it at its address set forth on Schedule 11.5.1.
Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by telecopier shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient). Notices delivered through electronic communications to the extent provided in Section 11.5.2 [Electronic Communications] shall be effective as provided in such Section.
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11.5.iiElectronic Communications.
Notices and other communications to the Lenders and the Issuing Lenders hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices to any Lender or any Issuing Lender if such Lender or Issuing Lender, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication and the Administrative Agent shall have notified the Borrower of the same. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications. Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement); provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.
11.5.iiiChange of Address, Etc.
Any party hereto may change its address, e-mail address or telecopier number for notices and other communications hereunder by notice to the other parties hereto.
11.fSeverability.
The provisions of this Agreement are intended to be severable. If any provision of this Agreement shall be held invalid or unenforceable in whole or in part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without in any manner affecting the validity or enforceability thereof in any other jurisdiction or the remaining provisions hereof in any jurisdiction.
11.gDuration; Survival.
All representations and warranties of the Loan Parties contained herein or made in connection herewith shall survive the execution and delivery of this Agreement, the completion of the transactions hereunder and Payment In Full. All covenants and agreements of the Loan Parties contained herein relating to the payment of principal, interest, premiums, additional compensation or expenses and indemnification, including those set forth in the Notes, Section 2.10.8 [Indemnity], Section 2.10.10 [Cash Collateral Prior to the Expiration Date], Section 5 [Payments] and Section 11.3 [Expenses; Indemnity; Damage Waiver], shall survive payment in full of all principal and interest under the Notes, the termination of the Commitments and the expiration or termination or cash collateralization of all Letters of Credit. All other covenants and agreements of the Loan Parties shall continue in full force and effect from and after the date hereof and until Payment In Full.
11.hSuccessors and Assigns.
11.8.iSuccessors and Assigns Generally.
The provisions of this Agreement shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of Section 11.8.2 [Assignments by Lenders], (ii) by way of participation in accordance with the provisions of Section 11.8.4 [Participations], or (iii) by way of pledge or assignment of a security interest subject to
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the restrictions of Section 11.8.5 [Certain Pledges; Successors and Assigns Generally] (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in Section 11.8.4 [Participations], the Lead Arrangers, and, to the extent expressly contemplated hereby, the Related Parties of each of the Agents, the Issuing Lenders and the Lenders, and as set forth in Section 11.12 [Certain Collateral Matters]) any legal or equitable right, remedy or claim under or by reason of this Agreement or any other Loan Document.
11.8.iiAssignments by Lenders.
Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided that any such assignment shall be subject to the following conditions:
(a) Minimum Amounts.
(1)in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and the Loans at the time owing to it or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and
(2)in any case not described in clause (a)(i) of this Section 11.8.2, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the applicable Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption Agreement with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption Agreement, as of the Trade Date) shall not be less than $5,000,000, in the case of any assignment in respect of the Revolving Credit Commitment or Revolving Credit Loans of the assigning Lender, unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed).
(b) Proportionate Amounts. Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loan or the Commitment assigned.
(c) Required Consents. Each assignment shall be subject to the consent of the following Persons (which shall not be unreasonably withheld or delayed):
(i) the Borrower, unless (x) an Event of Default has occurred and is continuing at the time of such assignment or (y) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund; provided that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within five (5) Business Days after having received notice thereof;
(ii) the Administrative Agent and the Swingline Lender; and
(iii) each Issuing Lender, unless the assignment is to a Lender; provided that no consent of any Issuing Lender shall be required for any assignment between Goldman Sachs Bank USA and Goldman Sachs Lending Partners LLC.
(d) Assignment and Assumption Agreement. The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption Agreement, together with a processing and recordation fee of $3,500 from the assignor or the assignee, and
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the assignee, if it is not a Lender, shall deliver to the Administrative Agent an administrative questionnaire provided by the Administrative Agent.
(e) Prohibited Assignments. No such assignment or participation shall be made to (i) the Borrower or any of the Borrower’s Affiliates or Subsidiaries, (ii) any natural person, or (iii) any Defaulting Lender.
Subject to acceptance and recording thereof by the Administrative Agent pursuant to Section 11.8.3 [Register], from and after the effective date specified in each Assignment and Assumption Agreement, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption Agreement, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption Agreement, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption Agreement 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 4.4 [Term SOFR Rate Unascertainable; Illegality; Increased Costs], Section 5.7 [Increased Costs], and Section 11.3 [Expenses; Indemnity; Damage Waiver] 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 Section 11.8.2 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 Section 11.8.4 [Participations].
11.8.iiiRegister.
The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain a record of the names and addresses of the Lenders, and the Commitments of, and principal amounts (and related interest amounts) of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The Register shall be conclusive (absent manifest error), and the Borrower, the Agents, the Issuing Lenders and the Lenders shall treat each Person whose name is in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.
11.8.ivParticipations.
Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than any Person specified in Section 11.8.2(e)) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent, the Lenders and the Issuing Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement.
Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver with respect to any of clause (a)(i) or (b) of Section 11.1.1 [Required Consents]. The Borrower agrees that each Participant shall be entitled to the benefits of Section 4.4 [Term SOFR Rate Unascertainable; Illegality; Increased Costs], Section 5.7 [Increased Costs] and Section 5.8 [Taxes] (subject to the requirements and limitations of such Sections and Sections 5.6.3 [Designation of a Different Lending Office] and 5.6.2 [Replacement of a Lender], and it being understood that the documentation required under Section 5.8.5 [Status of Lenders] shall be delivered solely to the participating Lender) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 11.8.2 [Assignments by Lenders]; provided that such Participant (A) shall be subject to the provisions of Section 5.6.2 [Replacement of a Lender] and Section 5.6.3 [Designation of a Different
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Lending Office] as if it were an assignee under Section 11.8.2 [Assignments by Lenders]; and (B) shall not be entitled to receive any greater payment under Section 5.7 [Increased Costs], 5.8 [Taxes] or Section 11.3 [Expenses; Indemnity; Damage Waiver], with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation. Each Lender that sells a participation agrees, at the Borrower’s request and expense, to use reasonable efforts to cooperate with the Borrower to effectuate the provisions of Section 5.6.2 [Replacement of a Lender] and Section 5.6.3 [Designation of a Different Lending Office] with respect to any Participant. To the extent permitted by Law, each Participant also shall be entitled to the benefits of Section 9.2.3 [Set-off] as though it were a Lender; provided such Participant agrees to be subject to Section 5.3 [Sharing of Payments by Lenders] as though it were a Lender.
Each Lender that sells participations to a Participant, acting solely for this purpose as a non-fiduciary agent of the Borrower, shall maintain a register of all such Participants on which it enters the name and address of each Participant and the principal amounts (and related interest amounts) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant Register”). The entries in the Participant Register shall be conclusive (absent manifest error), and the Borrower and the Lenders shall treat each Person whose name is recorded in the Participant Register pursuant to the terms hereof as a Participant for all purposes of this Agreement, notwithstanding notice to the contrary; provided that no Lender shall have the obligation to disclose all or a portion of the Participant Register (including the identity of the Participant or any information relating to a Participant’s interest in any Loans or other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary in connection with a Tax audit or other proceeding to establish that any loans are in registered form for U.S. federal income tax purposes. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.
11.8.vCertain Pledges; Successors and Assigns Generally.
Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or any central bank having jurisdiction; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.
11.8.viResignation as Issuing Lender or Swingline Lender after Assignment.
Notwithstanding anything to the contrary contained herein, if at any time any Issuing Lender or the Swingline Lender assigns all of its Revolving Credit Commitment and Revolving Credit Loans pursuant to Section 11.8.1, such Issuing Lender or the Swingline Lender may, (i) at the time of such assignment, upon written notice to the Administrative Agent, the Borrower and the Lenders, resign as an Issuing Lender and/or (ii) at the time of such assignment, upon written notice to the Borrower, resign as the Swingline Lender. In the event of any such resignation as an Issuing Lender or the Swingline Lender, the Borrower shall be entitled to appoint (with notice to and subject to consent (not to be unreasonably withheld or delayed) from the Administrative Agent) from the assignee Lender or among the rest of the Lenders a successor Issuing Lender or Swingline Lender hereunder; provided that no failure by the Borrower to appoint any such successor shall affect the resignation of the applicable Issuing Lender or Swingline Lender as an Issuing Lender or the Swingline Lender, as the case may be. If the applicable Issuing Lender resigns as an Issuing Lender, it shall retain all the rights, powers, privileges and duties of an Issuing Lender hereunder with respect to all Letters of Credit issued by it and outstanding as of the effective date of its resignation as an Issuing Lender and all Letter of Credit Obligations with respect thereto (including the right to require the Lenders to make Participation Advances pursuant to Section 2.10.3 [Participations, Disbursements, Reimbursement], and such Letters of Credit shall continue to constitute Letters of Credit hereunder until such Letters of Credit expire or terminate in accordance with their respective terms. If the Swingline Lender resigns as Swingline Lender, the Borrower shall repay any outstanding Swing Loans on or prior to the effective date of such resignation and, to the extent any Swing Loans remain outstanding as of the effective date of its resignation as Swingline Lender, the resiedn Swingline Lender shall retain all the rights, powers, privileges and duties of a Swingline Lender
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with respect to such Swing Loans, including the right to require the Lenders to make Base Rate Loans pursuant to Section 2.11 [Borrowings to Repay Swing Loans]. Upon the appointment of a successor Issuing Lender and/or Swingline Lender, (x) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Issuing Lender or Swingline Lender, as the case may be, and (y) the successor Issuing Lender shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to the applicable retiring Issuing Lender to effectively assume the obligations of the applicable retiring Issuing Lender with respect to such Letters of Credit.
11.iConfidentiality.
11.9.iGeneral.
Each of the Agents, the Lenders and the Issuing Lenders agrees to maintain the confidentiality of the Information, except that Information may be disclosed (i) to its Affiliates and to its and its Affiliates’ respective partners, directors, officers, employees, agents, advisors and other representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (ii) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (iii) to the extent required by applicable Laws or regulations or by any subpoena or similar legal process, (iv) to any other party hereto, (v) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (vi) subject to an agreement containing provisions substantially the same as those of this Section 11.9, to (a) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (b) any actual or prospective counterparty (or its advisors) to any Swap Agreement or derivative transaction or similar transaction relating to the Borrower and its obligations, (vii) with the consent of the Borrower, (viii) to the extent such Information (a) becomes publicly available other than as a result of a breach of this Section 11.9 or (b) becomes available to an Agent, any Lender, any Issuing Lender or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrower, the other Loan Parties or any other Person that has obtained such confidential information pursuant to this Section 11.9 or (ix) on a confidential basis to (a) any rating agency in connection with rating the Borrower or its Subsidiaries or the credit facilities provided hereunder, (b) information regarding the credit facilities provided hereunder to (x) the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers or other market identifiers with respect to the credit facilities provided hereunder or (y) market data collectors and service providers to the Administrative Agent and the Lenders in connection with the administration, settlement and management of this Agreement and the credit facilities provided hereunder. Any Person required to maintain the confidentiality of Information as provided in this Section 11.9 shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.
11.9.iiSharing Information With Affiliates of the Lenders.
Each Loan Party acknowledges that from time to time financial advisory, investment banking and other services may be offered or provided to the Borrower or one or more of its Affiliates (in connection with this Agreement or otherwise) by any Lender or by one or more Subsidiaries or Affiliates of such Lender, and each of the Loan Parties hereby authorizes each Lender to share any information delivered to such Lender by such Loan Party and its Subsidiaries pursuant to this Agreement to any such Subsidiary or Affiliate subject to the provisions of Section 11.9.1 [General].
11.jCounterparts; Integration; Effectiveness.
This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Loan Documents, and any separate letter agreements with respect to fees payable to a Lender or any Affiliate of a Lender, constitute the entire
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contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof including any prior confidentiality agreements and commitments; provided that, for the avoidance of doubt, Existing Commitment Fees, Existing Letter of Credit Fees and Existing Interest shall be payable hereunder in accordance with the second paragraph of Section 2.1.1. [Revolving Credit Loans]. Except as provided in Section 7 [Conditions of Lending and Issuance of Letters of Credit], this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by telecopy or e-mail shall be effective as delivery of a manually executed counterpart of this Agreement.
The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to any document to be signed in connection with this Agreement, any Assignment and Assumption Agreement or any other Loan Document and the transactions contemplated hereby or thereby shall be deemed to include an electronic symbol or process attached to a contract or other record and adopted by a Person with the intent to sign, authenticate or accept such contract or record (each an “Electronic Signature”), deliveries 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, physical delivery thereof 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; provided that nothing in any Loan Document shall require the Administrative Agent to accept Electronic Signatures in any form or format without its prior written consent. Without limiting the generality of the foregoing, each Loan Party (i) agrees that, for all purposes, including without limitation, in connection with any workout, restructuring, enforcement of remedies, bankruptcy proceedings or litigation among the Administrative Agent, the Lenders and the Loan Parties, electronic images of this Agreement or any other Loan Documents (in each case, including with respect to any signature pages thereto) shall have the same legal effect, validity and enforceability as any paper original, and (ii) waives any argument, defense or right to contest the validity or enforceability of the Loan Documents based solely on the lack of paper original copies of any Loan Documents, including with respect to any signature pages thereto.
11.kGoverning Law, Etc.
11.11.iGoverning Law.
This Agreement and the other Loan Documents and any claims, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement or any other Loan Document (except, as to any other Loan Document, as expressly specified therein) and the transactions contemplated hereby and thereby shall be governed by, and construed in accordance with, the Law of the State of New York. Each Standby Letter of Credit issued under this Agreement shall be subject either to the rules of the Uniform Customs and Practice for Documentary Credits, as most recently published by the International Chamber of Commerce at the time of issuance (“UCP”) or the rules of the International Standby Practices (ICC Publication Number 590), as determined by the Issuing Lender, and each Commercial Letter of Credit shall be subject to UCP, and in each case to the extent not inconsistent therewith, the Laws of the State of New York.
11.11.iiSUBMISSION TO JURISDICTION.
THE BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND
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DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT ANY AGENT, ANY LENDER OR ANY ISSUING LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE BORROWER OR ANY OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
11.11.iiiWAIVER OF VENUE.
THE BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN SECTION 11.11.2 [SUBMISSION TO JURISDICTION]. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT AND AGREES NOT TO ASSERT ANY SUCH DEFENSE.
11.11.ivSERVICE OF PROCESS.
EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 11.5 [NOTICES; EFFECTIVENESS; ELECTRONIC COMMUNICATION]. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.
11.11.vWAIVER OF JURY TRIAL.
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.11.5.
11.lCertain Collateral Matters.
The benefit of the Loan Documents and of the provisions of this Agreement relating to any Collateral securing the Obligations shall extend to and be available to the Secured Parties. No Lender or any Affiliate of a Lender shall have any voting rights under any Loan Document as a result of the existence of obligations owed to it under any Specified Swap Agreement or any Other Lender Provided Financial Service Product, and no Person shall have any voting rights under any Loan Document solely because of such Person’s status as a Lender-Related Person.
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11.mUSA PATRIOT Act Notice.
Each Lender that is subject to the USA PATRIOT Act and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Loan Parties that pursuant to the requirements of the USA PATRIOT Act, it is required to obtain, verify and record information that identifies the Loan Parties, which information includes the name and address of the Loan Parties and other information that will allow such Lender or Administrative Agent, as applicable, to identify the Loan Parties in accordance with the USA PATRIOT Act.
11.nNo Fiduciary Duty.
Each Loan Party agrees and acknowledges that: (i) each Secured Party is acting solely as a principal and is not a financial advisor, agent or fiduciary, for the Loan Parties or any of their respective Affiliates, stockholders, creditors or employees or any other party; (ii) no Secured Party has assumed or will assume an advisory, agency or fiduciary responsibility in any Loan Party’s or their respective Affiliates’ favor with respect to any of the transactions contemplated hereby (irrespective of whether any Secured Party has advised or is currently advising any Loan Party or its Affiliates on other matters) and no Secured Party has any obligation to the Loan Parties or their respective Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein; (iii) the Secured Parties and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from the Loan Parties or their respective Affiliates and the Secured Parties have no obligation to disclose any of such interests by virtue of any advisory, agency or fiduciary relationship; and (iv) the Lenders have not provided any legal, accounting, regulatory or tax advice in any jurisdiction with respect to any of the transactions contemplated hereby and the Loan Parties have consulted their own legal, accounting, regulatory and tax advisors to the extent they have deemed appropriate. Each Loan Party acknowledges and agrees that it will consult with its own advisors concerning such matters and shall be responsible for making its own independent investigation and appraisal of the transactions contemplated hereby, and neither any Secured Party nor its Affiliates shall have any responsibility or liability to any Loan Party with respect thereto. Each Loan Party hereby waives and releases, to the fullest extent permitted by law, any claims that such Loan Party may have against the Secured Parties or their respective Affiliates with respect to any breach or alleged breach of agency or fiduciary duty.
11.oAmendment and Restatement.
Effective as of the Closing Date, the Existing Credit Agreement shall be amended and restated in its entirety by this Agreement and the Existing Credit Agreement shall thereafter be of no further force and effect except to evidence the incurrence by the Borrower of the “Obligations” under and as defined in the Existing Credit Agreement (whether or not such “Obligations” are contingent as of the Closing Date).The terms and conditions of this Agreement and the rights and remedies of the Administrative Agent and the Lenders under this Agreement and the other Loan Documents shall apply to all of the Obligations incurred under the Existing Credit Agreement; provided that, for the avoidance of doubt, Existing Commitment Fees, Existing Letter of Credit Fees and Existing Interest shall be payable hereunder in accordance with the second paragraph of Section 2.1.1. [Revolving Credit Loans]. On and after the Closing Date, (i) all references to the Credit Agreement in the Loan Documents (other than this Agreement) shall be deemed to refer to this Agreement and (ii) all references to any section (or subsection) of the Existing Credit Agreement in any Loan Document (but not herein) shall be amended to become, mutatis mutandis, references to the corresponding provisions of this Agreement. The parties hereto acknowledge and agree that the Liens securing payment of the “Obligations” as defined in the Existing Loan Agreement, shall from and after the Closing Date secure the payment and performance of all Obligations for the benefit of the Collateral Agent and the Secured Parties, and all such Liens shall continue in full force and effect after giving effect to this Agreement and are hereby confirmed and reaffirmed by each of the Loan Parties. The parties hereto further acknowledge and agree that all “Security Documents” as defined in the Existing Credit Agreement (including all Mortgages and Control Agreements) shall remain in full force and effect after the Closing Date in favor of and for the benefit of the Collateral Agent and the Secured Parties (with each reference therein to the collateral agent, the credit agreement or a loan document being a reference to the Collateral Agent, this Agreement or the other Loan Documents, as applicable), and each Loan Party hereby confirms and ratifies its obligations thereunder. In furtherance of the foregoing, Collateral Agent is hereby appointed as Collateral Agent in connection
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with the foregoing, and shall be entitled to all of the benefits, rights, privileges and immunities hereunder and under the other Loan Documents with respect to the foregoing. This amendment and restatement is limited as written and is not a consent to any other amendment, restatement or waiver or other modification, whether or not similar and, except as expressly provided herein or in any other Loan Document, all terms and conditions of the Loan Documents remain in full force and effect unless otherwise specifically amended hereby or by any other Loan Document. This Agreement shall not constitute a novation of the Existing Credit Agreement or of any other Loan Document (as defined in the Existing Credit Agreement).
11.pAcknowledgment and Consent to Bail-In of Affected Financial Institutions.
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 Lender that is an Affected 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 the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
(26)the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any Lender that is an Affected Financial Institution; and
(27)the effects of any Bail-In Action on any such liability, including, if applicable:
(vii)a reduction in full or in part or cancellation of any such liability;
(viii)a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected 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
(ix)the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of any the applicable Resolution Authority.
11.aAcknowledgement Regarding Any Supported QFCs.
To the extent that the Loan Documents provide support, through a guarantee or otherwise, for Hedging Obligations or any other agreement or instrument that is a QFC (such support, “QFC Credit Support” and each such QFC, a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States):
(28)In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan
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Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.
(29)As used in this Section 11.17, the following terms have the following meanings:
“BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.
“Covered Entity” shall mean any of the following:
(x)a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b);
(xi)a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or
(xii)a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
“QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).
[SIGNATURE PAGES INTENTIONALLY OMITTED]
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SCHEDULE 1.1(A)
PRICING GRID
| Level | Utilization Percentage | Term SOFR Rate Spread | Base Rate Spread | Letter of Credit Fee | Commitment Fee |
|---|---|---|---|---|---|
| I | less than or equal to 25% | 1.75% | 0.75% | 1.75% | 0.375% |
| II | greater than 25%, but <br>less than or equal to 50% | 2.00% | 1.00% | 2.00% | 0.375% |
| III | greater than 50%, but<br>less than or equal to 75% | 2.25% | 1.25% | 2.25% | 0.500% |
| IV | greater than 75%, but<br>less than or equal to 90% | 2.50% | 1.50% | 2.50% | 0.500% |
| V | greater than 90% | 2.75% | 1.75% | 2.75% | 0.500% |
For purposes of determining the Applicable Margin, the Applicable Letter of Credit Fee Rate, and the Applicable Commitment Fee Rate:
(a) From the Closing Date through the date on which the Compliance Certificate is required to be delivered hereunder for the first full fiscal quarter ending after the Closing Date (the “Initial Period”), the Applicable Margin, Applicable Letter of Credit Fee Rate, and the Applicable Commitment Fee Rate shall be the respective amounts set forth under Level II of this Schedule 1.1(A) set forth above.
(b) It is expressly agreed that after the Initial Period, the Applicable Margin, the Applicable Letter of Credit Fee Rate, and the Applicable Commitment Fee Rate shall be determined based upon Schedule 1.1(A) above and change on each date on which a Compliance Certificate is required to be delivered hereunder.
EXHIBIT 2.5.1 FORM OF
LOAN REQUEST; RATE REQUEST
TO: PNC Bank, National Association, as Administrative Agent
The Tower at PNC Plaza 300 Fifth Avenue Pittsburgh, PA 15222
Attention: Meghan Krawchyk
Email: meghan.krawchyk@pnc.com
Agency Services
PNC Firstside Center, 4th Floor
500 First Avenue
Pittsburgh, Pennsylvania 15219
Attention: David Spisak
Fax: (412) 762-8672
Email: david.spisak@pnc.com
FROM: CNX Resources Corporation(the “Borrower”)
RE: Third Amended and Restated Credit Agreement (as it may be amended, restated, modified or supplemented, the “Credit Agreement”), dated as of October 6, 2021, by and among CNX Resources Corporation, a Delaware corporation, the Guarantors from time to time party thereto, the Lenders from time to time party thereto and PNC Bank, National Association as Collateral Agent and PNC Bank, National Association as Administrative Agent (the “Administrative Agent”).
Capitalized terms not otherwise defined herein shall have the respective meanings ascribed to them by the Credit Agreement.
A. Pursuant to Section 2.5.1 or 4.1 of the Credit Agreement, the undersigned Borrower irrevocably requests [check one box under 1(a) below and fill in blank space next to the box as appropriate]:
1.(a) A new Revolving Credit Loan. OR
Renewal of the Term SOFR Rate Option applicable to an outstanding Revolving Credit Loan originally made on __________ __, 20____. OR
Conversion of the Base Rate Option applicable to an outstanding Revolving Credit Loan originally made on _____________ to a Revolving Credit Loan to which the Term SOFR Rate Option applies. OR
Conversion of the Term SOFR Rate Option applicable to an outstanding Revolving Credit Loan on __________ __, ____ to a Revolving Credit Loan to which the Base Rate Option applies.
SUCH NEW, RENEWED OR CONVERTED REVOLVING CREDIT LOAN SHALL BEAR INTEREST:
[Check one box under 1(b) below and fill in blank spaces in line next to box]:
1.(b)(i) Under the Base Rate Option. Such Loan shall have a Borrowing Date or interest conversion date, as applicable, of __________, ___ (which date shall be (i) the same Business Day as the Business Day of receipt by the Administrative Agent by 11:00 a.m. of this Loan Request for making a new Revolving Credit Loan to which the Base Rate Option applies, or (ii) the last day of the preceding Interest Period if a Revolving Credit Loan to which the Term SOFR Rate Option applies is being converted to a Revolving Credit Loan to which the Base Rate Option applies).
OR
(ii) Under the Term SOFR Rate Option. Such Loan shall have a Borrowing Date or interest conversion date, as applicable, of _____________ (which date shall be no earlier than three (3) Business Days subsequent to the Business Day of receipt by the Administrative Agent by 11:00 a.m. of this Loan Request for (i) making a new Revolving Credit Loan to which the Term SOFR Rate Option applies or renewing a Revolving Credit Loan to which the Term SOFR Rate Option applies, or (ii) converting a Loan to which the Base Rate Option applies to a Revolving Credit Loan to which the Term SOFR Rate Option applies).
2. Such Loan is in the principal amount of U.S. $_________ or the principal amount to be renewed or converted is U.S. $_____________. [to be in increments of $1,000,000 and not to be less than $5,000,000 for each Borrowing Tranche under the Term SOFR Rate Option and to be in increments of $50,000 and not to be less than the lesser of $500,000 and the maximum amount available for Borrowing Tranches to which the Base Rate Option applies]
3. [Complete blank below if the Borrower is selecting the Term SOFR Rate Option]: Such Loan shall have an Interest Period of one, three, or six Months. ___________________________.
B. As of the date hereof and the date of making of the above-requested Revolving Credit Loan (and after giving effect thereto): the representations and warranties of the Loan Parties contained in Section 6 of the Credit Agreement and in the other Loan Documents are true and correct in all material respects on and as of the date hereof with the same effect as though such representations and warranties had been made on and as of the date hereof (except that (i) any representation and warranty that is already qualified as to materiality is true and correct in all respects as so qualified and (ii) representations and warranties which expressly relate solely to an earlier date or time were true and correct on and as of the specific dates or times referred to therein); no Event of Default or Potential Default has occurred and is continuing; and the Revolving Facility Usage does not exceed the lesser of (i) the Borrowing Base and (ii) the Revolving Credit Commitments.
C. The undersigned hereby certifies that, after giving effect to the borrowing contemplated hereby, the aggregate amount of Indebtedness (and, notwithstanding the definition of “Indebtedness,” all letters of credit (including Letters of Credit) being deemed to have an outstanding principal amount of Indebtedness equal to the maximum potential liability of
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the Borrower and its Restricted Subsidiaries thereunder) under the Credit Agreement shall not exceed the Applicable Notes Indenture Cap.
D. As of the date hereof and the date of making of the above-requested Revolving Credit Loan (and after giving effect thereto), the aggregate amount of Excess Balance Sheet Cash does not and will not exceed $150,000,000.
D. The undersigned hereby irrevocably requests [check one line under 1.(a) below and fill in blank space next to the line as appropriate]:
1.(a) ___ Funds to be deposited into PNC Bank account per our current standing instructions. Complete amount of deposit if not full loan advance amount: $_______________.
OR
___ Funds to be wired per the following wire instructions: $_________________ Amount of Wire Transfer Bank Name: _____________________ ABA: __________________________ Account Number: _________________ Account Name: ___________________ Reference: _______________________
OR
___ Funds to be wired per the attached Funds Flow (multiple wire transfers).
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
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[SIGNATURE PAGE TO LOAN REQUEST]
The undersigned certifies to the Administrative Agent as to the accuracy of the foregoing.
CNX RESOURCES CORPORATION
Date: ____________, 20___ By: Name: Title:
Document
Execution Version
AMENDMENT NO. 1
This AMENDMENT NO. 1, dated as of May 5, 2022 (this “Amendment”), amends the Amended and Restated Credit Agreement, dated as of October 6, 2021 (as amended, restated, supplemented or otherwise modified from time to time prior to the date hereof, the “Credit Agreement”), by and among CNX Midstream Partners LP (the “Borrower”), the guarantors party thereto, the lenders party thereto, and PNC Bank, National Association, as administrative agent for the Lenders (the “Administrative Agent”) and as collateral agent (the “Collateral Agent” and, together with the Administrative Agent, the “Agents”). Capitalized terms used but not defined herein shall have the meanings given them in the Credit Agreement as amended by this Amendment.
WITNESSETH
WHEREAS, the Borrower desires to amend the Credit Agreement on the terms set forth herein;
WHEREAS, PNC Capital Markets LLC is acting as lead arranger and joint bookrunner for this Amendment.
NOW, THEREFORE, the parties hereto, in consideration of the mutual covenants and agreements herein contained and intending to be legally bound hereby, covenant and agree as follows:
1.Credit Agreement Amendments. Effective as of the Amendment No. 1 Effective Date, (a) the Credit Agreement is hereby amended to be as set forth in the conformed copy of the Credit Agreement attached as Exhibit A hereto and (b) Exhibit 2.5.1 to the Credit Agreement is hereby amended to be as set forth in the conformed copy of such exhibit attached as Exhibit B hereto.
2.Conditions Precedent. Section 1 of this Amendment shall be effective upon satisfaction of each of the following conditions (the date of such effectiveness, the “Amendment No. 1 Effective Date”):
(a)Execution and Delivery of Amendment. The Borrower, the Guarantors and the Agents shall have executed and delivered this Amendment and (ii) the Administrative Agent shall have received consents to this Amendment, in a form reasonably satisfactory to the Administrative Agent, executed and delivered by all Lenders.
(b)Officer’s Certificate. The representations and warranties of each of the Loan Parties contained in the Loan Documents shall be true and correct in all material respects on and as of the Amendment No. 1 Effective Date with the same effect as though such representations and warranties had been made on and as of such date (except (i) that any representation and warranty that is already qualified as to materiality shall be true and correct in all respects as so qualified and (ii) representations and warranties which expressly relate solely to an earlier date or time, which representations and warranties shall be true and correct on and as of the specific dates or times referred to therein); no Event of Default or Potential Default shall have occurred and be continuing; since December 31, 2021, there shall not have occurred any event or condition that has had or could be reasonably expected, either individually or in the aggregate, to constitute a Material Adverse Change; and there shall be delivered to the Administrative Agent for the benefit of each Lender a certificate of the Borrower, dated the Amendment No. 1 Effective Date and signed by a Responsible Officer or Authorized Officer of the Borrower, to each such effect.
(c)Secretary's Certificate. The Administrative Agent shall have received one or more certificates dated the Amendment No. 1 Effective Date and signed by an Authorized Officer of each of the Loan Parties, certifying (A) that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors of such Loan Party (or its managing general partner, managing member or equivalent) authorizing the execution, delivery and performance of this Amendment and the other Loan Documents to be executed and delivered in connection herewith, and that such resolutions have not been modified, rescinded or amended and are in full force and effect on the Amendment No. 1 Effective Date; (B) the names of the officer or officers authorized to sign this Amendment and the other Loan Documents to be executed and delivered in connection herewith and the true signatures of such officer or officers and specifying the Authorized Officers permitted to act on behalf of such Loan Party for purposes of this Amendment and such other Loan Documents and the true signatures of such officers, on which the Administrative Agent, the Issuing Lenders, and each Lender may conclusively rely; and (C) copies of its organizational documents, including its certificate of incorporation, bylaws, certificate of limited partnership, partnership agreement, certificate of formation, and limited liability company agreement as in effect on the Amendment No. 1 Effective Date, recently certified by the appropriate state official where such documents are filed in a state office (or, in the alternative, certifying that such organizational documents have not been amended since the latest delivery of such organizational documents pursuant to Section 7.1.1(b)(iii) of the Credit Agreement or pursuant to a condition precedent to effectiveness of an amendment to the Credit Agreement, and that such organizational documents are in full force and effect), together with recently dated certificates from the appropriate state officials as to the continued existence and good standing of such Loan Party in each state where organized.
(d)Fees and Expenses. All fees and expenses payable on or before the Amendment No. 1 Effective Date by the Borrower to the Administrative Agent (or its Affiliates) in connection with this Amendment shall have been paid, including the reasonable fees, charges and disbursements of counsel for the Administrative Agent.
3.Full Force and Effect; Reaffirmation. All of the terms, conditions, representations, warranties and covenants contained in the Loan Documents shall continue in full force and effect, in each case, as expressly modified by this Amendment. This Amendment shall constitute a Loan Document for purposes of the Credit Agreement (as amended by this Amendment) and the other Loan Documents. All references to the Credit Agreement in any Loan Document, unless expressly provided otherwise, shall mean and be a reference to the Credit Agreement as amended by this Amendment. Each Loan Party, by its signature below, hereby affirms and confirms that, after giving effect to this Amendment, (i) its obligations under each of the Loan Documents to which it is a party and (ii) its guarantee of the Obligations and the pledge of and/or grant of a security interest in its assets as Collateral to secure the Obligations, and acknowledges and agrees that such guarantee, pledge and/or grant continue in full force and effect in respect of, and to secure, the Obligations. The amendment of the Credit Agreement pursuant to this Amendment and all other Loan Documents amended and/or executed and delivered in connection herewith is not intended to, and shall not, constitute a novation of the Credit Agreement or any of the other Loan Documents as in effect immediately prior to the Amendment No. 1 Effective Date.
4.Counterparts. This Amendment may be executed by different parties hereto in any number of separate counterparts, each of which, when so executed and delivered shall be an original and all such counterparts shall together constitute one and the same instrument. Delivery of an executed counterpart of this Amendment by telecopy or e-mail shall be effective as delivery of a manually executed counterpart of this Amendment.
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5.Severability. If any term of this Amendment or any application thereof shall be held to be invalid, illegal or unenforceable, the validity of other terms of this Amendment or any other application of such term shall in no way be affected thereby.
6.Entire Agreement. This Amendment sets forth the entire agreement and understanding of the parties with respect to the subject matter hereof and supersedes all prior understandings and agreements, whether written or oral, among the parties hereto relating to such subject matter. For the avoidance of doubt, there are no unwritten oral agreements among the parties hereto. No representation, promise, inducement or statement of intention has been made by any party that is not embodied in this Amendment, and no party shall be bound by or liable for any alleged representation, promise, inducement or statement of intention not set forth herein.
7.Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of New York. The provisions of Section 11.11.2 through 11.11.5 of the Credit Agreement shall apply to this Amendment mutatis mutandis.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly authorized, have executed this Amendment as of the day and year first above written.
CNX MIDSTREAM PARTNERS LP
By: Name: Title:
GUARANTORS:
CNX MIDSTREAM DEVCO I LP
By: Name: Title:
CNX MIDSTREAM SP HOLDINGS LLC
CNX MIDSTREAM OPERATING COMPANY LLC
CNX MIDSTREAM DEVCO I GP LLC
By: Name: Title:
[Signature Page to Amendment No. 1 to CNX Midstream Credit Agreement]
PNC BANK, NATIONAL ASSOCIATION, as Administrative Agent, Collateral Agent and as a Lender
By:
Name:
Title:
[Signature Page to Amendment No. 1 to CNX Midstream Credit Agreement]
Exhibit A
Conformed Credit Agreement
(see attached)
Exhibit B
Conformed Form of Loan Notice; Rate Request
(see attached)
Exhibit A to Amendment No. 1
DEAL CUSIP #12654CAA5 REVOLVING CREDIT FACILITY CUSIP #12654CAB3
REVOLVING CREDIT FACILITY
AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of October 6, 2021, as amended as of May 5, 2022,
by and among
CNX MIDSTREAM PARTNERS LP
and
THE GUARANTORS PARTY HERETO FROM TIME TO TIME
and
THE LENDERS PARTY HERETO FROM TIME TO TIME
and
PNC BANK, NATIONAL ASSOCIATION, as the Administrative Agent and the Collateral Agent
_________________
BANK OF AMERICA, N.A., CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK BRANCH, CITIBANK, N.A., JPMORGAN CHASE BANK, N.A., MUFG BANK, LTD., TD SECURITIES (USA) LLC, TRUIST BANK and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Co-Syndication Agents
PNC CAPITAL MARKETS LLC, BOFA SECURITIES, INC., CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK BRANCH, CITIBANK, N.A., JPMORGAN CHASE BANK, N.A., MUFG BANK, LTD., TD SECURITIES (USA) LLC, TRUIST SECURITIES, INC. and WELLS FARGO SECURITIES, LLC, as Joint Lead Arrangers and Joint Bookrunners
TABLE OF CONTENTS
Page
| 1. CERTAIN DEFINITIONS | |
|---|---|
| 1.1 Certain Definitions. | 1 |
| 1.2 Construction. | 50 |
| 1.3 Accounting Principles. | 50 |
| 1.4 Valuations. | 51 |
| 1.5 Letter of Credit Amounts. | 51 |
| 1.6 Interest Rates. | 51 |
| 2. REVOLVING CREDIT AND SWING LOAN FACILITIES | |
| 2.1 Commitments. | 51 |
| 2.1.1 Revolving Credit Loans. | 52 |
| 2.1.2 Swing Loans. | 53 |
| 2.2 Nature of Lenders’ Obligations with Respect to Revolving Credit Loans. | 54 |
| 2.3 Commitment Fees. | 54 |
| 2.4 Commitment Reduction. | 54 |
| 2.4.1 Voluntary. | 54 |
| 2.4.2 Mandatory. | 54 |
| 2.4.3 Effect of Commitment Reduction. | 54 |
| 2.5 Loan Requests. | 55 |
| 2.5.1 Revolving Credit Loan Requests. | 55 |
| 2.5.2 Swing Loan Requests. | 55 |
| 2.6 Making and Repayment of Loans. | 56 |
| 2.6.1 Making Revolving Credit Loans. | 56 |
| 2.6.2 Presumptions by the Administrative Agent. | 56 |
| 2.6.3 Making Swing Loans. | 56 |
| 2.6.4 Repayment of Loans. | 57 |
| 2.7 Notes. | 57 |
| 2.7.1 Revolving Credit Notes. | 57 |
| 2.7.2 Swing Loan Note. | 57 |
| 2.8 Use of Proceeds. | 57 |
| 2.9 [Reserved]. | 57 |
| 2.10 Letters of Credit. | 57 |
| 2.10.1 Issuance of Letters of Credit. | 57 |
| 2.10.2 Letter of Credit Fees. | 59 |
| 2.10.3 Participations, Disbursements, Reimbursement. | 59 |
| 2.10.4 Repayment of Participation Advances. | 61 |
| 2.10.5 Documentation. | 61 |
| 2.10.6 Determinations to Honor Drawing Requests. | 61 |
| 2.10.7 Nature of Participation and Reimbursement Obligations. | 61 |
| 2.10.8 Indemnity. | 63 |
| 2.10.9 Liability for Acts and Omissions. | 63 |
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Page
| 2.10.10 Cash Collateral Prior to the Expiration Date. | 64 |
|---|---|
| 2.10.11 Issuing Lender Reporting Requirements. | 65 |
| 2.11 Borrowings to Repay Swing Loans. | 65 |
| 2.12 Increase in Revolving Credit Commitments. | 65 |
| 2.13 Defaulting Lenders. | 68 |
| 3. [RESERVED] | |
| 4. INTEREST RATES | |
| 4.1 Interest Rate Options. | 69 |
| 4.1.1 Interest Rate Options; Swing Line Interest Rate. | 69 |
| 4.1.2 Amendment No. 1 Existing Loans. | 70 |
| 4.1.3 Rate Quotations. | 70 |
| 4.1.4 Conforming Changes Relating to Term SOFR Rate. | 70 |
| 4.2 Interest Periods. | 71 |
| 4.3 Interest After Default. | 71 |
| 4.4 Term SOFR Rate Unascertainable; Illegality; Increased Costs; Deposits Not Available. | 71 |
| 4.4.1 Unascertainable. | 71 |
| 4.4.2 Illegality; Increased Costs. | 72 |
| 4.4.3 Administrative Agent’s and Lender’s Rights. | 72 |
| 4.5 Selection of Interest Rate Options. | 73 |
| 4.6 Benchmark Replacement Setting. | 73 |
| 5. PAYMENTS | |
| 5.1 Payments. | 77 |
| 5.2 Pro Rata Treatment of Lenders. | 77 |
| 5.3 Sharing of Payments by Lenders. | 77 |
| 5.4 Presumptions by Administrative Agent. | 78 |
| 5.5 Interest Payment Dates. | 78 |
| 5.6 Prepayments. | 79 |
| 5.6.1 Right to Prepay. | 79 |
| 5.6.2 Replacement of a Lender. | 79 |
| 5.6.3 Designation of a Different Lending Office. | 80 |
| 5.6.4 Mandatory Prepayments. | 81 |
| 5.7 Increased Costs. | 82 |
| 5.7.1 Increased Costs Generally. | 82 |
| 5.7.2 Capital Requirements. | 82 |
| 5.7.3 Certificates for Reimbursement; Repayment of Outstanding Loans; Borrowing of New Loans. | 83 |
| 5.7.4 Delay in Requests. | 83 |
| 5.8 Taxes. | 83 |
| 5.8.1 Payments Free of Taxes. | 83 |
| 5.8.2 Payment of Other Taxes by the Borrower. | 83 |
| 5.8.3 Indemnification by the Borrower. | 84 |
| 5.8.4 Evidence of Payments. | 84 |
| 5.8.5 Status of Lenders. | 84 |
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Page
| 5.8.6 Refunds. | 86 |
|---|---|
| 5.8.7 Definition of Lender. | 86 |
| 5.8.8 Administrative Agent Forms. | 86 |
| 5.9 Indemnity. | 86 |
| 5.10 Settlement Date Procedures. | 87 |
| 6. REPRESENTATIONS AND WARRANTIES | |
| 6.1 Organization and Qualification. | 88 |
| 6.2 EEA Financial Institutions. | 88 |
| 6.3 Subsidiaries. | 88 |
| 6.4 Power and Authority. | 88 |
| 6.5 Validity and Binding Effect. | 88 |
| 6.6 No Conflict; Borrower and Subsidiaries’ Status Under CNX Debt Documents. | 89 |
| 6.7 Litigation. | 89 |
| 6.8 Properties. | 89 |
| 6.9 Financial Statements. | 91 |
| 6.10 Use of Proceeds. | 91 |
| 6.11 Liens in the Collateral. | 91 |
| 6.12 Full Disclosure. | 93 |
| 6.13 Taxes. | 93 |
| 6.14 Consents and Approvals. | 93 |
| 6.15 No Event of Default; Compliance with Instruments. | 93 |
| 6.16 Patents, Trademarks, Copyrights, Licenses, Permits, Etc. | 93 |
| 6.17 Solvency. | 94 |
| 6.18 Maintenance of Properties. | 94 |
| 6.19 Insurance. | 94 |
| 6.20 Compliance with Laws. | 94 |
| 6.21 Material Contracts; Burdensome Restrictions. | 95 |
| 6.22 Investment Companies; Regulated Entities. | 95 |
| 6.23 ERISA Compliance. | 95 |
| 6.24 Employment Matters. | 96 |
| 6.25 Environmental Matters. | 96 |
| 6.26 Anti-Terrorism Laws | 97 |
| 6.27 Title to Refined Products | 97 |
| 7. CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT | |
| 7.1 First Loans and Letters of Credit. | 97 |
| 7.1.1 Deliveries. | 97 |
| 7.1.2 Payment of Fees. | 99 |
| 7.1.3 USA PATRIOT Act. | 100 |
| 7.2 Each Additional Loan or Letter of Credit. | 100 |
| 8. COVENANTS | |
| 8.1 Affirmative Covenants. | 100 |
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Page
| 8.1.1 Preservation of Existence, Etc. | 101 |
|---|---|
| 8.1.2 Payment of Liabilities, Including Taxes, Etc. | 101 |
| 8.1.3 Maintenance of Insurance. | 101 |
| 8.1.4 Maintenance of Properties and Equipment. | 102 |
| 8.1.5 Maintenance of Patents, Trademarks, Etc. | 103 |
| 8.1.6 Visitation Rights. | 103 |
| 8.1.7 Keeping of Records and Books of Account. | 103 |
| 8.1.8 Further Assurances. | 103 |
| 8.1.9 Additional Guarantors. | 104 |
| 8.1.10 Compliance with Laws. | 104 |
| 8.1.11 Use of Proceeds. | 104 |
| 8.1.12 Subordination of Intercompany Loans. | 105 |
| 8.1.13 Anti-Terrorism Laws; Anti-Corruption Laws. | 105 |
| 8.1.14 Compliance with Certain Contracts. | 105 |
| 8.1.15 [Reserved]. | 106 |
| 8.1.16 [Reserved]. | 106 |
| 8.1.17 Collateral. | 106 |
| 8.1.18 Title. | 109 |
| 8.1.19 Maintenance of Permits. | 109 |
| 8.1.20 Post-Closing Matters. | 109 |
| 8.1.21 Accounts. | 109 |
| 8.2 Negative Covenants. | 110 |
| 8.2.1 Indebtedness. | 110 |
| 8.2.2 Liens. | 111 |
| 8.2.3 Designation of Unrestricted Subsidiaries. | 112 |
| 8.2.4 Loans and Investments. | 113 |
| 8.2.5 Restricted Payments. | 114 |
| 8.2.6 Liquidations, Mergers, Consolidations, Acquisitions. | 115 |
| 8.2.7 Dispositions. | 116 |
| 8.2.8 Affiliate Transactions. | 118 |
| 8.2.9 Change in Business. | 119 |
| 8.2.10 Fiscal Year. | 119 |
| 8.2.11 Amendments to Organizational Documents; Amendments or Prepayments of Certain Other Indebtedness. | 119 |
| 8.2.12 Swaps. | 120 |
| 8.2.13 [Reserved]. | 120 |
| 8.2.14 Financial Covenants. | 120 |
| 8.2.15 Restrictions on Distributions from Restricted Subsidiaries. | 120 |
| 8.2.16 Negative Pledge Agreements. | 122 |
| 8.3 Reporting Requirements. | 124 |
| 8.3.1 Quarterly Financial Statements. | 124 |
| 8.3.2 Annual Financial Statements. | 124 |
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Page
| 8.3.3 SEC Website. | 125 |
|---|---|
| 8.3.4 Certificate of the Borrower. | 125 |
| 8.3.5 Notice of Default. | 126 |
| 8.3.6 Certain Events. | 126 |
| 8.3.7 Budgets, Forecasts, Other Reports and Information. | 126 |
| 9. DEFAULT | |
| 9.1 Events of Default. | 127 |
| 9.1.1 Payments Under Loan Documents. | 127 |
| 9.1.2 Breach of Warranty. | 127 |
| 9.1.3 Breach of Certain Covenants. | 128 |
| 9.1.4 Breach of Other Covenants. | 128 |
| 9.1.5 Defaults in Other Agreements or Indebtedness. | 128 |
| 9.1.6 Final Judgments or Orders. | 128 |
| 9.1.7 Loan Document Unenforceable. | 128 |
| 9.1.8 Inability to Pay Debts. | 129 |
| 9.1.9 ERISA. | 129 |
| 9.1.10 Change of Control. | 129 |
| 9.1.11 [Reserved]. | 129 |
| 9.1.12 Involuntary Proceedings. | 129 |
| 9.1.13 Voluntary Proceedings. | 129 |
| 9.2 Consequences of Event of Default. | 129 |
| 9.2.1 Events of Default Other Than Bankruptcy, Insolvency or Reorganization Proceedings. | 129 |
| 9.2.2 Bankruptcy, Insolvency or Reorganization Proceedings. | 130 |
| 9.2.3 Set-off. | 130 |
| 9.2.4 [Reserved]. | 131 |
| 9.2.5 Application of Proceeds. | 131 |
| 9.2.6 Collateral Agent. | 132 |
| 9.2.7 Other Rights and Remedies. | 132 |
| 9.3 Notice of Sale. | 132 |
| 10. THE AGENTS | |
| 10.1 Appointment and Authority. | 132 |
| 10.2 Rights as a Lender. | 133 |
| 10.3 Exculpatory Provisions. | 133 |
| 10.4 Reliance by Agents. | 134 |
| 10.5 Delegation of Duties. | 134 |
| 10.6 Resignation of Agents. | 134 |
| 10.7 Non-Reliance on Agents and Other Lenders. | 136 |
| 10.8 No Other Duties, Etc. | 136 |
| 10.9 Administrative Agent’s Fee. | 136 |
| 10.10 Authorization to Release Collateral and Guarantors. | 136 |
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| 10.11 No Reliance on Administrative Agent’s Customer Identification Program. | 137 |
|---|---|
| 10.12 Withholding Tax. | 137 |
| 10.13 Certain ERISA Matters. | 137 |
| 10.14 Erroneous Payments. | 139 |
| 11. MISCELLANEOUS | |
| 11.1 Modifications, Amendments or Waivers. | 141 |
| 11.1.1 Required Consents. | 141 |
| 11.1.2 Certain Amendments. | 142 |
| 11.1.3 Amendments Affecting the Administrative Agent, Etc. | 142 |
| 11.1.4 Non-Consenting Lenders. | 142 |
| 11.1.5 Defaulting Lenders. | 143 |
| 11.2 No Implied Waivers; Cumulative Remedies. | 143 |
| 11.3 Expenses; Indemnity; Damage Waiver. | 143 |
| 11.3.1 Costs and Expenses. | 143 |
| 11.3.2 Indemnification by the Borrower. | 143 |
| 11.3.3 Reimbursement by Lenders. | 144 |
| 11.3.4 Waiver of Consequential Damages, Etc. | 144 |
| 11.3.5 Payments. | 145 |
| 11.4 Holidays. | 145 |
| 11.5 Notices; Effectiveness; Electronic Communication. | 145 |
| 11.5.1 Notices Generally. | 145 |
| 11.5.2 Electronic Communications. | 145 |
| 11.5.3 Change of Address, Etc. | 146 |
| 11.6 Severability. | 146 |
| 11.7 Duration; Survival. | 146 |
| 11.8 Successors and Assigns. | 146 |
| 11.8.1 Successors and Assigns Generally. | 146 |
| 11.8.2 Assignments by Lenders. | 147 |
| 11.8.3 Register. | 148 |
| 11.8.4 Participations. | 148 |
| 11.8.5 Certain Pledges; Successors and Assigns Generally. | 149 |
| 11.8.6 Resignation as Issuing Lender or Swingline Lender after Assignment. | 150 |
| 11.9 Confidentiality. | 150 |
| 11.9.1 General. | 150 |
| 11.9.2 Sharing Information With Affiliates of the Lenders. | 151 |
| 11.10 Counterparts; Integration; Effectiveness. | 151 |
| 11.11 Governing Law, Etc. | 152 |
| 11.11.1 Governing Law. | 152 |
| 11.11.2 SUBMISSION TO JURISDICTION. | 152 |
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Page
| 11.11.3 WAIVER OF VENUE. | 153 |
|---|---|
| 11.11.4 SERVICE OF PROCESS. | 153 |
| 11.11.5 WAIVER OF JURY TRIAL. | 153 |
| 11.12 Certain Collateral Matters. | 153 |
| 11.13 USA PATRIOT Act Notice. | 153 |
| 11.14 No Fiduciary Duty. | 154 |
| 11.15 Amendment and Restatement. | 154 |
| 11.16 Acknowledgment and Consent to Bail-In of Affected Financial Institutions. | 155 |
| 11.17 Acknowledgement Regarding Any Supported QFCs. | 155 |
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LIST OF SCHEDULES AND EXHIBITS
SCHEDULES
Schedule 1.1(A) Pricing Grid
Schedule 1.1(B) Commitments of Lenders
Schedule 1.1(L) Letter of Credit Issuing Lender Sublimit
Schedule 1.1(P) Patent, Trademark and Copyright Security Agreements
Schedule 1.1(S) Specified Swap Agreements
Schedule 2.10.1 Existing Letters of Credit
Schedule 6.1 Qualifications To Do Business
Schedule 6.3 Subsidiaries
Schedule 6.11 Pledged Securities
Schedule 6.21 Material Contracts
Schedule 7.1.1(j) Lien Searches
Schedule 8.1.18 Title Requirements
Schedule 8.1.20 Post-Closing Matters
Schedule 8.2.1 Existing Indebtedness
Schedule 8.2.2 Existing Liens
Schedule 8.2.4 Existing Investments
Schedule 8.2.8 Existing Affiliate Transactions
Schedule 8.2.15 Existing Restrictions on Subsidiaries
Schedule 8.2.16 Existing Negative Pledge Agreements
Schedule 11.5.1 Notice Information
EXHIBITS
Exhibit 1.1(A) Assignment and Assumption Agreement
Exhibit 1.1(B) New Lender Joinder
Exhibit 1.1(G)(1) Guarantor Joinder
Exhibit 1.1(G)(2) Guaranty Agreement
Exhibit 1.1(I)(1) Indemnity
Exhibit 1.1(I)(2) Intercompany Subordination Agreement
Exhibit 1.1(M) Mortgage
Exhibit 1.1(N)(1) Revolving Credit Note
Exhibit 1.1(N)(2) Swing Loan Note
Exhibit 1.1(P)(1) Perfection Certificate
Exhibit 1.1(P)(2) Perfection Certificate Supplement
Exhibit 2.5.1 Loan Request
Exhibit 2.5.2 Swing Loan Request
Exhibit 8.2.6 Acquisition Certificate
Exhibit 8.3.4 Quarterly Compliance Certificate
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AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT (the “Agreement”) is dated as of October 6, 2021, as amended as of May 5, 2022, and is made by and among CNX MIDSTREAM PARTNERS LP, a Delaware limited partnership (the “Borrower”), EACH OF THE GUARANTORS (as hereinafter defined), the LENDERS (as hereinafter defined), and PNC BANK, NATIONAL ASSOCIATION, as administrative agent for the Lenders under this Agreement (in such capacity, the “Administrative Agent”) and as collateral agent for the Lenders and the other Secured Parties (in such capacity, the “Collateral Agent”).
WITNESSETH:
WHEREAS, the Borrower, certain of its Subsidiaries, the lenders party thereto, PNC Bank, National Association, in its capacity as administrative agent, are party to that certain Credit Agreement, dated as of March 8, 2018 (as amended prior to the date hereof, the “Existing Credit Agreement”);
WHEREAS, the Borrower has requested that the Lenders amend and restate the Existing Credit Agreement as set forth herein;
WHEREAS, the Lenders agree to amend and restate the Existing Credit Agreement subject to the terms and conditions in this Agreement; and
WHEREAS, the liens, security interests and guaranties securing and supporting the Existing Credit Agreement shall continue to secure and support the Obligations as amended and restated pursuant to this Agreement; and
WHEREAS, as of the Amendment No. 1 Effective Date, immediately prior to the effectiveness of Amendment No. 1, (x) Revolving Credit Loans in an aggregate principal amount of $113,000,000 were outstanding (the “Amendment No. 1 Existing Revolving Credit A Loans”), which bear interest as of the Amendment No. 1 Effective Date at a rate per annum equal to 2.81% (which represents the LIBOR Rate plus the Applicable Margin for Loans to which the LIBOR Rate Option applies (each such term as defined in this Agreement as of immediately prior to effectiveness of Amendment No. 1)) (the “Amendment No. 1 Existing Interest Rate A”) with a one-month Interest Period ending on June 1, 2022 (the “Amendment No. 1 Existing Interest Period Termination Date A” and such Interest Period, the “Amendment No. 1 Existing Interest Period A”) and (y) Revolving Credit Loans in an aggregate principal amount of $110,000,000 were outstanding (the “Amendment No. 1 Existing Revolving Credit B Loans” and together with the Amendment No. 1 Existing Revolving Credit A Loans, the “Amendment No. 1 Existing Revolving Credit Loans”), which bear interest as of the Amendment No. 1 Effective Date at a rate per annum equal to 2.56% (which represents the LIBOR Rate plus the Applicable Margin for Loans to which the LIBOR Rate Option applies (each such term as defined in this Agreement as of immediately prior to effectiveness of Amendment No. 1)) (the “Amendment No. 1 Existing Interest Rate B”) with a one-month Interest Period ending on May 16, 2022 (the “Amendment No. 1 Existing Interest Period Termination Date B” and such Interest Period, the “Amendment No. 1 Existing Interest Period B”). The Amendment No. 1 Existing Loans remained outstanding upon the effectiveness of the Amendment No. 1.
NOW, THEREFORE, the parties hereto, in consideration of their mutual covenants and agreements hereinafter set forth and intending to be legally bound hereby, covenant and agree as follows:
- CERTAIN DEFINITIONS
1.aCertain Definitions.
In addition to words and terms defined elsewhere in this Agreement, the following words and terms shall have the following meanings, respectively, unless the context hereof clearly requires otherwise:
“2026 Notes” means the Borrower’s 6.50% Senior Notes due 2026 outstanding on the Closing Date.
“Account” shall have the meaning set forth in the Security Agreement.
“Acquisition Period” shall mean any period commencing on the date that a Material Acquisition is consummated through and including the last day of the second full fiscal quarter following the date on which such acquisition is consummated; provided that there shall be at least one full fiscal quarter between any two Acquisition Periods.
“Adjusted Term SOFR” shall mean the Term SOFR Rate as determined as provided in the definition thereof plus the SOFR Adjustment. If the Adjusted Term SOFR would be less than the SOFR Floor, then Adjusted Term SOFR shall be deemed to be the SOFR Floor.
“Administrative Agent” shall have the meaning specified in the preamble hereto.
“Administrative Agent’s Fee” shall have the meaning specified in Section 10.9 [Administrative Agent’s Fee].
“Administrative Agent’s Letter” shall have the meaning specified in Section 10.9 [Administrative Agent’s Fee].
“Affected Financial Institution” shall mean (a) any EEA Financial Institution or (b) any UK Financial Institution.
“Affiliate” of any specified Person shall mean any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. 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 Stock, by agreement or otherwise. For purposes of this definition, the terms “controlling,” “controlled by” and “under common control with” have correlative meanings.
“Affiliate Transaction” shall have the meaning assigned to such term in Section 8.2.8 [Affiliate Transactions].
“Agents” shall mean, collectively, the Administrative Agent and the Collateral Agent. The term “Agent” shall mean any of the Agents.
“Agreement” shall have the meaning specified in the preamble hereto.
“Amendment No. 1” shall mean Amendment No. 1, dated as of May 5, 2022, to this Agreement.
“Amendment No. 1 Effective Date” shall have the meaning specified in Amendment No. 1.
“Amendment No. 1 Existing Interest Period” shall mean (i) with respect to the Amendment No. 1 Existing Revolving Credit A Loans, the Amendment No. 1 Existing Interest Period A and (ii) with respect to the Amendment No. 1 Existing Revolving Credit B Loans, the Amendment No. 1 Existing Interest Period B.
“Amendment No. 1 Existing Interest Period A” shall have the meaning set forth in the Recitals hereof.
“Amendment No. 1 Existing Interest Period B” shall have the meaning set forth in the Recitals hereof.
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“Amendment No. 1 Existing Interest Period Termination Date” shall mean (i) with respect to the Amendment No. 1 Existing Revolving Credit A Loans, the Amendment No. 1 Existing Interest Period Termination Date A and (ii) with respect to the Amendment No. 1 Existing Revolving Credit B Loans, the Amendment No. 1 Existing Interest Period Termination Date B.
“Amendment No. 1 Existing Interest Period Termination Date A” shall have the meaning set forth in the Recitals hereof.
“Amendment No. 1 Existing Interest Period Termination Date B” shall have the meaning set forth in the Recitals hereof.
“Amendment No. 1 Existing Interest Rate” shall mean (i) with respect to the Amendment No. 1 Existing Revolving Credit A Loans, the Amendment No. 1 Existing Interest Rate A and (ii) with respect to the Amendment No. 1 Existing Revolving Credit B Loans, the Amendment No. 1 Existing Interest Rate B.
“Amendment No. 1 Existing Interest Rate A” shall have the meaning set forth in the Recitals hereof.
“Amendment No. 1 Existing Interest Rate B” shall have the meaning set forth in the Recitals hereof.
“Amendment No. 1 Existing Loan Interest Payment Date” shall have the meaning set forth in Section 4.1.2 [Amendment No. 1 Existing Loans].
“Amendment No. 1 Existing Revolving Credit A Loans” shall have the meaning set forth in the Recitals hereof.
“Amendment No. 1 Existing Revolving Credit B Loans” shall have the meaning set forth in the Recitals hereof.
“Amendment No. 1 Existing Revolving Credit Loans” shall have the meaning set forth in the Recitals hereof.
“Anti-Corruption Laws” shall mean (a) the U.S. Foreign Corrupt Practices Act and rules and regulations thereunder, (b) the UK Bribery Act and (c) other anti-corruption and anti-bribery laws and regulations of any applicable jurisdiction.
“Anti-Terrorism Laws” shall mean any Laws relating to terrorism, trade sanctions programs and embargoes, import/export licensing, money laundering or bribery, and any regulation, order, or directive promulgated, issued or enforced pursuant to such Laws, including the USA PATRIOT Act and regulations of OFAC.
“Applicable Account” shall mean a Deposit Account (other than an Excluded Account), a Securities Account or a Commodity Account.
“Applicable Commitment Fee Rate” shall mean the percentage rate per annum based on the Total Leverage Ratio according to the applicable table on Schedule 1.1(A) below the heading “Commitment Fee.”
“Applicable Letter of Credit Fee Rate” shall mean the percentage rate per annum based on the Total Leverage Ratio according to the applicable table on Schedule 1.1(A) below the heading “Letter of Credit Fee.”
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“Applicable Margin” shall mean, as applicable:
(1) the percentage spread to be added to the Base Rate applicable to Revolving Credit Loans under the Base Rate Option based on the Total Leverage Ratio according to the applicable table on Schedule 1.1(A) below the heading “Base Rate Margin,” or
(2) the percentage spread to be added to the Term SOFR Rate applicable to Revolving Credit Loans under the Term SOFR Rate Option based on the Total Leverage Ratio according to the applicable table on Schedule 1.1(A) below the heading “Term SOFR Rate Margin.”
“Applicable Notes Indenture Cap” shall mean the maximum amount of secured Indebtedness (and, notwithstanding the definition of “Indebtedness,” with letters of credit (including Letters of Credit) being deemed to have an outstanding principal amount of Indebtedness equal to the maximum potential liability of the Borrower and its Restricted Subsidiaries thereunder) that is permitted under any Permitted Unsecured Notes Indenture; provided that if different Permitted Unsecured Notes Indentures permit different amounts of Indebtedness, the most restrictive Permitted Unsecured Notes Indenture shall govern for purposes of this definition.
“Approved Fund” shall mean any fund that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of business and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
“Assignment and Assumption Agreement” shall mean an assignment and assumption agreement entered into by a Lender and an assignee permitted under Section 11.8 [Successors and Assigns], in substantially the form of Exhibit 1.1(A).
“Authorized Financial Officer” of any Person shall mean the chief financial officer, treasurer or vice-president finance of such Person or, if there is no chief financial officer, treasurer or vice-president finance of such Person, a vice president of such Person, designated by such Person as being a financial officer authorized to deliver and certify financial information on behalf of the Loan Parties required hereunder.
“Authorized Officer” shall mean, with respect to any Loan Party, the chief executive officer, president, chief financial officer, treasurer or assistant treasurer of such Loan Party or such other individuals, designated by written notice to the Administrative Agent from CNX Midstream GP, on behalf of the Borrower, authorized to execute notices, reports and other documents on behalf of the Loan Parties required hereunder. Any document delivered hereunder that is signed by an Authorized Officer of CNX Midstream GP, on behalf of the Borrower, shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of the Borrower and such Authorized Officer shall be conclusively presumed to have acted on behalf of the Borrower. CNX Midstream GP, on behalf of the Borrower, may amend such list of individuals from time to time by giving written notice of such amendment to the Administrative Agent.
“Auto-Extension Letter of Credit” shall have the meaning assigned to such term in Section 2.10.1(c) [Issuance of Letters of Credit].
“Availability” shall mean, as of any time, the difference between (a) the Commitments at such time, minus (b) the total Revolving Exposures of all Lenders at such time.
“Average Life” shall mean, as of the date of determination, with respect to any Indebtedness or Preferred Stock, the quotient obtained by dividing
(1) the sum of the products of the numbers of years from the date of determination to the dates of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to such Preferred Stock multiplied by the amount of such payment by
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(2) the sum of all such payments.
“Bail-In Action” shall mean the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.
“Bail-In Legislation” shall mean, (a) 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 and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).
“Base Rate” shall mean, for any day, a fluctuating per annum rate of interest equal to the highest of (a) the Federal Funds Open Rate, plus 0.5%, (b) the Prime Rate, and (c) the Daily Simple SOFR, so long as Daily Simple SOFR is offered, ascertainable and not unlawful, plus 100 basis points (1.0%); provided, however, if the Base Rate as determined above would be less than zero, then such rate shall be deemed to be zero. Any change in the Base Rate (or any component thereof) shall take effect at the opening of business on the day such change occurs.
“Base Rate Option” shall mean the option of the Borrower to have Loans bear interest at the rate and under the terms set forth in Section 4.1.1(a)(i) [Revolving Credit Base Rate Option].
“Benchmark Replacement” shall have the meaning specified in Section 4.6(g) [Benchmark Replacement Setting].
“Beneficial Owner” shall have 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 “Beneficially Owns” and “Beneficially Owned” have corresponding meanings. For purposes of this definition, a Person shall be deemed not to Beneficially Own securities that are the subject of a stock purchase agreement, merger agreement, amalgamation agreement, arrangement agreement or similar agreement until consummation of the transactions or, as applicable, series of related transactions contemplated thereby.
“Beneficial Ownership Certification” shall mean a certification regarding beneficial ownership as required by the Beneficial Ownership Regulation.
“Beneficial Ownership Regulation” shall mean 31 C.F.R. § 1010.230.
“Benefit Plan” shall mean any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” (as defined in Section 4975 of the Code) or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan.”
“Board of Directors” shall mean, with respect to any Person, (a) if the Person is a corporation, the board of directors of the corporation or any committee thereof duly authorized to act on behalf of such board or a similar governing body, (b) if the Person is a partnership, the board of directors of the general partner of the partnership or any committee thereof duly authorized to act on behalf of such board or a similar governing body and (c) with respect to any other Person, the functional equivalent of the foregoing.
“Board Resolution” shall mean a copy of a resolution certified by the Secretary or an Assistant Secretary of the Borrower to have been duly adopted by the Board of Directors of the Borrower and to be in full force and effect on the date of such certification.
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“Borrower” shall have the meaning specified in the preamble hereto.
“Borrowing Date” shall mean, with respect to any Loan, the date for the making thereof or the renewal or conversion thereof at or to the same or a different Interest Rate Option, which shall be a Business Day.
“Borrowing Tranche” shall mean specified portions of Loans outstanding as follows: (i) any Loans to which a Term SOFR Rate Option applies which become subject to the same Interest Rate Option under the same Loan Request by the Borrower and which have the same Interest Period shall constitute one Borrowing Tranche, and (ii) all Loans to which a Base Rate Option applies shall constitute one Borrowing Tranche.
“Building” shall mean a walled and roofed structure, other than a gas or liquid storage tank, that is principally above ground and affixed to a permanent site, and a walled and roofed structure while in the course of construction, alteration or repair or shall have such other meaning ascribed to such term in the Flood Laws.
“Business Day” shall mean any day other than a Saturday or Sunday or a legal holiday on which commercial banks are authorized or required to be closed for business in Pittsburgh, Pennsylvania (or, if otherwise, the Lending Office of the Administrative Agent); provided that, when used in connection with an amount that bears interest at a rate based on SOFR or any direct or indirect calculation or determination of SOFR, the term “Business Day” shall mean any such day that is also a U.S. Government Securities Business Day.
“Capital Expansion Project” shall mean any project of one or more Loan Parties (a) with respect to which such Loan Parties will have Expansion Capital Expenditures attributable thereto in excess of $20,000,000, (b) for which construction or expansion of such project has commenced, (c) that is identified in a certificate delivered by the Borrower to the Administrative Agent not less than 30 days prior to the last day of the first fiscal quarter (or such lesser period as may be reasonably acceptable to the Administrative Agent) for which the Borrower desires to commence inclusion of a Capital Expansion Project Adjustment related to such project in Consolidated EBITDA, which certificate includes the Borrower’s projected Consolidated EBITDA for such project and the Borrower’s good faith anticipated commercial operation date for such project and (d) for which the Borrower has provided to the Administrative Agent, at such times as the Administrative Agent may from time to time request, in each case in form and substance satisfactory to the Administrative Agent in its reasonable discretion, information regarding such project including, to the extent such information is applicable, updated status reports summarizing each Capital Expansion Project currently under construction and covering original anticipated and current projected costs and capital expenditures (including information on actual costs to date) for such Capital Expansion Project, the originally identified and current projected commercial operation date, volume commitments to such project, pricing arrangements, hedging agreements relating to such project, the Borrower’s expectations as to the ability of third parties to perform under any contracts relating to utilization of such project, and any other aspect of such project as the Administrative Agent may reasonably request from time to time.
“Capital Expansion Project Adjustment” shall mean any adjustment for any Capital Expansion Project (i) during any fiscal quarter during which construction has commenced and commercial operations have not yet commenced, (ii) for the fiscal quarter during which commercial operations commence and (iii) for the first three full fiscal quarters following the completion of such project; provided that (A) all Capital Expansion Project Adjustments shall be based on projected Consolidated EBITDA attributable to such Capital Expansion Project during the first 12-month period following commencement of commercial operations of such Capital Expansion Project (which shall be determined by the Borrower based on customer contracts relating to such Capital Expansion Project, the creditworthiness of the other parties to such contracts, and projected revenues from such contracts, capital costs and expenses, and other factors reasonably deemed appropriate by the Administrative Agent) and shall be acceptable to the Administrative Agent in its reasonable discretion; provided that after first providing such projection for any Capital Expansion Project, the Borrower shall thereafter, until the end of the first 12-month period following commencement of commercial operations of such Capital Expansion Project, re-evaluate such anticipated Consolidated EBITDA quarterly and, if there is a material
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decrease or increase in such amount (as reasonably determined by the Borrower), the Borrower shall deliver an updated projection and calculation thereof, which, if reasonably acceptable to the Administrative Agent, shall become and be deemed to be the Capital Expansion Project Adjustment for such Capital Expansion Project for each calculation of Consolidated EBITDA following the date on which such updated projection is delivered to the Administrative Agent until the next such re-evaluation, (B) for in-process Capital Expansion Projects, Consolidated EBITDA credit shall be given on a percentage of completion basis, (C) in no event shall the aggregate amount of all Capital Expansion Project Adjustments during any consecutive four fiscal quarter period exceed 20% of actual Consolidated EBITDA for such period prior to giving effect to any such adjustments, (D) for in-process projects, if the actual commercial operation date for any Capital Expansion Project does not occur by the scheduled commercial operation date for such project originally identified to the Administrative Agent by the Borrower, then the amount of such Consolidated EBITDA adjustment with respect to such project shall be reduced, for quarters ending after such scheduled commercial operation date to (but excluding) the first full fiscal quarter after the actual commercial operation date, by the following percentages depending on the period of delay (based on the period of actual delay or then-estimated delay, whichever is longer): (1) 90 days or less, 0%, (2) longer than 90 days but not more than 180 days, 25%, (3) longer than 180 days but not more than 270 days, 50%, (4) longer than 270 days but not more than 365 days, 75%, and (5) longer than 365 days, 100%. No Capital Expansion Project Adjustment may be made unless the Borrower delivers pro forma projections of Consolidated EBITDA attributable to such Capital Expansion Project to the Administrative Agent and receives its approval as described above.
“Capital Expenditures” shall mean for any period, with respect to any Person, the aggregate of all expenditures by such Person during such period for the acquisition or leasing (in the case of leasing, pursuant to a Capital Lease Obligation) of fixed or capital assets or additions to equipment (including replacements, capitalized repairs and improvements during such period) which are required to be capitalized under GAAP on a consolidated balance sheet of such Person.
“Capital Lease Obligation” shall mean an obligation that is required to be classified and accounted for as a capital lease or financing lease for financial reporting purposes in accordance with GAAP, and the amount of Indebtedness represented by such obligation shall be the capitalized amount of such obligation determined 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 terminated by the lessee without payment of a penalty.
“Capital Stock” of any Person shall mean (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 exercisable for, exchangeable for or convertible into Capital Stock, whether or not such debt securities include any right of participation with Capital Stock.
“Cash Collateralize” shall mean to pledge and deposit with or deliver to Administrative Agent, for the benefit of each applicable Issuing Lender, as collateral for the Letter of Credit Obligations, cash or deposit account balances pursuant to documentation reasonably satisfactory to Administrative Agent and each applicable Issuing Lender (which documents are hereby consented to by the Lenders). Such cash collateral shall be maintained in blocked deposit accounts at the Administrative Agent. At the option of the applicable Issuing Lender, in lieu of cash collateral, the applicable Letter of Credit Obligations may be supported by one or more back-to-back letters of credit in form and from institutions reasonably satisfactory to such Issuing Lender, and such arrangement shall also be within the meaning of Cash Collateralize. The terms “Cash Collateral” and “Cash Collateralization” shall have correlative meanings.
“Cash on Hand” shall mean, as of any date of determination, an amount equal to (i) the aggregate amount of unrestricted cash and Temporary Cash Investments of the Loan Parties as of such date plus (ii) the aggregate amount of cash and Temporary Cash Investments of the Loan Parties as of such date pledged solely to the Collateral Agent for the benefit of the Secured Parties to secure the
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Obligation, in each case, after giving effect to all incurrences and repayments of Indebtedness, issuances of Equity Interests, Investments and Restricted Payments to occur on such date; provided that Cash on Hand shall exclude any Cash Collateral or any other cash collateral pledged to secure obligations under any undrawn letters of credit.
“Casualty Event” shall mean, with respect to any assets of the Borrower or any Restricted Subsidiary, any damage to or destruction of, or any condemnation or other taking (including by any Official Body) of, any such assets that occurs after the Closing Date for which the Borrower or any Restricted Subsidiary receives insurance proceeds or proceeds of a condemnation award or any other compensation. Casualty Event shall include but not be limited to any taking of all or any part of any real property of the Borrower or any Restricted Subsidiary in or by condemnation or other eminent domain proceedings pursuant to any Law, or by reason of the temporary requisition or the use or occupancy of all or any part of any real property by any Official Body, civil or military.
“CFC” shall mean a Subsidiary of the Borrower that is a “controlled foreign corporation” as defined in Section 957 of the Code.
“CFC Holdco” shall mean a Subsidiary of the Borrower that owns no material assets other than Equity Interests in one or more Foreign Subsidiaries that are CFCs.
“Change in Law” shall mean the occurrence, after the Existing Credit Agreement Closing Date, of any of the following: (a) the adoption or taking effect of any Law, (b) any change in any Law or in the administration, interpretation, implementation or application thereof by any Official Body or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of Law) by any Official Body; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, regulations, guidelines, interpretations or directives thereunder or issued in connection therewith (whether or not having the force of Law) and (y) all requests, rules, regulations, guidelines, interpretations or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities (whether or not having the force of Law), 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, issued, promulgated or implemented.
“Change of Control” shall mean:
(1) the consummation of any transaction (including any merger or consolidation or the acquisition of any Capital Stock) the result of which is that any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the Beneficial Owner, directly or indirectly, of more than 35% of the total voting power of the Voting Stock of CNX;
(2) the holders of Capital Stock of the Borrower shall have approved any plan of liquidation or dissolution of the Borrower;
(3) 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 assets of the Borrower (including Equity Interests of Restricted Subsidiaries) and its Subsidiaries, taken as a whole, to any Person other than a Loan Party;
(4) a “change of control” or similar event shall have occurred under any Permitted Unsecured Notes Indenture; or
(5) the failure of CNX (or a wholly owned Subsidiary of CNX (other than the Borrower or a Subsidiary of the Borrower)) to own a majority of the outstanding Voting Stock of Borrower (or so long as the Borrower is a limited partnership, (x) the failure of CNX Midstream GP to be the sole general partner of the Borrower pursuant to the terms of the Partnership Agreement or (y) CNX (or a wholly owned Subsidiary of CNX (other than
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the Borrower or a Subsidiary of the Borrower)) failing to own (A) a majority of the outstanding limited partnership units of Borrower or (B) a majority of the outstanding Equity Interests of CNX Midstream GP).
“CIP Regulations” shall have the meaning assigned to such term in Section 10.11 [No Reliance on Administrative Agent’s Customer Identification Program].
“Closing Date” shall mean October 6, 2021, the date of this Agreement.
“CNX” shall mean CNX Resources Corporation, a Delaware corporation.
“CNX Midstream GP” shall mean CNX Midstream GP LLC, a Delaware limited liability company.
“Code” shall mean the Internal Revenue Code of 1986.
“Collateral” shall mean the property of whatever kind and nature subject or purported to be subject from time to time to a Lien under any Security Document, but shall not include (i) any asset that shall have been released, pursuant to Section 10.10 [Authorization to Release Collateral and Guarantors] or Section 11.1.1(d) [Required Consents], from the Liens created under such Security Document or (ii) any Excluded Assets.
“Collateral Agent” shall mean PNC Bank, National Association, in its capacity as collateral agent under any of the Loan Documents, or any successor collateral agent.
“Commercial Letter of Credit” shall mean any letter of credit which is a commercial letter of credit issued in respect of the purchase of goods or services by the Borrower or any of its Subsidiaries.
“Commitment” shall mean as to any Lender its Revolving Credit Commitment, and “Commitments” shall mean the aggregate of the Revolving Credit Commitments of all of the Lenders.
“Commitment Fee” shall have the meaning specified in Section 2.3 [Commitment Fees].
“Commodity Account” shall mean any “commodity account” as defined in the UCC in effect in the State of New York from time to time.
“Commodity Exchange Act” shall mean the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.
“Compliance Certificate” shall have the meaning specified in Section 8.3.4 [Certificate of the Borrower].
“Conforming Changes” shall mean, with respect to the Term SOFR Rate or any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Base Rate,” the definition of “Business Day,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, the applicability and length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Administrative Agent decides may be appropriate to reflect the adoption and implementation of the Term SOFR Rate or such Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of the Term SOFR Rate or the Benchmark Replacement exists, in such other manner of administration as the Administrative Agent decides is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents).
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“Consideration” shall mean, with respect to any acquisition, without duplication, the aggregate of (i) the cash paid by the Borrower or any Restricted Subsidiary, directly or indirectly, to the seller in connection therewith, (ii) the Indebtedness assumed by the Borrower or any Restricted Subsidiary in connection therewith and (iii) any other consideration given by the Borrower or any Restricted Subsidiary in connection therewith.
“Consolidated Cash Interest Expense” shall mean, for any period, Consolidated Interest Expense for such period, excluding the portion thereof not paid or payable in cash.
“Consolidated EBITDA” shall mean, for any period, the sum of Consolidated Net Income, plus (a) other than in the case of clauses (8), (9) and (10) below, to the extent deducted in calculating such Consolidated Net Income (without duplication):
(1) Consolidated Interest Expense, net of interest income;
(2) provision for taxes based on income or profits (including state franchise taxes accounted for as income taxes in accordance with GAAP) of the Borrower and the Restricted Subsidiaries for such period;
(3) depletion, depreciation and impairment charges and expenses of the Borrower and the Restricted Subsidiaries for such period;
(4) amortization expense (including amortization of goodwill and other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) of the Borrower and the Restricted Subsidiaries for such period;
(5) losses for such period from the early extinguishment of Indebtedness;
(6) non-recurring transaction costs expensed (in accordance with GAAP) by the Borrower and the Restricted Subsidiaries in connection with (i) the Transactions, (ii) any issuance of Permitted Unsecured Notes (and the use of proceeds thereof to redeem any or all Permitted Unsecured Notes of the Borrower, including the payment of premium, fees and expenses in connection therewith) and (iii) to the extent permitted hereunder, any (A) amendments, restatements and other modifications of the Loan Documents and (B) acquisition, investment, disposition, issuance or repayment of debt, issuance of equity securities, refinancing transaction or amendment or other modification of any debt instrument (in each case, including any such transaction undertaken but not completed), in each, case whether or not successful, in an aggregate amount under this subclause (iii) not to exceed, in any four-quarter period, $15,000,000;
(7) non-cash charges related to legacy employee liabilities;
(8) net cash proceeds of insurance received, or recognized as a receivable in accordance with GAAP, for such period in respect of a casualty event (to the extent such amount is reducing an expense on the statement of operations of the Borrower for such period relating to such casualty event) or business interruption; provided that to the extent such amount is actually not received in cash, the amount not received that increased Consolidated EBITDA shall be deducted from Consolidated EBITDA in the period in which it is determined that such amount has not been or is not likely to be received;
(9) any cash payments received by the Borrower or any of its Restricted Subsidiaries in such period representing any deficiency payment pursuant to minimum volume commitments, minimum well commitments or similar arrangements (in each case, solely to the extent (x) not otherwise included in the calculation of Consolidated Net Income for such or any prior period and (y) increasing deferred revenue of Borrower and its Restricted Subsidiaries), after deducting the amount of any cash payment previously collected and required to be credited to the applicable customers under such minimum volume commitments, minimum well commitments or similar arrangements as a result of
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previous deficiency payments made under such minimum volume commitments, minimum well commitments or similar arrangements (it being understood that this clause (9) may be a negative number); and
(10) Capital Expansion Project Adjustments;
minus (b) (1) to the extent increasing Consolidated Net Income for such period, gains for such period from the early extinguishment of Indebtedness, (2) except to the extent already reducing Consolidated Net Income for such period, cash payments made in such period by the Borrower and the Restricted Subsidiaries related to legacy employee liabilities and (3) deficiency payments pursuant to minimum volume commitments, minimum well commitments or similar arrangement included in the calculation of Consolidated Net Income for such period, which payments were included in the Consolidated Net Income for a prior period pursuant to clause (a)(9) above. Consolidated EBITDA shall be calculated on a Pro Forma Basis. For the purposes of calculating Consolidated EBITDA, Consolidated Net Income and the expenses and other items described above shall be adjusted with respect to the portion of Consolidated Net Income and the portion of such expenses and other items which are attributable to any non-wholly owned Subsidiaries of the Borrower to reflect only the Borrower’s pro rata ownership interest in such Subsidiaries.
“Consolidated Indebtedness” shall mean, as of any date, the sum (without duplication) of (a) the aggregate principal amount of Indebtedness of the Borrower and the Restricted Subsidiaries of the type referenced under the first instances of clause (1), (2) or (3) of the definition of “Indebtedness” outstanding on such date and (b) all obligations of the Borrower and the Restricted Subsidiaries under any drawn letters of credit, bankers’ acceptances or similar credit transactions that are not reimbursed within one Business Day following receipt by the Borrower or the relevant Restricted Subsidiary of a demand for reimbursement following payment on such letter of credit, bankers’ acceptance or similar credit transaction, in each case under clause (a) or (b), after giving effect to all incurrences and repayments of Indebtedness occurring on such date.
“Consolidated Interest Expense” shall mean, for any period, the total interest expense of the Borrower and the Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP (excluding (i) write-off of deferred financing costs and (ii) accretion of interest charges on future retirement benefits and other obligations that do not constitute Indebtedness), plus, to the extent not included in such total interest expense, and to the extent incurred by the Borrower or any Restricted Subsidiary, without duplication:
(1) interest expense attributable to Capital Lease Obligations;
(2) capitalized interest;
(3) non-cash interest expense; and
(4) net costs (including amortization of fees and up-front payments) associated with Interest Rate Agreements and Currency Agreements that, at the time entered into, resulted in the Borrower and the Restricted Subsidiaries being net payees as to future payouts under such Interest Rate Agreements or Currency Agreements, and Interest Rate Agreements and Currency Agreements for which the Borrower or any Restricted Subsidiary has paid a premium.
“Consolidated Net Income” shall mean the aggregate net income (loss) attributable to the Borrower and its Subsidiaries determined on a consolidated basis in accordance with GAAP; provided that there shall not be included in such Consolidated Net Income:
(1) any net income of any other Person if such other Person is not a Restricted Subsidiary, provided that:
(a) subject to the exclusion contained in clause (5) of this definition, the Borrower’s equity in the net income of such other Person for such period shall be included in
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such Consolidated Net Income up to the aggregate amount of cash actually distributed by such other Person during such period to the Borrower or any Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution paid to a Restricted Subsidiary, to the limitations contained in clause (2) of this definition); and
(b) the Borrower’s equity in a net loss of any such other Person for such period shall be included in determining such Consolidated Net Income;
(2) any net income of any Restricted Subsidiary (other than a Guarantor) if such Restricted Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions by such Restricted Subsidiary, directly or indirectly, to the Borrower, except that:
(a) subject to the exclusion contained in clause (5) below, the Borrower’s equity in the net income of any such Restricted Subsidiary for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash actually distributed by such Restricted Subsidiary during such period to the Borrower or another Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution paid to another Restricted Subsidiary, to the limitation contained in this clause); and
(b) the Borrower’s equity in a net loss of any such Restricted Subsidiary for such period shall be included in determining such Consolidated Net Income;
(3) any income or loss attributable to discontinued operations;
(4) any extraordinary gains or losses, together with any related provision for taxes on such gains or losses;
(5) any gain or loss, together with any related provision for taxes on such gains or losses, on Dispositions outside the ordinary course of business; provided that for purposes of this clause (5), (i) any Disposition of Equity Interests of any Subsidiary and (ii) any Material Acquisition/Disposition shall, in each case, be deemed to be outside the ordinary course of business;
(6) any non-cash compensation expense realized for grants of performance shares, stock, stock options or other equity-based awards;
(7) unrealized losses and gains under derivative instruments included in the determination of Consolidated Net Income, including those resulting from the application of Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) 815;
(8) any non-cash impairment or write-down under GAAP or SEC guidelines of long-term assets; provided that any reversal or other benefit of any such impairment or write-down in any future period shall be excluded from Consolidated Net Income in such future period; and
(9) the cumulative effect of a change in accounting principles.
“Consolidated Net Tangible Assets” shall mean the aggregate amount of assets (less applicable reserves and other properly deductible items) after deducting therefrom all goodwill, trade names, trademarks, patents, unamortized debt discount and expense, and other like intangibles, of the Borrower and its Restricted Subsidiaries computed in accordance with GAAP, as reflected in the most recent financial statements delivered pursuant to Section 8.3.1 [Quarterly Financial Statements] or Section 8.3.2 [Annual Financial Statements].
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“Contractual Requirement” shall have the meaning assigned to that term in Section 6.6 [No Conflict; Borrower and Subsidiaries’ Status Under CNX Debt Documents].
“Control Agreement” shall mean a control agreement among the Collateral Agent, the depository bank, the securities intermediary or commodities counterparty, the other parties thereto and the applicable Loan Party, establishing the Collateral Agent’s control with respect to the applicable Deposit Account, Securities Account or Commodities Account, in each case, in form and substance reasonably satisfactory to the Administrative Agent and Collateral Agent.
“Covered Entity” shall mean (a) the Borrower, each of the Borrower’s Subsidiaries, all Guarantors and all pledgors of Collateral and (b) each Person that, directly or indirectly, is an Affiliate of a Person described in clause (a) above (excluding, in the case of this clause (b), CNX and its Subsidiaries (other than the Borrower and its Subsidiaries)).
“Currency Agreement” shall mean in respect of a Person any foreign exchange contract, currency swap agreement or other similar agreement to which such Person is a party or a beneficiary.
“Current Lender” shall have the meaning assigned to such term in Section 2.12(a) [Increasing Lenders and New Lenders].
“Customary Recourse Exceptions” shall mean, with respect to any Non-Recourse Debt of any Person, exclusions from the exculpation provisions with respect to such Non-Recourse Debt for the voluntary bankruptcy of such Person, fraud, misapplication of cash, environmental claims, waste, willful destruction and other circumstances customarily excluded by lenders from exculpation provisions or included in separate indemnification agreements in non-recourse financings.
“Daily Simple SOFR” shall mean, for any day (a “SOFR Rate Day”), the interest rate per annum determined by the Administrative Agent by dividing (the resulting quotient rounded upwards, at the Administrative Agent’s discretion, to the nearest 1/100th of 1%) (A) SOFR for the day (the “SOFR Determination Date”) that is 2 Business Days prior to (i) such SOFR Rate Day if such SOFR Rate Day is a Business Day or (ii) the Business Day immediately preceding such SOFR Rate Day if such SOFR Rate Day is not a Business Day, by (B) a number equal to 1.00 minus the SOFR Reserve Percentage, in each case, as such SOFR is published by the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate) on the website of the Federal Reserve Bank of New York, currently at http://www.newyorkfed.org, or any successor source identified by the Federal Reserve Bank of New York or its successor administrator for the secured overnight financing rate from time to time. If Daily Simple SOFR as determined above would be less than the SOFR Floor, then Daily Simple SOFR shall be deemed to be the SOFR Floor. If SOFR for any SOFR Determination Date has not been published or replaced with a Benchmark Replacement by 5:00 p.m. (Pittsburgh, Pennsylvania time) on the second Business Day immediately following such SOFR Determination Date, then SOFR for such SOFR Determination Date will be SOFR for the first Business Day preceding such SOFR Determination Date for which SOFR was published in accordance with the definition of “SOFR”; provided that SOFR determined pursuant to this sentence shall be used for purposes of calculating Daily Simple SOFR for no more than 3 consecutive SOFR Rate Days. If and when Daily Simple SOFR as determined above changes, any applicable rate of interest based on Daily Simple SOFR will change automatically without notice to the Borrower, effective on the date of any such change.
“Deeds” shall have the meaning assigned to such term in Section 6.8(d) [Properties].
“Defaulting Lender” shall mean any Lender that (a) has failed, within two Business Days of the date required to be funded or paid, to (i) fund any portion of its Loans, (ii) fund any portion of its participations in Letters of Credit or Swing Loans or (iii) pay over to the Administrative Agent, any Issuing Lender, the Swingline Lender or any Lender any other amount required to be paid by it hereunder, unless, in the case of clause (i) above, such Lender notifies the Administrative Agent in writing that such failure is the result of such Lender’s good faith determination that a condition precedent to funding (specifically identified and including the particular default, if any) has not been satisfied, (b) has notified the Borrower or the Administrative Agent in writing, or has made a public statement to the effect, that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such
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writing or public statement indicates that such position is based on such Lender’s good faith determination that a condition precedent (specifically identified and including the particular default, if any) to funding a Loan under this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit, (c) has failed, within two Business Days after request by the Administrative Agent or the Borrower, acting in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations) to fund prospective Loans and participations in then outstanding Letters of Credit and Swing Loans under this Agreement; provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon the Administrative Agent’s or the Borrower’s receipt of such certification in form and substance satisfactory to the Administrative Agent or the Borrower, as the case may be, (d) has become the subject of a Bankruptcy Event, (e) has failed at any time to comply with the provisions of Section 5.3 [Sharing of Payments by Lenders] with respect to purchasing participations from the other Lenders, whereby such Lender’s share of any payment received, whether by setoff or otherwise, is in excess of its Ratable Share of such payments due and payable to all of the Lenders or (f) has, or has a direct or indirect parent company that has, become the subject of a Bail-In Action.
As used in this definition, the term “Bankruptcy Event” shall mean, with respect to any Person, such Person or such Person’s direct or indirect parent company becoming the subject of a bankruptcy or insolvency proceeding, or having had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed for it, or, in the good faith determination of the Administrative Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment; provided that a Bankruptcy Event shall not result solely by virtue of (i) any ownership interest, or the acquisition of any ownership interest, in such Person or such Person’s direct or indirect parent company by an Official Body or instrumentality thereof if, and only if, such ownership interest does not result in or provide such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Person (or such Official Body or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person or (ii) the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official by a supervisory authority or regulator with respect to a Person or a Person’s direct or indirect parent company under the Dutch Financial Supervision Act 2007 (as amended from time to time and including any successor legislation) if applicable law prohibits the public disclosure of such appointment and so long as such appointment has in fact not been publicly disclosed.
“Deposit Account” shall mean any “deposit account” as defined in the UCC in effect in the State of New York from time to time and shall specifically include any account with a deposit function.
“Designated Non-Cash Consideration” shall mean the Fair Market Value of non-cash Consideration received by the Borrower or a Restricted Subsidiary of the Borrower in connection with a Disposition that is so designated as Designated Non-Cash Consideration pursuant to an Officer’s Certificate, setting forth the basis of such valuation, less the amount of cash or Temporary Cash Investments received in connection with a subsequent sale of or collection on such Designated Non-Cash Consideration.
“Disposition” or “Dispose” shall mean the sale, conveyance, assignment, lease, sale and leaseback, abandonment or other transfer or disposal of, voluntarily or involuntarily, of any property or assets, tangible or intangible, including the sale, assignment, discount or other disposition of Accounts, equipment or general intangibles with or without recourse, the issuance or sale of Capital Stock of a Subsidiary or granting of options or rights of first refusal in such assets, in each case, including any of the foregoing that are effected by Division. In the case of the grant of an option or right of first refusal with respect to any asset, the date of such grant shall be deemed to be the date of Disposition of such asset.
“Disqualified Stock” shall mean any Equity Interests of a Person or any Restricted Subsidiary that by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable, in either case at the option of the holder thereof) or otherwise (a) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise, (b) is or may become redeemable or
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repurchaseable at the option of the holder thereof, in whole or in part or (c) is convertible or exchangeable at the option of the holder thereof for Indebtedness or Disqualified Stock, on or prior to the earlier of, in the case of clause (a), (b) or (c) above, (i) 91 days after the Expiration Date and (ii) upon Payment In Full (provided that only the portion of Equity Interests which is mandatorily redeemable or matures or is redeemable at the option of the holder thereof prior to such date will be deemed to be Disqualified Stock), in each case other than in exchange for Equity Interests of the Borrower (other than Disqualified Stock).
Notwithstanding the preceding sentence:
(1) any Equity Interests that would constitute Disqualified Stock solely because the holders thereof have the right to require the Borrower to repurchase such Equity Interests upon the occurrence of a change of control or an asset disposition will not constitute Disqualified Stock if such Equity Interests provide that the issuer thereof will not redeem any such Equity Interests pursuant to such provisions prior to the repayment in full of the Obligations (other than unasserted contingent obligations);
(2) any Equity Interests issued to any plan for the benefit of employees of the Borrower or its Subsidiaries or by any such plan to such employees, such Equity Interests shall not constitute Disqualified Stock solely because they may be required to be repurchased by the Borrower or its Subsidiaries in order to satisfy applicable statutory or regulatory obligations; and
(3) any Equity Interests held by any future, current or former employee, director, manager or consultant (or their respective trusts, estates, investment funds, investment vehicles or immediate family members) of the Borrower or any of its Subsidiaries, in each case upon the termination of employment or death of such person pursuant to any stock option plan or any other management or employee benefit plan or agreement shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Borrower or its Subsidiaries.
“Division” shall mean, with respect to any Person, a division of or by such person into two or more newly formed Persons pursuant to the laws of the jurisdiction of its organization.
“Dollar,” “Dollars,” “U.S. Dollars” and the symbol “$” shall each mean lawful money of the United States of America.
“Easement” shall mean any right of way agreement, easement, surface use agreement or other similar agreement relating to any Midstream Asset owned or held by any Loan Party at the time in question.
“EEA Financial Institution” shall mean (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 clause (a) or (b) of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country” shall mean any of the member states of the European Union, Iceland, Liechtenstein, and Norway, or any other country that is a member of the European Economic Area.
“EEA Resolution Authority” shall mean 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 Signature” shall have the meaning assigned to in Section 11.10 [Counterparts; Integration; Effectiveness].
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“Eligibility Date” shall mean, with respect to each Loan Party and each Swap, the date on which this Agreement or any other Loan Document becomes effective with respect to such Swap (for the avoidance of doubt, the Eligibility Date shall be the effective date of such Swap if this Agreement or any other Loan Document is then in effect with respect to such Loan Party, and otherwise it shall be the Existing Credit Agreement Closing Date).
“Eligible Contract Participant” shall mean an “eligible contract participant” as defined in the Commodity Exchange Act and regulations thereunder.
“Energy Policy Act” shall mean the Energy Policy Act of 1992, Pub.L. No. 102-486, 106 Stat. 2776 (codified as amended in scattered sections of 15, 16, 25, 20, 42 U.S.C.), and any successor thereto.
“Environment” shall mean ambient air, indoor air, surface water, groundwater, drinking water, land surface and sub-surface strata and natural resources such as wetlands, flora and fauna.
“Environmental Laws” shall mean any and all applicable current and future federal, state, local and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or other governmental restrictions or common law causes of action relating to (a) protection of the Environment or to emissions, discharges, Releases or threatened Releases of Hazardous Materials, (b) human health as affected by Hazardous Materials, or (c) mining operations and activities to the extent relating to protection of the Environment or reclamation, including the Surface Mining Control and Reclamation Act or to occupational or miner health and safety, provided that “Environmental Laws” do not include any laws relating to worker or retiree benefits, including benefits arising out of occupational diseases.
“Environmental Liability” shall mean any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), directly or indirectly resulting from or based upon (a) actual or alleged violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the Release or threatened Release of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
“Equity Interests” of any Person shall mean (1) any and all Capital Stock of such Person and (2) all rights to purchase, warrants or options (whether or not currently exercisable), participations or other equivalents of or interests in (however designated) such Capital Stock of such Person, but excluding from all of the foregoing any debt securities exercisable for, exchangeable for or convertible into Equity Interests, regardless of whether such debt securities include any right of participation with Equity Interests.
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as the same may be amended or supplemented from time to time, and any successor statute of similar import, and the rules and regulations thereunder, as from time to time in effect.
“ERISA Affiliate” shall mean, at any relevant time, any trade or business (whether or not incorporated) under common control with the Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).
“ERISA Event” shall mean (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan or notification to the Borrower or any ERISA Affiliate that a Multiemployer Plan is insolvent or in reorganization within the meaning of Title IV of ERISA or experienced a mass withdrawal within the meaning of Section 4219 of ERISA; (d) the filing of a notice of intent to terminate a Pension Plan, or the
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treatment of a plan amendment as a termination of a Pension Plan or a Multiemployer Plan under Sections 4041 or 4041A of ERISA, respectively; (e) the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (f) an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; (g) the determination that any Pension Plan is considered an at-risk plan within the meaning of Section 430 of the Code or Section 303 of ERISA; (h) the Borrower or an ERISA Affiliate is informed that any Multiemployer Plan to which the Borrower or the ERISA Affiliate contributes is in endangered or critical status within the meaning of Section 432 of the Code or Section 305 of ERISA; (i) the failure by the Borrower or any ERISA Affiliate to meet all applicable requirements under the Pension Funding Rules in respect of a Pension Plan, whether or not waived, or a failure by the Borrower or any ERISA Affiliate to make any required contribution to a Multiemployer Plan; or (j) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate.
“Erroneous Payment” has the meaning assigned to it in Section 10.14(a) [Erroneous Payments].
“Erroneous Payment Deficiency Assignment” has the meaning assigned to it in Section 10.14(d) [Erroneous Payments].
“Erroneous Payment Impacted Class” has the meaning assigned to it in Section 10.14(d) [Erroneous Payments].
“Erroneous Payment Return Deficiency” has the meaning assigned to it in 10.14(d) [Erroneous Payments].
“Erroneous Payment Subrogation Rights” has the meaning assigned to it in Section 10.14(d) [Erroneous Payments].
“EU Bail-In Legislation Schedule” shall mean 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” shall mean any of the events described in Section 9.1 [Events of Default] and referred to therein as an “Event of Default.”
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
“Excluded Account” shall mean a Deposit Account (i) which is used solely for making payroll and withholding tax payments related thereto and other employee wage and benefit payments and accrued and unpaid employee compensation (including salaries, wages, bonuses, benefits and expense reimbursements), (ii) which is used solely for paying or remitting taxes, including sales taxes, (iii) which is used solely as an escrow account or as a fiduciary or trust account, in each case, for the benefit of unaffiliated third parties or (iv) the aggregate average daily balance in which (in each case determined for the most recently completed calendar month) does not at any time exceed $500,000; provided that the aggregate average daily balance (determined for the most recently completed calendar month) of all Deposit Accounts referenced in this clause (iv) shall not exceed $1,500,000 or (v) that is a “zero balance account”; provided that the available balance of each such account is automatically swept on each Business Day into another Deposit Account that is subject to a Control Agreement or is an Excluded Account referenced in one of the other clauses of this definition.
“Excluded Assets” shall have the meaning specified in Section 8.1.17(b) [Collateral].
“Excluded Subsidiaries” shall mean (a) each Unrestricted Subsidiary, (b) each Foreign Subsidiary and each CFC Holdco, (c) each Immaterial Subsidiary and (d) each Restricted Subsidiary of the Borrower that is not directly or indirectly wholly-owned by the Borrower; provided that a Restricted Subsidiary that is a Loan Party shall not become an Excluded Subsidiary by virtue of a transfer of a portion of the Equity Interests in such Restricted Subsidiary (except pursuant to a bona fide joint venture transaction permitted hereunder) until a majority of the Equity Interests in such Restricted Subsidiary are
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Disposed of in accordance with the provisions of Section 8.2.4 [Loans and Investments] or Section 8.2.7 [Dispositions]. Notwithstanding the foregoing, any Person that is an obligor or guarantor under any Permitted Unsecured Notes Indenture shall not be an Excluded Subsidiary and, if not already a Guarantor, shall become a Guarantor pursuant to Section 8.1.9 [Additional Guarantors]; provided that CNX Midstream Finance Corp. shall not be required to be a Guarantor solely by reason of its being a co-issuer of the 2026 Notes.
“Excluded Swap Obligation” shall mean, with respect to any Guarantor, any Swap Obligation if, and to the extent that, all or a portion of the Guaranty of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap Obligation (or any Guaranty thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s failure for any reason to constitute an Eligible Contract Participant at the time the Guaranty of such Guarantor or the grant by such Guarantor of a security interest becomes effective with respect to such Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps of such Guarantor for which such Guaranty or security interest is or becomes illegal.
“Excluded Taxes” shall mean, with respect to the Administrative Agent, any Lender, any Issuing Lender or any other recipient of any payment to be made by or on account of any obligation of any Loan Party hereunder or under any other Loan Document, (a) Taxes imposed on or measured by such recipient’s net income or profits (however denominated), and franchise Taxes imposed on it (in lieu of net income Taxes), by a jurisdiction (or any political subdivision thereof) as a result of such recipient being organized or having its principal office located or, in the case of any Lender, applicable lending office in such jurisdiction or that are Other Connection Taxes, (b) any branch profits Taxes imposed under section 884(a) of the Code, or any similar Tax, imposed by any jurisdiction described in clause (a) above, (c) in the case of a Lender, any U.S. federal withholding Tax that is imposed on amounts payable to such Lender pursuant to a Law in effect at the time such Lender becomes a party hereto (or designates a new lending office), except to the extent that such Lender (or its assignor, if any) was entitled, immediately prior to the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrower with respect to such withholding Tax pursuant to Section 5.8.1 [Payments Free of Taxes], (d) any withholding Tax attributable to such Lender’s failure to comply with Section 5.8.5 [Status of Lenders] and (e) any Tax imposed pursuant to FATCA.
“Executive Order No. 13224” shall mean the Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.
“Existing Credit Agreement” shall have the meaning assigned to such term in the recitals hereto.
“Existing Credit Agreement Closing Date” shall mean March 8, 2018.
“Existing Letters of Credit” shall have the meaning set forth in Section 2.10.1(e) [Issuance of Letters of Credit].
“Expansion Capital Expenditures” shall mean, for any period for any Person, Capital Expenditures of such Person to the extent not made for the restoration, repair or maintenance of any fixed or capital asset.
“Expiration Date” shall mean the fifth anniversary of the Closing Date.
“Fair Market Value” shall mean 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 in the case of amounts of at least the Threshold Amount and otherwise by a Responsible Officer, any such determination being conclusive for all purposes under this Agreement.
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“FATCA” shall mean Sections 1471 through 1474 of the Code as of the date hereof (and any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to current Section 1471(b)(1) of the Code (and any amended or successor version described above), and any intergovernmental agreements (and any related laws or official administrative guidance) implementing the foregoing.
“Federal Funds Effective Rate” for any day shall mean the rate per annum (based on a year of 360 days and actual days elapsed and rounded upward to the nearest 1/100 of 1%) announced by the Federal Reserve Bank of New York (or any successor) on such day as being the weighted average of the rates on overnight federal funds transactions on the previous trading day, as computed and announced by such Federal Reserve Bank (or any successor) in substantially the same manner as such Federal Reserve Bank computes and announces the weighted average it refers to as the “Federal Funds Effective Rate” as of the date of this Agreement; provided, if such Federal Reserve Bank (or its successor) does not announce such rate on any day, the “Federal Funds Effective Rate” for such day shall be the Federal Funds Effective Rate for the last day on which such rate was announced. Notwithstanding anything to the contrary set forth above, in the event the rate determined pursuant to the preceding sentence shall be less than zero, then (for the avoidance of doubt) the Federal Funds Effective Rate shall be deemed to be zero for purposes of this Agreement.
“Federal Funds Open Rate” for any day shall mean the rate per annum (based on a year of 360 days and actual days elapsed) which is the daily federal funds open rate as quoted by ICAP North America, Inc. (or any successor) as set forth on the Bloomberg Screen BTMM for that day opposite the caption “OPEN” (or on such other substitute Bloomberg Screen that displays such rate), or if there shall at any time, for any reason, no longer exist a Bloomberg Screen BTMM (or any substitute screen), as set forth on such other recognized electronic source used for the purpose of displaying such rate as selected by the Administrative Agent (for the purposes of this definition only, an “Alternate Source”) or if such rate for such day does not appear on the Bloomberg Screen BTMM (or any substitute screen) or on any Alternate Source, or if there shall at any time, for any reason, no longer exist a Bloomberg Screen BTMM (or any substitute screen) or any Alternate Source, a comparable replacement rate determined by the Administrative Agent at such time (which determination shall be conclusive absent manifest error); provided, however, that if such day is not a Business Day, the Federal Funds Open Rate for such day shall be the “open” rate on the immediately preceding Business Day. Notwithstanding anything to the contrary set forth above, in the event the rate determined pursuant to the preceding sentence shall be less than zero, then (for the avoidance of doubt) the Federal Funds Open Rate shall be deemed to be zero for purposes of this Agreement. If and when the Federal Funds Open Rate changes, the rate of interest with respect to any advance to which the Federal Funds Open Rate applies will change automatically without notice to the Borrower, effective on the date of any such change.
“FERC” shall mean the Federal Energy Regulatory Commission or any of its successors.
“Financial Covenants” shall mean the covenants set forth in Section 8.2.14 [Financial Covenants].
“Financial Projections” shall have the meaning assigned to that term in Section 6.9(b) [Financial Projections].
“Flood Laws” shall mean (i) the National Flood Insurance Act of 1994 (which comprehensively revised the National Flood Insurance Act of 1968 and the Flood Disaster Protection Act of 1973) as now or hereafter in effect or any successor statute thereto, (ii) the Flood Insurance Reform Act of 2004 as now or hereafter in effect or any successor statute thereto, (iii) the Biggert-Waters Flood Insurance Reform Act of 2012 as now or hereafter in effect or any successor statute thereto, and (iv) all other applicable Laws relating to policies and procedures that address requirements placed on federally regulated lenders relating to flood matters, in each case, as now or hereafter in effect or any successor statute thereto.
“Foreign Lender” shall mean any Lender that is not a “United States person” as defined in section 7701 of the Code.
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“Foreign Subsidiaries” shall mean, for any Person, each Subsidiary of such Person that is incorporated or organized under the laws of any jurisdiction other than the United States of America, any state thereof or the District of Columbia.
“GAAP” shall mean generally accepted accounting principles in the United States as are in effect from time to time, subject to the provisions of Section 1.3 [Accounting Principles], and applied on a consistent basis both as to classification and amounts.
“Gathering System” shall mean Midstream Assets and Easements of the Borrower or any of its Restricted Subsidiaries comprised of any gathering system (including pipelines) owned, leased or otherwise held from time to time by the Borrower or any Restricted Subsidiary that is used in the business of the Borrower or any Restricted Subsidiary.
“Guarantor” shall mean each of the parties to this Agreement that is designated as a “Guarantor” on the signature page hereof and each other Person that joins this Agreement as a Guarantor after the date hereof, in each case, until such Person ceases to be a Guarantor in accordance with this Agreement.
“Guarantor Joinder” shall mean a joinder by a Person as a Guarantor under the Loan Documents in the form of Exhibit 1.1(G)(1).
“Guaranty” of any Person shall mean any obligation of such Person guaranteeing or in effect guaranteeing any liability or obligation of any other Person in any manner, whether directly or indirectly, including any agreement to indemnify or hold harmless any other Person, any performance bond or other suretyship arrangement and any other form of assurance against loss, including letters of credit issued for the account of Persons other than Loan Parties, except endorsement of negotiable or other instruments for deposit or collection in the ordinary course of business. “Guarantied” shall have a correlative meaning.
“Guaranty Agreement” shall mean the Continuing Agreement of Guaranty and Suretyship in substantially the form of Exhibit 1.1(G)(2) executed and delivered by the Borrower and each of the Guarantors.
“Hazardous Materials” shall mean (i) any explosive substances or wastes and (ii) any chemicals, pollutants or contaminants, substances, materials or wastes, in any form, regulated under, or that could reasonably be expected to give rise to liability under, any applicable Environmental Law, including asbestos and asbestos containing materials, polychlorinated biphenyls, urea-formaldehyde insulation, mining waste (including tailings), perfluoroalkyl and polyfluoroalkyl substances, gasoline or petroleum (including crude oil or any fraction thereof) or petroleum products.
“Hedging Obligations” of any Person shall mean the obligations of such Person pursuant to any Swap Agreement.
“Historical Statements” shall have the meaning specified in Section 6.9(a) [Historical Statements].
“Hydrocarbons” shall mean coal, oil, natural gas, casing head gas, drip gasoline, natural gasoline, diesel, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and all constituents, elements or compounds thereof and products refined or processed therefrom.
“Immaterial Subsidiary” shall mean as of any date, any Restricted Subsidiary that does not have assets having an aggregate book value, as of the end of the most recently ended fiscal year of the Borrower, exceeding $1,000,000 or Consolidated Net Income exceeding $1,000,000 for the most recently ended fiscal year of the Borrower, in each case, that is certified in the Perfection Certificate delivered as of the Closing Date or shown in the most recently delivered financial statements of the Borrower delivered pursuant to Section 8.3.1 [Quarterly Financial Statements] or Section 8.3.2 [Annual Financial Statements]; provided that (i) solely with respect to any Restricted Subsidiary that has been acquired or created by the Borrower or any of its Restricted Subsidiaries subsequent to the Closing Date or the most
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recently delivered financial statements of the Borrower delivered pursuant to Section 8.3.1 [Quarterly Financial Statements] or Section 8.3.2 [Annual Financial Statements], the assets and Consolidated Net Income determinations set forth above shall be made by the Borrower based on information concerning such Restricted Subsidiary that is reasonably available to the Borrower at the date of determination and subsequent to the Closing Date or the most recently delivered financial statements of the Borrower delivered pursuant to Section 8.3.1 [Quarterly Financial Statements] or Section 8.3.2 [Annual Financial Statements] and (ii) a Subsidiary will not be considered an Immaterial Subsidiary if it, directly or indirectly, Guaranties or otherwise provides credit support for any Indebtedness of the Borrower.
“Immaterial Title Deficiencies” shall mean defects or exceptions to title and other Liens, discrepancies and similar matters relating to title which do not, individually or in the aggregate, reduce or impair the value of the properties of the Loan Parties by an amount greater than $5,000,000 or materially reduce or impair the use of any such property.
“Increasing Lender” shall have the meaning assigned to that term in Section 2.12(a) [Increasing Lenders and New Lenders].
“Indebtedness” shall mean, with respect to any Person on any date of determination (without duplication):
(1) the principal of and premium (if any) in respect of (a) indebtedness of such Person for money borrowed and (b) indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable;
(2) all Capital Lease Obligations of such Person;
(3) all obligations of such Person issued or assumed as the deferred purchase price of property (which purchase price is due more than six months after the date of taking delivery of title to such property), including all obligations of such Person for the deferred purchase price of property under any title retention agreement (but excluding trade accounts payable arising in the ordinary course of business);
(4) all obligations of such Person for the reimbursement of any obligor on any letter of credit, bankers’ acceptance or similar credit transaction (other than obligations with respect to letters of credit securing obligations (other than obligations described in clauses (1) through (3) of this paragraph) entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the fifth Business Day following receipt by such Person of a demand for reimbursement following payment on the letter of credit);
(5) Hedging Obligations;
(6) all obligations of the type referred to in clauses (1) through (5) of this paragraph of other Persons and all dividends of other Persons with respect to Preferred Stock and Disqualified Stock for the payment of which, in either case, such Person is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise, including by means of any Guaranty; and
(7) all obligations of the type referred to in clauses (1) through (6) of this paragraph of other Persons secured by any Lien on any property or asset of such first-mentioned Person (whether or not such obligation is assumed by such first-mentioned Person), the amount of such obligation being deemed to be the lesser of the Fair Market Value of such property or assets or the amount of the obligation so secured.
The “amount” or “principal amount” of any Indebtedness or Disqualified Stock or other Preferred Stock outstanding at any time of determination as used herein shall be as set forth below or, if not set forth below, determined in accordance with GAAP:
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(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;
(2) the principal amount (i.e. face value) of the Indebtedness, in the case of any other Indebtedness;
(3) 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 assets at the date of determination; and (b) the amount of the Indebtedness of the other Person;
(4) in the case of any Capital Lease Obligation, the amount determined in accordance with the definition thereof;
(5) in the case of any Preferred Stock, (a) if other than Disqualified Stock, the greater of its voluntary or involuntary liquidation preference and its maximum fixed redemption price or repurchase price or (b) if Disqualified Stock, as specified in the definition thereof;
(6) in the case of any Swap Agreements permitted by Section 8.2.1(f) [Indebtedness], zero;
(7) in the case of all other unconditional obligations, the amount of the liability thereof determined in accordance with GAAP; and
(8) in the case of all other contingent obligations, the maximum liability at such date of such Person.
For purposes of determining any particular amount of Indebtedness, Guaranties of, or obligations in respect of letters of credit relating to, Indebtedness otherwise included in the determination of such amount shall not also be included. If Indebtedness is secured by a letter of credit that serves only to secure such Indebtedness, then the total amount deemed incurred shall be equal to the greater of (a) the principal of such Indebtedness and (b) the amount that may be drawn under such letter of credit.
None of the following shall constitute Indebtedness:
(1) Indebtedness arising from agreements providing for indemnification or adjustment of purchase price or from Guaranties securing any obligations of the Borrower or any of its Subsidiaries pursuant to such agreements, incurred or assumed in connection with the disposition of any business, assets or Subsidiary of the Borrower, other than Guaranties or similar credit support by the Borrower or any of its Subsidiaries of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Subsidiary for the purpose of financing such acquisition;
(2) obligations to pay accrued expenses, any trade payables or other similar liabilities to trade creditors and other accrued current liabilities incurred in the ordinary course of business as the deferred purchase price of property;
(3) any liability for Federal, state, local or other taxes owed or owing by such Person;
(4) obligations to pay royalties and other amounts due in the ordinary course of business to royalty and working interest owners;
(5) obligations arising from Guaranties to suppliers, lessors, licensees, contractors, franchisees or customers incurred in the ordinary course of business;
(6) obligations (other than express Guaranties of Indebtedness for borrowed money) in respect of Indebtedness of other Persons arising in connection with (a) trade acceptances and (b) endorsements of instruments for deposit in the ordinary course of business;
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(7) obligations arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; provided that such obligation is extinguished within two Business Days of its incurrence;
(8) obligations in respect of any obligations under workers’ compensation laws and similar legislation;
(9) [reserved];
(10) any unrealized losses or charges in respect of Hedging Obligations (including those resulting from the application of FASB ASC 815);
(11) Indebtedness consisting of the financing of insurance premiums in customary amounts consistent with the operations and business of the Borrower and the Restricted Subsidiaries;
(12) any repayment or reimbursement obligation of such Person or any Restricted Subsidiary with respect to Customary Recourse Exceptions, unless and until an event or circumstance occurs that triggers the Person’s or such Restricted Subsidiary’s direct repayment or reimbursement obligation (as opposed to contingent or performance obligations) to the lender or other Person to whom such obligation is actually owed, in which case the amount of such direct payment or reimbursement obligation shall constitute Indebtedness; and
(13) earn-out obligations in respect of Consideration in an acquisition permitted hereunder until such obligations would be required to be reflected on a balance sheet in accordance with GAAP (provided that the amount of such earn-out obligations reflected on a balance sheet shall be counted in the Consideration at such time).
“Indemnified Taxes” shall mean (a) all Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in clause (a) above, all Other Taxes.
“Indemnitee” shall have the meaning specified in Section 11.3.2 [Indemnification by the Borrower].
“Indemnity” shall mean the Regulated Substances Certificate and Indemnity Agreement, in substantially the form of Exhibit 1.1(I)(1), executed and delivered by each of the Loan Parties to the Administrative Agent for the benefit of the Secured Parties.
“Information” shall mean all information received from the Loan Parties or any of their Subsidiaries relating to the Loan Parties or any of such Subsidiaries or any of their respective businesses, other than any such information that is available to the Administrative Agent, any Lender or any Issuing Lender on a non-confidential basis prior to disclosure by the Loan Parties or any of their Subsidiaries.
“Insolvency Proceeding” shall mean, with respect to any Person, (a) a case, action or proceeding with respect to such Person (i) before any court or any other Official Body under any bankruptcy, insolvency, reorganization or other similar Law now or hereafter in effect, or (ii) for the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator (or similar official) of any Loan Party or otherwise relating to the liquidation, dissolution, winding-up or relief of such Person, or (b) any general assignment for the benefit of creditors, composition, marshaling of assets for creditors, or other, similar arrangement in respect of such Person’s creditors generally or any substantial portion of its creditors undertaken under any Law.
“Intercompany Subordination Agreement” shall mean the Amended and Restated Subordination Agreement among the Loan Parties and the Restricted Subsidiaries, dated as of the Closing
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Date, in substantially the form of Exhibit 1.1(I)(2), executed and delivered by the Loan Parties and the Restricted Subsidiaries.
“Interest Coverage Ratio” shall mean, as of any date of determination, the ratio of Consolidated EBITDA to Consolidated Cash Interest Expense, in each case, for the latest period of four fiscal quarters ended on or prior to the date of determination.
“Interest Period” shall mean the period of time selected by the Borrower in connection with (and to apply to) any election permitted hereunder by the Borrower to have Revolving Credit Loans bear interest under the Term SOFR Rate Option. Subject to the last sentence of this definition, such period shall be, in each case, subject to the availability thereof, one month, three months or six months. Such Interest Period shall commence on the effective date of such Interest Rate Option, which shall be the Borrowing Date. Notwithstanding the second sentence hereof: (a) any Interest Period which would otherwise end on a date which is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, and (b) the Borrower shall not select, convert to or renew an Interest Period for any portion of the Loans that would end after the Expiration Date.
“Interest Rate Agreement” shall mean any interest rate swap agreement, interest rate cap agreement or other financial agreement or arrangement relating to fluctuations in interest rates.
“Interest Rate Option” shall mean any Term SOFR Rate Option or Base Rate Option.
“Interstate Pipelines” shall have the meaning assigned to such term in Section 6.20(c) [Compliance with Laws].
“Investment” in any Person shall mean any (1) direct or indirect advance, loan or other extensions of credit (including by way of Guaranty or similar arrangement for the benefit of), or capital contribution to such Person (including any transfer of cash or other property to others or any payment for property or services for the account or use of others but excluding (a) advances to customers and contract miners or joint interest partners in the ordinary course of business that are recorded as accounts receivable on the balance sheet of the lender, and (b) trade payables and extensions of trade credit on commercially reasonable terms in accordance with normal trade practices), (2) all items that are or would be classified as investments on a balance sheet or (3) any purchase or acquisition of Capital Stock, Indebtedness or other similar securities issued by such Person, in each case, including any of the foregoing clauses (1) through (3) that is effected by Division. Except as otherwise provided for in this Agreement, the amount of an Investment shall be its Fair Market Value at the time the Investment is made and without giving effect to subsequent changes in value. If the Borrower or any Restricted Subsidiary sells or otherwise Disposes of any Capital Stock of any Restricted Subsidiary, or any Restricted Subsidiary issues any Capital Stock, in either case, such that, after giving effect to any such sale or Disposition, such Person is no longer a Subsidiary, the Borrower shall be deemed to have made an Investment on the date of any such sale or other disposition equal to the Fair Market Value of the Capital Stock of and all other Investments in such Person retained.
For purposes of Section 8.2.4 [Loans and Investments] with respect to Investments in Unrestricted Subsidiaries:
(1) “Investment” shall include the portion (proportionate to the Borrower’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of any Subsidiary of the Borrower at the time that such Subsidiary is designated an Unrestricted Subsidiary; and upon a redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary, the aggregate amount of Investments outstanding under Section 8.2.4(h) [Loans and Investments] shall be reduced (but not below zero) by an amount equal to the Fair Market Value of the Borrower’s proportionate interest in such Subsidiary immediately following such redesignation; and
(2) any property transferred to or from an Unrestricted Subsidiary shall be valued at its Fair Market Value at the time of such transfer.
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“Investment Grade Rating” shall mean a rating of Baa3 or better by Moody’s (or its equivalent under any successor rating categories of Moody’s) and BBB- or better by S&P (or its equivalent under any successor rating categories of S&P).
“IRS” shall mean the U.S. Internal Revenue Service.
“ISP” shall mean, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice, Inc. (or such later version thereof as may be in effect at the time of issuance of such Letter of Credit).
“Issuer Documents” shall mean with respect to any Letter of Credit, the Letter of Credit application, and any other document, agreement and instrument entered into by the applicable Issuing Lender and any Loan Party or in favor of the applicable Issuing Lender and relating to such Letter of Credit.
“Issuing Lenders” shall mean each Person listed on Schedule 1.1(L). References to the “Issuing Lender” shall be to the applicable Issuing Lender(s).
“Joint Venture” shall mean any Person that is not a direct or indirect Subsidiary of the Borrower in which the Borrower or any Restricted Subsidiary makes any equity Investment.
“Labor Contracts” shall mean all employment agreements, employment contracts, collective bargaining agreements and other agreements among the Borrower or any Restricted Subsidiary and its employees.
“Law” shall mean any law (including common law), constitution, statute, treaty, regulation, rule, ordinance, opinion, issued guidance, release, ruling, order, executive order, injunction, writ, decree, bond, judgment, authorization or approval, lien or award of or any settlement arrangement, by agreement, consent or otherwise, with any Official Body, foreign or domestic.
“LC Disbursement” shall mean a payment made by an Issuing Lender pursuant to a Letter of Credit issued by such Issuing Lender.
“Lead Arrangers” shall mean PNC Capital Markets LLC, BofA Securities, Inc., Canadian Imperial Bank of Commerce, New York Branch, Citibank, N.A., JPMorgan Chase Bank, N.A., MUFG Bank, Ltd., TD Securities (USA) LLC, Truist Securities, Inc. and Wells Fargo Securities, LLC, in their capacities as joint lead arrangers and joint bookrunners of the revolving credit facility hereunder.
“Lender-Related Person” shall have the meaning specified in Section 11.3.2 [Indemnification by the Borrower].
“Lenders” shall mean the Persons named on Schedule 1.1(B) and any other Person that becomes a party to this Agreement in such capacity from time to time and, in each case, their respective successors and assigns as permitted hereunder, each of which is referred to herein as a Lender. For the purpose of any grant in any Loan Document of a security interest or other Lien to the Lenders or to the Collateral Agent for the benefit of the Lenders as security for the Obligations, “Lenders” shall include any Affiliate of a Lender to which such Obligation is owed. For the avoidance of doubt, Increased Lenders, Decreased Lenders and Existing Lenders that do not constitute Exiting Lenders shall all constitute Lenders hereunder as of the Closing Date.
“Letter of Credit” shall have the meaning assigned to that term in Section 2.10.1(a) [Issuance of Letters of Credit] and shall include the Existing Letters of Credit.
“Letter of Credit Aggregate Sublimit” shall mean, at any time, the lesser of (i) $100,000,000 and (ii) the Revolving Credit Commitments at such time.
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“Letter of Credit Expiration Date” shall mean the date which is 10 Business Days prior to the Expiration Date.
“Letter of Credit Fee” shall have the meaning assigned to that term in Section 2.10.2 [Letter of Credit Fees].
“Letter of Credit Issuing Lender Sublimit” shall mean, for each Issuing Lender, the amount set forth opposite the name of such Issuing Lender on Schedule 1.1(L); provided that any Issuing Lender may increase its own Letter of Credit Issuing Lender Sublimit by written notice to the Borrower and the Administrative Agent.
“Letter of Credit Obligations” shall mean, as of any date of determination, the aggregate amount available to be drawn under all outstanding Letters of Credit on such date (if any Letter of Credit shall increase in amount automatically in the future, such aggregate amount available to be drawn shall currently give effect to any such future increase) plus the aggregate outstanding Reimbursement Obligations on such date. The Letter of Credit Obligations of any Lender at any time shall be its Ratable Share of the total Letter of Credit Obligations at such time. For purposes of computing the amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.5 [Letter of Credit Amounts]. For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.13 or Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.
“Lien” shall mean any mortgage, deed of trust, pledge, lien, security interest, charge or other similar encumbrance or security arrangement of any nature whatsoever, whether voluntarily or involuntarily given, including any conditional sale or title retention arrangement, and any assignment, deposit arrangement or lease intended as, or having the effect of, security and any filed financing statement or other notice of any of the foregoing (whether or not a lien or other encumbrance is created or exists at the time of the filing), but shall not include any operating lease.
“LLC Interests” shall have the meaning specified in Section 6.3 [Subsidiaries].
“Loan Documents” shall mean this Agreement, the Administrative Agent’s Letter, the Guaranty Agreement, the Indemnity, the Intercompany Subordination Agreement, the Notes, the Security Documents and amendments, supplements, joinders or assignments to the foregoing and any other instruments, certificates or documents (expressly excluding any Other Lender Provided Financial Service Product, any Specified Swap Agreements or any other Swap Agreements) delivered or contemplated to be delivered hereunder or thereunder or in connection herewith or therewith, and “Loan Document” shall mean any of the Loan Documents.
“Loan Parties” shall mean the Borrower and the Guarantors.
“Loan Request” shall have the meaning specified in Section 2.5.1 [Revolving Credit Loan Requests].
“Loans” shall mean collectively and “Loan” shall mean separately all Revolving Credit Loans and Swing Loans or any Revolving Credit Loan or Swing Loan.
“Material Acquisition” shall mean a Permitted Acquisition involving aggregate Consideration payable by Borrower or a Restricted Subsidiary of not less than $25,000,000.
“Material Acquisition/Disposition” shall mean any Investment, Permitted Acquisition or Disposition that involves (a) an acquisition or disposition of assets, the Fair Market Value of which assets exceeds $25,000,000 or (b) a change in Consolidated EBITDA that exceeds $10,000,000 per four fiscal quarter period.
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“Material Adverse Change” shall mean any set of circumstances or events that (a) has or would reasonably be expected to have any material adverse effect whatsoever upon the validity or enforceability of this Agreement or any other Loan Document, (b) is or would reasonably be expected to be material and adverse to the business, properties, assets, financial condition, or results of operations of the Loan Parties taken as a whole, (c) impairs materially or would reasonably be expected to impair materially the ability of the Loan Parties taken as a whole to duly and punctually pay their Indebtedness under this Agreement or any other Loan Document, or (d) impairs materially or would reasonably be expected to impair materially the rights and remedies of the Administrative Agent or any of the Lenders pursuant to this Agreement or any other Loan Document.
“Material Contract” shall mean (i) any indenture or other agreement governing Permitted Unsecured Notes, (ii) each agreement set forth on Schedule 6.21 and (iii) any other agreement, instrument or document which, if breached, terminated or cancelled, could reasonably be expected to result in a Material Adverse Change.
“Midstream Assets” shall mean: (i) all tangible property used in (a) gathering, dehydrating or compressing natural gas, crude, condensate and natural gas liquids, (b) treating, processing, fractionating and transporting natural gas, crude, condensate and natural gas liquids or the fractionated products thereof, (c) storing natural gas, crude, condensate and natural gas liquids or the fractionated products thereof, (d) marketing natural gas, crude, condensate and natural gas liquids or the fractionated products thereof and (e) water distribution, storage, supply, treatment and disposal services thereof, including Gathering Systems, Processing Plants, storage facilities, surface leases, Easements and servitudes related to each of the foregoing; and (ii) Equity Interests of any Person that has no assets (other than de minimis assets) other than assets referred to in clause (i). Unless otherwise specified herein, “Midstream Assets” shall be deemed to refer to those properties owned, leased or otherwise held by the Borrower and its Restricted Subsidiaries.
“Month,” with respect to an Interest Period under the Term SOFR Rate Option, shall mean the interval between the days in consecutive calendar months numerically corresponding to the first day of such Interest Period. If any Interest Period begins on a day of a calendar month for which there is no numerically corresponding day in the month in which such Interest Period is to end, the final month of such Interest Period shall be deemed to end on the last Business Day of such final month.
“Moody’s” shall mean Moody’s Investors Service, Inc. and its successors.
“Mortgages” shall mean, collectively, the mortgages or deeds of trust with respect to Real Property or Easements in which a security interest is granted in substantially the form of Exhibit 1.1(M), executed and delivered by the applicable Loan Parties to the Collateral Agent to secure the Obligations, for the benefit of the Secured Parties, and “Mortgage” shall mean, individually, any of the Mortgages.
“Mortgage Requirement” shall mean, as of any date of determination, the Loan Parties shall have granted to the Collateral Agent a perfected Lien with respect to and Mortgage otherwise meeting the requirements applicable to Mortgages hereunder on (x) Gathering Systems of the Loan Parties representing at least ninety percent (90%) of the book value of all Gathering Systems of the Loan Parties at such time and (y) with respect to any Real Property not constituting Gathering Systems, each other parcel of Real Property owned or leased by a Loan Party, or in which any Loan Party has a related Easement or other related real property interest, which, when taken together with any other related parcels, Easements or interests of the Loan Parties that are contiguous to such parcel, Easement or interests, has a Fair Market Value as of such time of $3,000,000 or more; provided that, at its discretion, the Administrative Agent may exclude any Building from the foregoing clause (y) by written notice to the Borrower and the Lenders.
“Multiemployer Plan” shall mean any employee benefit plan which is a “multiemployer plan” within the meaning of Section 4001(a)(3) of ERISA and to which the Borrower or any ERISA Affiliate is then making or accruing an obligation to make contributions or, within the preceding five plan years, has made or had an obligation to make such contributions or has any ongoing obligation with respect to withdrawal liability (within the meaning of Title IV of ERISA).
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“Net Cash Proceeds” shall mean
(i) with respect to any Disposition, an amount equal to:
(1) the cash proceeds received by the Borrower or any Restricted Subsidiary from or in respect of such transaction (including, when received: (i) any cash proceeds received as income or other deferred cash proceeds, or (ii) cash proceeds of any non-cash proceeds of such transaction, converted to cash), less
(2) the sum of the following to the extent incurred or payable by the Borrower or any Restricted Subsidiary:
(a) any foreign, federal, state or local income taxes paid or payable in respect of such Disposition or any other foreign, federal, state or local taxes paid in connection with such Disposition, with all amounts under this clause (2)(a) being determined for the Borrower and the Restricted Subsidiaries on a tax consolidated basis (after application of all credits and other offsets),
(b) any customary and reasonable brokerage commissions and all other customary and reasonable fees and expenses related to such Disposition (including, without limitation, financial advisory fees, legal fees and accountants’ fees),
(c) any amounts estimated in good faith by an Authorized Financial Officer of the Borrower to provide reserves in accordance with GAAP for payment of indemnities or liabilities that may be incurred in connection with such Disposition,
(d) the principal amount, premium or penalty, if any, interest and other amounts on any Indebtedness secured by a Lien (senior to the Lien securing the Obligations) on the related asset and which debt is discharged as part of such Disposition (other than any such Indebtedness assumed by any other Person in connection with such Disposition), and
(e) any insurance proceeds, condemnation awards or other compensation to the extent such proceeds are used for reinvestment, substitution, replacement, repair or restoration in accordance with the terms hereof;
(ii) with respect to any Casualty Event, the cash insurance proceeds, condemnation awards and other compensation received in respect thereof, net of (x) all reasonable costs and expenses incurred in connection with the collection of such proceeds, awards or other compensation in respect of such Casualty Event, including the Borrower’s good faith estimate of income taxes actually paid or payable in connection with the receipt of such proceeds, awards or other compensation and (y) the principal amount, premium or penalty, if any, interest and other amounts on any Indebtedness which is secured by a Lien (senior to the Lien securing the Obligations) on the property damaged, destroyed, condemned or taken in such Casualty Event (so long as such Lien was permitted under the Loan Documents at the time of such Casualty Event) and which is repaid with such proceeds; and
(iii) with respect to any issuance of Equity Interests or the incurrence of Indebtedness, the cash proceeds thereof, net of customary fees, commissions, underwriting discounts, costs and other expenses incurred in connection with such issuance or incurrence, as applicable.
For purposes of this definition, if taxes or other customary fees or expenses payable in connection with the sale, transfer or lease of any asset are not known as of the date of such Disposition or Casualty Event, then such fees, expenses or taxes shall be estimated in good faith by an Authorized Financial Officer of the Borrower and such estimated amounts shall be deducted for purposes of determining Net Cash Proceeds in accordance with the immediately preceding sentence.
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“New Lender” shall have the meaning assigned to that term in Section 2.12(a) [Increasing Lenders and New Lenders].
“New Lender Joinder” shall mean the joinder whereby each New Lender joins this Agreement in substantially the form attached hereto as Exhibit 1.1(B).
“Non-Consenting Lender” shall have the meaning specified in Section 11.1.4 [Non-Consenting Lenders].
“Non-Extension Notice Date” shall have the meaning assigned to such term in Section 2.10.1(c) [Issuance of Letters of Credit].
“Non-Recourse Debt” shall mean, with respect to Indebtedness of any Unrestricted Subsidiary or Joint Venture, Indebtedness:
(1) as to which neither the Borrower nor any Restricted Subsidiary (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness) or (b) is directly or indirectly liable as a guarantor or otherwise, except for Customary Recourse Exceptions and except by the pledge of (or a Guaranty limited in recourse solely to) the Equity Interests of such Unrestricted Subsidiary or Joint Venture; and
(2) as to which the lenders will not have any recourse to the Capital Stock or assets of the Borrower or any Restricted Subsidiary (other than the Equity Interests of such Unrestricted Subsidiary or Joint Venture), except for Customary Recourse Exceptions.
“Notes” shall mean the Revolving Credit Notes and the Swing Loan Notes.
“Obligation” shall mean any obligation or liability of any of the Loan Parties, howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, now or hereafter existing, or due or to become due (including interest, fees and other monetary obligations accruing and/or incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), under or in connection with (i) this Agreement, the Loans, any Letter of Credit or any other Loan Document, whether to any Agent, any Issuing Lender, any Swingline Lender, any Lender-Related Person, any Lender or other Persons provided for under such Loan Documents, (ii) any Specified Swap Agreement (other than, with respect to any Guarantor that is not a Qualified ECP Loan Party, Excluded Swap Obligations of such Guarantor), (iii) any Erroneous Payment Subrogation Rights, or (iv) any Other Lender Provided Financial Service Product.
“OFAC” shall mean the United States Department of the Treasury’s Office of Foreign Assets Control.
“Officer’s Certificate” shall mean a certificate signed by an Authorized Officer of the Borrower (or CNX Midstream GP, on behalf of the Borrower).
“Official Body” shall mean the government of the United States of America or any other nation, or in each case any political subdivision thereof, whether state, local, county, provincial or otherwise, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank) and any group or body charged with setting financial accounting or regulatory capital rules or standards (including the Financial Accounting Standards Board, the Bank for International Settlements or the Basel Committee on Banking Supervision or any successor or similar authority to any of the foregoing).
“Order” shall have the meaning specified in Section 2.10.9(b) [Liability for Acts and Omissions].
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“Other Connection Taxes” shall mean, with respect to any recipient, Taxes imposed as a result of a present or former connection between such recipient and the jurisdiction imposing such Tax (other than connections arising from such recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to and/or enforced any Loan Document, or sold or assigned an interest in any Note or Loan Document).
“Other Lender Provided Financial Service Product” shall mean agreements or other arrangements under which the Administrative Agent, any Lender or Affiliate of the Administrative Agent or a Lender (or any Person that was the Administrative Agent or a Lender or an Affiliate of the Administrative Agent or a Lender at the time such agreement or arrangement was entered into) provides any of the following products or services to any of the Loan Parties: (a) credit cards, (b) credit card processing services, (c) debit cards, (d) purchase cards, (e) ACH transactions, (f) cash management, including controlled disbursement, accounts or services, or (g) foreign currency exchange.
“Other Taxes” shall mean all present or future stamp or documentary Taxes or any other excise or property Taxes, charges or similar levies arising from any payment made hereunder or under any other Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 5.6.2 [Replacement of a Lender]).
“Participant” shall have the meaning specified in Section 11.8.4 [Participations].
“Participating Member State” shall mean any member State of the European Communities that adopts or has adopted the euro as its lawful currency in accordance with legislation of the European Community relating to Economic and Monetary Union.
“Participation Advance” shall have the meaning specified in Section 2.10.4(a) [Repayment of Participation Advances].
“Partnership Agreement” shall mean the Second Amended and Restated Agreement of Limited Partnership of the Borrower, dated as of January 3, 2018.
“Partnership Interests” shall have the meaning specified in Section 6.3 [Subsidiaries].
“Patent, Trademark and Copyright Security Agreement” shall mean, collectively, the Patent, Trademark and Copyright Security Agreements listed on Schedule 1.1(P), each executed and delivered by the applicable Loan Parties to the Collateral Agent for the benefit of the Secured Parties.
“Payment Date” shall mean the first Business Day of each calendar quarter after the date hereof and on the Expiration Date or upon termination of the Commitments.
“Payment In Full” and “Paid in Full” shall mean the payment in full in cash of the Loans and other Obligations (other than contingent indemnity obligations not then due) under the Loan Documents, termination of the Commitments and expiration or termination of all Letters of Credit (or with respect to any Letter of Credit with an expiration date that extends beyond the Letter of Credit Expiration Date, the pledge of Cash Collateral for such Letter of Credit pursuant to Section 2.10.10 [Cash Collateral Prior to the Expiration Date]).
“PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA or any successor.
“Pension Funding Rules” shall mean the rules of the Code and ERISA regarding minimum required contributions (including any installment payment thereof) to Pension Plans and set forth in Sections 412 and 430 of the Code and Sections 302 and 303 of ERISA.
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“Pension Plan” shall mean any “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA), other than a “multiemployer plan” within the meaning of Section 4001(a)(3) of ERISA, that is subject to Title IV of ERISA or the Pension Funding Rules and is sponsored or maintained by Borrower or any ERISA Affiliate or to which Borrower or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any times during the immediately preceding five plan years.
“Perfection Certificate” shall mean a certificate in the form of Exhibit 1.1(P)(1) or any other form reasonably acceptable to the Administrative Agent.
“Perfection Certificate Supplement” shall mean a certificate supplement in the form of Exhibit 1.1(P)(2) or any other form reasonably acceptable to the Administrative Agent.
“Permitted Account Counterparty” shall have the meaning specified in Section 8.1.21(b) [Accounts].
“Permitted Acquisition” shall have the meaning assigned to such term in Section 8.2.6(b) [Liquidations, Mergers, Consolidations, Acquisitions].
“Permitted Business” shall mean the businesses conducted by the Borrower and its Subsidiaries on the Closing Date and any business of a nature that is or shall have become related to: (a) gathering, dehydrating or compressing natural gas, crude, condensate or natural gas liquids; (b) treating, processing, fractionating or transporting natural gas, crude, condensate or natural gas liquids or the fractionated products thereof; (c) storing natural gas, crude, condensate, natural gas liquids or the fractionated products thereof; (d) marketing natural gas, crude, condensate, natural gas liquids or the fractionated products thereof; (e) water related services including sourcing, utilizing, distribution, protecting, transporting, storing, supplying, treating and disposing of water or waste fluid; (f) methane and carbon abatement, capture and storage and hydrogen production, storage, transportation and marketing; (g) stream, wetland, forestry and other environmental credits and activities; (h) building or acquiring the facilities and equipment to do the foregoing; (i) any process, product or service that reduces negative environmental impacts through significant energy efficiency improvements, sustainable use of resources and/or environmental protection activities, including without limitation those focused on renewable energy and (j) any activity that is ancillary, complementary or incidental to or necessary or appropriate for the activities described in this definition, including entering into Swap Agreements related to any of these activities.
“Permitted Liens” shall mean:
(1) Liens existing on the Closing Date and described on Schedule 8.2.2;
(2) Liens securing the Obligations in favor of the Collateral Agent for the benefit of the Secured Parties;
(3) Liens on cash or Temporary Cash Investments securing Letter of Credit Obligations with respect to Letters of Credit that have an expiration date that extends beyond the Letter of Credit Expiration Date in favor of the applicable Issuing Lender of such Letters of Credit;
(4) Liens (a) in favor of the Borrower or a Guarantor or (b) by a Restricted Subsidiary that is not a Guarantor in favor of any other Restricted Subsidiary that is not a Guarantor;
(5) Liens for taxes, assessments and governmental charges not yet delinquent or the validity of which are being contested in good faith by appropriate proceedings, promptly instituted and diligently conducted, and for which adequate reserves have been established to the extent required by GAAP as in effect at such time, and which proceedings (or orders entered in connection with such proceedings) have the effect of suspending the enforcement or collection of such Liens;
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(6) Liens incurred to secure appeal bonds and judgment Liens not constituting an Event of Default or Potential Default, in each case in connection with litigation or legal proceedings that are being contested in good faith by appropriate proceedings;
(7) Liens upon real or personal property other than the Collateral, including any attachment of personal property or real property or other legal process prior to adjudication of a dispute on the merits, (a) if the validity or amount thereof is being contested in good faith by appropriate and lawful proceedings diligently conducted so long as levy and execution thereon have been stayed or bonded and continue to be stayed or bonded, (b) if a final judgment is entered and such judgment is discharged within thirty (30) days of entry, or (c) the payment of which is covered in full (subject to customary deductible) by insurance;
(8) inchoate Liens arising by operation of Law;
(9) Liens securing Capital Lease Obligations, mortgage financings, equipment leases, purchase money obligations or other Indebtedness incurred pursuant to Section 8.2.1(d) [Indebtedness]; provided that such Liens shall attach only to the property (a) acquired with the proceeds of such Indebtedness or (b) which is the subject of such Capital Lease Obligations;
(10) Liens on the Equity Interests of a Person that is not a Restricted Subsidiary to secure obligations of such Person;
(11) claims, Liens or encumbrances upon, and defects of title to, real or personal property, including any attachment of personal or real property or other legal process prior to adjudication of a dispute on the merits, (a) if the validity or amount thereof is being contested in good faith by appropriate and lawful proceedings diligently conducted so long as levy and execution thereon have been stayed and continue to be stayed, (b) if a final judgment is entered and such judgment is discharged within thirty (30) days of entry, or (c) the payment of which is covered in full (subject to customary deductible) by insurance;
(12) precautionary filings under the UCC by a lessor with respect to personal property leased to such Person;
(13) Liens on insurance policies and proceeds thereof, or other deposits, to secure insurance premium financings;
(14) Liens on cash or Temporary Cash Investments arising in connection with the defeasance, discharge or redemption of Indebtedness permitted hereunder;
(15) other Liens not otherwise permitted hereunder with respect to Indebtedness or other obligations that do not in the aggregate exceed at any one time outstanding $25,000,000;
(16) Liens to renew, extend, refinance or refund a Lien referred to in clause (1) above; provided that (i) such new Lien shall be limited to all or part of the same property (including future improvements thereon and accessions thereto) subject to the original Lien and (ii) the obligations secured by such Lien at such time is not increased to any amount greater than the amount permitted by Refinancing Indebtedness;
(17) statutory and common law banker’s Liens and rights of setoff on bank deposits;
(18) option agreements and rights of first refusal granted with respect to assets that are permitted to be disposed of pursuant to the terms of Section 8.2.7 [Dispositions];
(19) any leases of assets permitted by Section 8.2.7 [Dispositions];
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(20) Liens which arise under joint venture agreements, contracts for the sale, transportation or exchange of oil and natural gas, marketing agreements, processing agreements, processing plant agreements, dehydration agreements, operating agreements, pipeline, gathering or transportation agreements, compression agreements, balancing agreements, construction agreements, disposal agreements, and other agreements which are usual and customary in the ordinary course of the Borrower’s and the Restricted Subsidiaries’ businesses and are for claims which are not delinquent or which are being contested in good faith by appropriate action and for which adequate reserves have been maintained in accordance with GAAP; provided that any such Lien referred to in this clause does not materially impair the use of any material property covered by such Lien for the purposes for which such Property is held by the Borrower or any Restricted Subsidiary or materially impair the value of any material property subject thereto;
(21) Immaterial Title Deficiencies; it being understood that this Permitted Lien does not affect the Borrower’s obligations under Section 8.1.18 [Title];
(22) pledges, deposits or bonds made in the ordinary course of business to secure payment of reclamation liabilities or workers’ compensation, or to participate in any fund in connection with workers’ compensation, unemployment insurance or other social security programs (including pledges or deposits of cash securing letters of credit that secure payment of such workers’ compensation, unemployment insurance or other social security programs);
(23) Liens of mechanics, materialmen, warehousemen, carriers, or other like Liens (including any other statutory nonconsensual or common law Liens), securing obligations incurred in the ordinary course of business that are not yet due and payable and Liens of landlords securing obligations to pay lease payments that are not yet due and payable or in default (including pledges or deposits of cash securing letters of credit that secure such Liens of landlords securing obligations to make lease payments that are not yet due and payable or in default) or, with respect to any of the foregoing, that are being contested in good faith by appropriate proceedings and as to which appropriate reserves have been established in accordance with GAAP and which proceedings (or orders entered in connection with such proceedings) have the effect of suspending the enforcement or collection of such Liens;
(24) good-faith pledges or deposits made or other Liens granted in the ordinary course of business to secure performance of bids, tenders, contracts (other than for the repayment of borrowed money) or leases, not in excess of the aggregate amount due thereunder or other amounts as may be customary, or to secure statutory obligations, or surety, appeal, indemnity, performance or other similar bonds required in the ordinary course of business (including pledges or deposits of cash securing letters of credit that secure such performance of bids, tenders, contracts (other than for the repayment of borrowed money) or leases, not in excess of the aggregate amount due thereunder or other amounts as may be customary, or that secure such statutory obligations, or such surety, appeal, indemnity, performance or other similar bonds required in the ordinary course of business);
(25) encumbrances consisting of zoning restrictions, licenses, easements or other restrictions on the use of real property, none of which materially impairs the use of such property or the value thereof, and none of which is violated in any material respect by existing or proposed structures or land use; and
(26) deposits and escrows of cash pursuant to customary purchase price adjustment, indemnity or similar obligations under agreements related to acquisitions and Dispositions permitted hereunder.
No intention by the Administrative Agent or the Collateral Agent to subordinate any Lien granted in favor of the Collateral Agent for the Secured Parties is to be hereby implied or expressed by the permitted existence of any Permitted Liens.
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“Permitted Unsecured Notes” shall mean (a) the Borrower’s 2026 Notes and 4.750% Senior Notes due 2030 and (b) unsecured notes issued after the Closing Date in one or more transactions by the Borrower and guaranteed by the Guarantors; provided that (i) no payment of principal in respect of such notes shall be required prior to six months after the Expiration Date in effect at the time of issuance (except for customary offers to purchase with proceeds of asset sales or upon the occurrence of a change of control), (ii) such notes shall not include any financial maintenance covenants, and the covenants and events of default shall be customary for high yield debt securities but in any event shall not be more restrictive than the covenants and events of default hereunder, taken as a whole and (iii) no Subsidiary of the Borrower shall Guaranty such notes unless such Subsidiary is (or concurrently with any such Guaranty becomes) a Guarantor hereunder.
“Permitted Unsecured Notes Indenture” shall mean an indenture or other agreement governing any Permitted Unsecured Notes.
“Person” shall mean any individual, corporation, partnership, limited liability company, association, joint-stock company, trust, unincorporated organization, joint venture, Official Body, or any other entity.
“Pledged Securities” shall mean all of the property described as “Pledged Securities” in the Security Agreement.
“Pledgor” shall have the meaning set forth in the Security Agreement.
“PNC” shall mean PNC Bank, National Association, its successors and assigns.
“Potential Default” shall mean any event or condition which with notice or passage of time, or any combination of the foregoing, would constitute an Event of Default.
“Preferred Stock” shall mean, with respect to any Person, Capital Stock of such Person of any class or classes (however designated) which is preferred as to the payment of dividends or distributions, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over Capital Stock of any other class of such Person.
“Prime Rate” shall mean the interest rate per annum announced from time to time by the Administrative Agent at its Principal Office as its then prime rate, which rate may not be the lowest or most favorable rate then being charged to commercial borrowers or others by the Administrative Agent. Any change in the Prime Rate shall take effect at the opening of business on the day such change is announced.
“Principal Office” shall mean the main banking office of the Administrative Agent in Pittsburgh, Pennsylvania.
“Pro Forma Basis” shall mean:
(1) any Material Acquisition/Disposition and any dividend or distribution on, or repurchases or redemptions of, Capital Stock of the Borrower made or to be made by the Borrower or any Restricted Subsidiary during the applicable reference period or subsequent to such reference period and on or prior to the date of determination will be given pro forma effect as if it had occurred on the first day of the applicable reference period;
(2) any Person that is a Restricted Subsidiary on the date of determination will be deemed to have been a Restricted Subsidiary at all times during such reference period;
(3) any Person that is not a Restricted Subsidiary on the date of determination will be deemed not to have been a Restricted Subsidiary at any time during such reference period; and
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(4) 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 the effect on such interest rate of any Specified Swap Agreement applicable to such Indebtedness).
For purposes of this definition, whenever pro forma effect is given to a transaction, the pro forma calculations shall be made in good faith by a Responsible Officer of the Borrower and in a manner consistent with Article 11 of Regulation S-X of the Securities Act, as set forth in a certificate of an Authorized Officer of the Borrower (with supporting calculations) and reasonably acceptable to the Administrative Agent. For purposes of making the computation referred to above, interest on any Indebtedness under a revolving credit facility (to the extent required to be computed on a pro forma basis) shall be computed based upon the average daily balance of such Indebtedness during the applicable period. Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be deemed to have been based upon the rate actually chosen, or, if none, then based upon such optional rate chosen as the Borrower may designate.
“Processing Plants” shall mean the Midstream Assets of the Borrower and its Restricted Subsidiaries comprised of any processing or condensate handling facilities owned or leased from time to time by the Borrower or any Restricted Subsidiary that are used in the business of the Borrower or any Restricted Subsidiary.
“Properties” shall have the meaning assigned to such term in Section 6.25(b) [Environmental Matters].
“PTE” shall mean a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.
“Qualified ECP Loan Party” shall mean each Loan Party that on the Eligibility Date is (a) an Eligible Contract Participant (after giving effect to Section 22 of the Guaranty Agreement and any and all other Guaranties of such Guarantor’s Swap Obligations by the Borrower and any other Guarantor), or (b) an Eligible Contract Participant that can cause another Person to qualify as an Eligible Contract Participant on the Eligibility Date under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act by entering into or otherwise providing a “letter of credit or keepwell, support, or other agreement” for purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.
“Ratable Share” shall mean the proportion that a Lender’s Commitment bears to the Commitments of all of the Lenders. If the Commitments have terminated or expired, the Ratable Shares shall be determined based upon the Commitments most recently in effect, giving effect to any assignments; provided that in the case of Section 2.13 [Defaulting Lenders] when a Defaulting Lender shall exist, “Ratable Share” shall mean the percentage of the aggregate Commitments (disregarding any Defaulting Lender’s Commitment) represented by such Lender’s Commitment.
“Real Property” shall mean, individually as the context requires, real property that is owned or leased by any Loan Party, including, but not limited to the surface, methane gas and other mineral rights, interests and leases associated with the properties described on Schedule 3 to the Perfection Certificate, and “Real Properties” shall mean, collectively, as the context requires, all of the foregoing but shall not include any asset that shall have been released, pursuant to Section 10.10 [Authorization to Release Collateral or Guarantors] or 11.1.1(d) [Required Consents] from the Liens created in connection with this Agreement.
“Recipient” shall mean (i) the Administrative Agent, (ii) any Lender and (iii) any Issuing Lender, as applicable.
“Refinance” shall mean, in respect of any Indebtedness, to refinance, extend, renew, refund, repay, prepay, redeem, replace, defease or retire, or to issue other Indebtedness in exchange or replacement for, such Indebtedness. “Refinanced” and “Refinancing” shall have correlative meanings.
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“Refinancing Indebtedness” shall mean Indebtedness that Refinances any Indebtedness of the Borrower or any Restricted Subsidiary existing on the Closing Date or incurred in compliance with this Agreement, including Indebtedness that Refinances Refinancing Indebtedness; provided that:
(1) such Refinancing Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the Indebtedness being Refinanced;
(2) such Refinancing Indebtedness has an Average Life at the time such Refinancing Indebtedness is incurred that is equal to or greater than the Average Life of the Indebtedness being Refinanced;
(3) such Refinancing Indebtedness has an aggregate principal amount (or if incurred with original issue discount, an aggregate issue price) that is equal to or less than the aggregate principal amount (or if incurred with original issue discount, the aggregate accreted value) then outstanding (plus fees and expenses, including any premium and defeasance costs) under the Indebtedness being Refinanced;
(4) if the refinanced Indebtedness was (A) subordinated in right of payment to the Obligations or the Guaranties thereof, as the case may be, then such Refinancing Indebtedness, by its terms, is subordinate in right of payment to the Obligations or the Guaranties thereof, as the case may be, at least to the same extent as the Indebtedness being Refinanced, (B) unsecured, then such Refinancing Indebtedness shall be unsecured or (C) secured by a Lien on Collateral that was contractually junior to the Lien on such Collateral securing the Obligations, then such Refinancing Indebtedness may be secured by such Collateral only to the extent the Liens on such Collateral securing such Refinancing Indebtedness are contractually junior to the Liens on such Collateral securing the Obligations to at least the same extent as in the Indebtedness being Refinanced; and
(5) if the refinanced Indebtedness is purchase money obligations, (a) the holders of such Refinancing Indebtedness agree that they will look solely to the fixed assets so acquired which secure such Refinancing Indebtedness, and neither the Borrower nor any Restricted Subsidiary (i) is directly or indirectly liable for such Refinancing Indebtedness or (ii) provides credit support, including any undertaking, Guaranty, agreement or instrument, related to such Refinancing Indebtedness that would constitute Indebtedness (other than the grant of a Lien on such acquired fixed assets) and (b) no default or event of default with respect to such Refinancing Indebtedness would cause, or permit (after notice or passage of time or otherwise), any holder of any other Indebtedness of the Borrower or a Guarantor to declare a default or event of default on such other Indebtedness or cause the payment, repurchase, redemption, defeasance or other acquisition or retirement for value thereof to be accelerated or payable prior to any scheduled principal payment, scheduled sinking fund payment or maturity;
provided further, however, that Refinancing Indebtedness shall not include:
(a) Indebtedness of a Subsidiary that Refinances Indebtedness of the Borrower; or
(b) Indebtedness of the Borrower or a Restricted Subsidiary of the Borrower that Refinances Indebtedness of an Unrestricted Subsidiary; or
(c) Indebtedness of a Restricted Subsidiary of the Borrower that is not a Loan Party which Refinances Indebtedness of a Loan Party.
“Refined Products” shall mean gasoline, diesel fuel, jet fuel, asphalt and asphalt products, and other refined products of crude oil.
“Regulation U” shall mean Regulation U, T or X as promulgated by the Board of Governors of the Federal Reserve System, as amended from time to time.
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“Reimbursement Date” shall have the meaning specified in Section 2.10.3(b) [Participations, Disbursements, Reimbursement].
“Reimbursement Obligation” shall have the meaning specified in Section 2.10.3(b) [Participations, Disbursements, Reimbursement].
“Related Parties” shall mean, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, advisors, trustees, administrators, managers and representatives of such Person and of such Person’s Affiliates.
“Release” shall mean any spilling, leaking, pumping, pouring, emitting, emptying, discharge, injecting, escaping, leaching, dumping, disposing, depositing into or migration into or through the Environment, or into, from or through any building or structure.
“Removal Effective Date” shall have the meaning assigned to such term in Section 10.6 [Resignation of Agents].
“Reportable Compliance Event” shall mean that any Covered Entity becomes a Sanctioned Person, or is charged by indictment, criminal complaint or similar charging instrument, arraigned, or custodially detained in connection with any Anti-Terrorism Law or any predicate crime to any Anti-Terrorism Law, or has knowledge of facts or circumstances to the effect that it is reasonably likely that any aspect of its operations is in violation of any Anti-Terrorism Law.
“Reportable Event” shall mean a reportable event described in Section 4043 of ERISA and regulations thereunder with respect to a Pension Plan or Multiemployer Plan.
“Required Flood Materials” shall mean, at any time of determination, with respect to each Real Property that is improved with a Building and is subject to a Mortgage at such time, or is the subject of a Mortgage to be delivered at such time, (i) a “Life-of-Loan” flood hazard determination with respect to such Real Property and (ii) if such Real Property is located in a special flood hazard area, (a) a notification to the Borrower of that fact and evidence of the receipt by the Borrower of such notice and (b) evidence of flood insurance on such Real Property that complies with Section 8.1.3 [Maintenance of Insurance].
“Required Lenders” shall mean Lenders (other than any Defaulting Lender) having more than 50% of the aggregate amount of the Revolving Credit Commitments of the Lenders (excluding any Defaulting Lender) or, after the termination of the Revolving Credit Commitments, the outstanding Revolving Credit Loans and Ratable Share of Letter of Credit Obligations of the Lenders (excluding any Defaulting Lender).
“Required Permits” shall mean all permits, licenses, authorizations, plans, approvals and bonds necessary under the applicable Laws for the Loan Parties to continue to conduct the Permitted Business on, in or under such parties’ Real Property, substantially in the manner as such operations had been authorized immediately prior to such Loan Party’s acquisition of its interests in such Real Property and as may be necessary for such Loan Party to conduct, in all material respects, the Permitted Business on, in or under such property as described in any plan of operation.
“Required Share” shall have the meaning assigned to such term in Section 5.10 [Settlement Date Procedures].
“Responsible Officer” shall mean, with respect to any Loan Party, each of the chief executive officer, president, vice president, chief financial officer, chief administrative officer, general counsel, secretary, treasurer and assistant treasurer of such Loan Party (or, in the case of the Borrower, of CNX Midstream GP). Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party. Any document delivered hereunder that is signed by a Responsible Officer of CNX Midstream GP, on behalf of the Borrower, shall be
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conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of the Borrower and such Responsible Officer shall be conclusively presumed to have acted on behalf of the Borrower.
“Restricted Payment” shall mean:
(1) the declaration or payment of any dividends or any other distributions of any sort in respect of Equity Interests of the Borrower or any Restricted Subsidiary (including any payment in connection with any merger or consolidation involving the Borrower or any Restricted Subsidiary) or similar payment to the direct or indirect holders of such Equity Interests, other than:
(a) dividends or distributions payable solely in Equity Interests of the Borrower (other than Disqualified Stock);
(b) dividends or distributions payable solely to the Borrower or a Restricted Subsidiary; and
(c) pro rata dividends or other distributions made by a Restricted Subsidiary to minority stockholders (or owners of an equivalent interest in the case of a Subsidiary that is an entity other than a corporation);
(2) the purchase, repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Borrower or any Restricted Subsidiary held by any other Person (other than any acquisition or retirement for value from, or payment to, the Borrower or any Restricted Subsidiary); or
(3) the purchase, repurchase, redemption, defeasance or other acquisition or retirement for value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment of any Subordinated Obligations of the Borrower or any Guarantor (other than (a) any intercompany Indebtedness between or among the Borrower and any Restricted Subsidiary and (b) the purchase, repurchase or other acquisition of Subordinated Obligations acquired in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of acquisition),
in each case, including any of the foregoing that is effected by Division.
“Restricted Subsidiary” shall mean any Subsidiary of the Borrower that is not an Unrestricted Subsidiary.
“Revolving Credit Commitment” shall mean, as to any Lender at any time, the amount as of the Closing Date set forth opposite its name on Schedule 1.1(B) in the column labeled “Amount of Commitment,” as such Commitment is thereafter assigned pursuant to an Assignment and Assumption Agreement, increased pursuant to Section 2.12 [Increase in Revolving Credit Commitments] or decreased pursuant to Section 2.4 [Commitment Reduction], and “Revolving Credit Commitments” shall mean the aggregate Revolving Credit Commitments of all of the Lenders.
“Revolving Credit Loans” shall mean collectively and “Revolving Credit Loan” shall mean separately all Revolving Credit Loans or any Revolving Credit Loan made by the Lenders or one of the Lenders to the Borrower pursuant to Section 2.1.1 [Revolving Credit Loans] or Section 2.10.3 [Participations, Disbursements, Reimbursement].
“Revolving Credit Notes” shall mean collectively and “Revolving Credit Note” shall mean separately all the promissory notes of the Borrower in the form of Exhibit 1.1(N)(1) evidencing the Revolving Credit Loans.
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“Revolving Exposure” shall mean, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender’s Revolving Credit Loans and its Letter of Credit Obligations and Swingline Exposure at such time.
“Revolving Facility Usage” shall mean at any time the sum of the outstanding Revolving Credit Loans, the outstanding Swing Loans, and the Letter of Credit Obligations.
“Rights of Way” shall have the meaning assigned to such term in Section 6.8(b) [Properties].
“Sanctioned Country” shall mean a country, territory or region subject to a sanctions program maintained under any Anti-Terrorism Law.
“Sanctioned Person” shall mean any individual person, group, regime, entity or thing listed or otherwise recognized as a specially designated, prohibited, sanctioned or debarred person, group, regime, entity or thing, or subject to any limitations or prohibitions (including but not limited to the blocking of property or rejection of transactions), under any Anti-Terrorism Law.
“SEC” shall mean the Securities and Exchange Commission, or any Official Body succeeding to any of its principal functions.
“Secured Leverage Ratio” means, as of any date, the ratio of:
(1) (a) Consolidated Indebtedness (other than any Consolidated Indebtedness that is not secured by any asset of the Borrower or any of its Restricted Subsidiaries) as of such date minus (b) (i) if no Loans are outstanding as of such date (or if the Secured Leverage Ratio is being determined on a Pro Forma Basis for determining the permissibility of any transaction, if any Loans outstanding will be fully repaid in connection with such transaction on such date), Cash on Hand as of such date or (ii) if any Loans are outstanding as of such date (or if the Secured Leverage Ratio is being determined on a Pro Forma Basis for determining the permissibility of any transaction, if any Loans would be outstanding in connection with such transaction on such date), up to $50,000,000 of Cash on Hand as of such date, in each case, after giving effect to all transactions occurring on such date, to
(2) Consolidated EBITDA of the Borrower for the period of four fiscal quarters of the Borrower most recently ended on or prior to the date of determination.
“Secured Parties” shall mean collectively, the Agents, the Swingline Lender, the Issuing Lenders, the Lenders, the Lender-Related Persons and any provider of a Specified Swap Agreement or Other Lender Provided Financial Service Product.
“Securities Account” shall mean any “securities account” as defined in the UCC in effect in the State of New York from time to time.
“Securities Act” shall mean the Securities Act of 1933.
“Security Agreement” shall mean the Amended and Restated Security Agreement, dated as of the Closing Date, executed and delivered by each of the Loan Parties to the Collateral Agent for the benefit of the Secured Parties.
“Security Documents” shall mean, collectively, the Security Agreement, the Mortgages, the Patent, Trademark and Copyright Security Agreement and each other security document or pledge agreement delivered in accordance with applicable local Law to grant a valid, perfected security interest in any property as Collateral for the Obligations, and all UCC or other financing statements or instruments of perfection required by this Agreement or any other such security document or pledge agreement to be filed with respect to the security interests in property and fixtures created pursuant to any
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document or instrument utilized to pledge or grant or purport to pledge or grant a security interest or Lien on any property as Collateral for the Obligations, and amendments, supplements or joinders to the foregoing.
“Settlement Date” shall mean the Business Day on which the Administrative Agent elects to effect settlement pursuant to Section 5.10 [Settlement Date Procedures].
“SOFR” shall mean, for any day, a rate equal to the secured overnight financing rate as administered by the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).
“SOFR Adjustment” shall mean ten basis points (0.10%).
“SOFR Floor” shall mean a rate of interest per annum equal to zero basis points (0.00%).
“SOFR Reserve Percentage” shall mean, for any day, the maximum effective percentage in effect on such day, if any, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the reserve requirements (including, without limitation, supplemental, marginal and emergency reserve requirements) with respect to SOFR funding.
“Solvent” shall mean, with respect to any Person on any date of determination, taking into account such right of reimbursement, contribution or similar right available to such Person from other Persons, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person, (b) the present fair saleable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay such debts and liabilities as they mature, (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which such Person is engaged, and (e) such Person is able to pay its debts and liabilities, contingent obligations and other commitments as they mature in the ordinary course of business. In computing the amount of contingent liabilities at any time, it is intended that such liabilities will be computed at the amount which, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.
“S&P” shall mean S&P Global Ratings, business of S&P Global Ratings, Inc., and any successor thereto.
“Specified Swap Agreement” shall mean (i) any Swap Agreement entered into for the purpose of hedging risk between (a) any Loan Party and (b) any counterparty that is, or was at the Existing Credit Agreement Closing Date or at the time such Swap Agreement was entered into, the Administrative Agent, a Lender or an Affiliate of an entity that is the Administrative Agent or an entity that is a Lender or (ii) any Swap Agreement that has been in effect since prior to the Existing Credit Agreement Closing Date, as set forth on Schedule 1.1(S) and is between (a) any Loan Party and (b) any counterparty that was the administrative agent, a lender or an Affiliate of an entity that is the administrative agent or an entity that is a lender under the Existing Credit Agreement and has appointed the Collateral Agent as its collateral agent under the Security Documents pursuant to arrangements reasonably satisfactory to the Administrative Agent.
“Standby Letter of Credit” shall mean a Letter of Credit issued to support obligations of the Borrower or any Restricted Subsidiary, contingent or otherwise, which finance the working capital and business needs of the Borrower and the Restricted Subsidiaries.
“State Pipeline Regulatory Agency” shall mean any state Official Body with jurisdiction over or with respect to any Gathering Systems.
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“Stated Maturity” shall mean, with respect to any Indebtedness, the maturity date (or specified date on which the final payment of principal on such Indebtedness is due) applicable thereto including as such maturity date (or specified date) may be changed to an earlier date pursuant to the provisions of the documents governing such Indebtedness including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such Indebtedness at the option of the holder thereof upon the happening of any contingency unless such contingency has occurred).
“Subordinated Obligation” shall mean any Indebtedness of the Borrower or any Guarantor (whether outstanding on the Existing Credit Agreement Closing Date or thereafter incurred) which is subordinate or junior in right of payment to, in the case of the Borrower, the Obligations or, in the case of a Guarantor, its Guaranty of the Obligations pursuant to a written agreement to that effect.
“Subsidiary” shall mean, with respect to any Person, any corporation, association, partnership or other business entity of which more than 50% of the total voting power of the Voting Stock thereof is at the time owned or controlled, directly or indirectly, by:
(1) such Person;
(2) such Person and one or more Subsidiaries of such Person; or
(3) one or more Subsidiaries of such Person.
Unless otherwise specified, “Subsidiary” refers to a Subsidiary of the Borrower.
“Subsidiary Shares” shall have the meaning specified in Section 6.3 [Subsidiaries].
“Supported QFC” shall have the meaning assigned to such term in Section 11.17 [Acknowledgement Regarding Any Supported QFCs].
“Swap” shall mean any “swap” as defined in Section 1a(47) of the Commodity Exchange Act and regulations thereunder, other than (a) a swap entered into, or subject to the rules of, a board of trade designated as a contract market under Section 5 of the Commodity Exchange Act, or (b) a commodity option entered into pursuant to Commodity Futures Trading Commission Regulation 32.3(a).
“Swap Agreement” shall mean (i) any Interest Rate Agreement, (ii) any Currency Agreement or (iii) any cap, floor, collar, exchange transaction, hedging contract, forward contract, swap agreement, futures contract, call or put option or any other similar agreement or other exchange or protection agreement relating to commodity prices, securities prices or financial market conditions.
“Swap Obligation” shall mean, with respect to any Guarantor, any obligation to pay or perform under any agreement, contract or transaction that constitutes a Swap.
“Swing Loan Note” shall mean a promissory note of the Borrower in the form of Exhibit 1.1(N)(2) evidencing the Swing Loans.
“Swing Loan Request” shall mean a request for Swing Loans made in accordance with Section 2.5.2 [Swing Loan Requests].
“Swing Loans” shall mean collectively and “Swing Loan” shall mean separately all Swing Loans or any Swing Loan made by the Swingline Lender to the Borrower pursuant to Section 2.6.3 [Making Swing Loans].
“Swingline Cap” shall mean, at any time, the lesser of (i) $25,000,000 and (ii) the Revolving Credit Commitments at such time.
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“Swingline Exposure” shall mean, at any time, the aggregate principal amount of all Swing Loans outstanding at such time. The Swingline Exposure of any Lender at any time shall be its Ratable Share of the total Swingline Exposure at such time.
“Swingline Lender” shall mean the Administrative Agent in its capacity as the lender of Swing Loans.
“Taxes” shall mean all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Official Body, including any interest, additions to tax or penalties applicable thereto. “Taxation” shall have a correlative meaning.
“Temporary Cash Investments” shall mean any of the following:
(1) any Investment in direct obligations of the United States of America or any agency thereof or obligations guaranteed by the United States of America or any agency thereof, in each case maturing not later than one year following acquisition thereof;
(2) Investments in time deposit accounts, certificates of deposit and money market deposits maturing within one year of the date of acquisition thereof issued by a bank or trust company which is organized under the laws of the United States of America, any state thereof or any foreign country recognized by the United States, and which bank or trust company has capital, surplus and undivided profits aggregating in excess of $250.0 million (or the foreign currency equivalent thereof) and has outstanding debt which is rated “A-” (or such similar equivalent rating) or higher by at least one nationally recognized statistical rating organization (as defined in Section 3(a)(62) of the Exchange Act) or any money-market fund sponsored by a registered broker dealer or mutual fund distributor whose assets consist of obligations of the types described in clauses (1), (2), (3), (4) and (5) of this definition;
(3) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (1) of this definition entered into with a bank meeting the qualifications described in clause (2) of this definition;
(4) Investments in commercial paper, maturing not more than 180 days after the date of acquisition, issued by a Person (other than an Affiliate of the Borrower) organized and in existence under the laws of the United States of America or any foreign country recognized by the United States of America with a rating at the time as of which any Investment therein is made of “P-2” (or higher) according to Moody’s or “A-2” (or higher) according to S&P or “R-1” (or higher) by Dominion Bond Rating Service Limited or Canadian Bond Rating Service, Inc. (in the case of a Canadian issuer);
(5) Investments in securities with maturities of six months or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States of America, or by any political subdivision or taxing authority thereof, and rated at least “A” by S&P or “A-2” by Moody’s;
(6) Investments in asset-backed securities maturing within one year of the date of acquisition thereof with a long-term rating at the time as of which any Investment therein is made of “A” (or higher) by Dominion Bond Rating Service Limited or Canadian Bond Rating Service, Inc. (in the case of a Canadian issuer);
(7) obligations of any foreign government or obligations that possess a guaranty of the full faith and credit of any foreign government maturing not later than one year after acquisition thereof;
(8) obligations of United States government-sponsored enterprises, Federal agencies, and Federal financing banks that are not otherwise authorized including, but not limited to, (i) United States government-sponsored enterprises such as instrumentalities of the Federal
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Credit System (Bank for Cooperatives, Federal Land Banks), Federal Home Loan Banks and Federal National Mortgage Association and (ii) Federal agencies such as instrumentalities of the Department of Housing and Urban Development (Federal Housing Administration, Government National Mortgage Association), Export-Import Bank, Farmers Home Administration and Tennessee Valley Authority, in each case maturing not later than one year following acquisition thereof;
(9) debt obligations (other than commercial paper obligations) of domestic or foreign corporations maturing not later than one year after acquisition thereof;
(10) preferred stock obligations with a floating rate dividend that is reset periodically at auction maturing not later than one year after acquisition thereof;
(11) Investments in repurchase agreements collateralized by any of the above securities eligible for outright purchase; provided that the collateral is delivered to a bank custody account in accordance with the terms of a written repurchase agreement with a dealer or bank; and
(12) Investments in shares of institutional mutual funds whose investment policies are essentially in agreement with the type and criteria for Investments otherwise set forth in this definition,
provided that Investments described in clauses (7) through (12) of this definition are restricted to obligations rated no lower than “A3” or “P-1” by Moody’s or “A-” or “A-1” by S&P.
“Term SOFR Administrator” shall mean CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by the Administrative Agent in its reasonable discretion).
“Term SOFR Rate” shall mean, with respect to any amount to which the Term SOFR Rate Option applies, for any Interest Period, the interest rate per annum determined by the Administrative Agent by dividing (the resulting quotient rounded upwards, at the Administrative Agent’s discretion, to the nearest 1/100th of 1%) (A) the Term SOFR Reference Rate for a tenor comparable to such Interest Period, as such rate is published by the Term SOFR Administrator on the day (the “Term SOFR Determination Date”) that is two (2) Business Days prior to the first day of such Interest Period, by (B) a number equal to 1.00 minus the SOFR Reserve Percentage. If the Term SOFR Reference Rate for the applicable tenor has not been published or replaced with a Benchmark Replacement by 5:00 p.m. (Pittsburgh, Pennsylvania time) on the Term SOFR Determination Date, then the Term SOFR Reference Rate, for purposes of clause (A) in the preceding sentence, shall be the Term SOFR Reference Rate for such tenor on the first Business Day preceding such Term SOFR Determination Date for which such Term SOFR Reference Rate for such tenor was published in accordance herewith, so long as such first preceding Business Day is not more than three (3) Business Days prior to such Term SOFR Determination Date. The Term SOFR Rate shall be adjusted automatically without notice to the Borrower on and as of (i) the first day of each Interest Period, and (ii) the effective date of any change in the SOFR Reserve Percentage.
“Term SOFR Rate Loan” shall mean a Loan that bears interest based on Term SOFR Rate.
“Term SOFR Rate Option” shall mean the option of the Borrower to have Loans bear interest at the rate and under the terms set forth in Section 4.1.1(a)(ii) [Revolving Credit Term SOFR Rate Option].
“Term SOFR Reference Rate” shall mean the forward-looking term rate based on SOFR.
“Threshold Amount” shall mean $25,000,000.
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“Total Leverage Ratio” shall mean, as of any date of determination, the ratio of:
(1) (a) Consolidated Indebtedness as of such date minus (b)(i) if no Loans are outstanding as of such date (or if the Total Leverage Ratio is being determined on a Pro Forma Basis for determining the permissibility of any transaction, if any Loans outstanding will be fully repaid in connection with such transaction on such date), Cash on Hand as of such date or (ii) if any Loans are outstanding as of such date (or if the Total Leverage Ratio is being determined on a Pro Forma Basis for determining the permissibility of any transaction, if any Loans would be outstanding in connection with such transaction on such date), up to $50,000,000 of Cash on Hand as of such date, in each case, after giving effect to all transactions occurring on such date, to
(2) Consolidated EBITDA of the Borrower for the period of four fiscal quarters of the Borrower most recently ended on or prior to the date of determination.
“Transactions” shall mean (i) the execution and delivery of the Loan Documents on the Closing Date, (ii) the prepayment in full of all amounts outstanding under the Existing Credit Agreement, including all unpaid principal, interest, breakage fees and all other fees and charges thereunder as of the Closing Date and the termination of all commitments thereunder and (iii) payment of fees and expenses in connection with the foregoing.
“Type” shall mean, with respect to Amendment No. 1 Existing Revolving Credit Loans, whether such Amendment No. 1 Existing Revolving Credit Loans are Amendment No. 1 Existing Revolving Credit A Loans or Amendment No. 1 Existing Revolving Credit B Loans.
“U.S. Special Resolution Regimes” shall have the meaning assigned to such term in Section 11.17 [Acknowledgement Regarding Any Supported QFCs].
“UCP” shall have the meaning assigned to such term in Section 11.11.1 [Governing Law].
“UK Financial Institution” shall mean any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended form time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.
“UK Resolution Authority” shall mean the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.
“Uniform Commercial Code” or “UCC” shall mean the Uniform Commercial Code as in effect in each applicable jurisdiction or other applicable Law entitled to all the rights, benefits and priorities provided by the Uniform Commercial Code or such Law.
“United States Tax Compliance Certificate” shall have the meaning assigned to such term in Section 5.8.5(b)(i)(C) [Status of Lenders].
“Unrestricted Subsidiary” shall mean (i) any Subsidiary of the Borrower (including any newly acquired or newly formed Subsidiary or a Person becoming a Subsidiary through merger or consolidation or Investment therein) that is designated by the Board of Directors of the Borrower as an Unrestricted Subsidiary pursuant to a Board Resolution in accordance with Section 8.2.3 [Designation of Unrestricted Subsidiaries] and (ii) the Subsidiaries of the foregoing; provided that, for the avoidance of doubt, all Investments in any Person referred to in either of the foregoing clauses by the Borrower or a Restricted Subsidiary on or following the Closing Date shall be made pursuant to and subject to capacity under Section 8.2.4 [Loans and Investments].
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“U.S. Government Securities Business Day” shall mean any day except for (a) a Saturday or Sunday or (b) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.
“USA PATRIOT Act” shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.
“Voting Stock” of a Person shall mean all classes of Capital Stock of such Person then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof.
“Write-Down and Conversion Powers” shall mean, (a) 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, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.
1.bConstruction.
Unless the context of this Agreement otherwise clearly requires, the following rules of construction shall apply to this Agreement and each of the other Loan Documents: (i) references to the plural include the singular, the plural, the part and the whole and the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation”; (ii) the words “hereof,” “herein,” “hereunder,” “hereto” and similar terms in this Agreement or any other Loan Document refer to this Agreement or such other Loan Document as a whole; (iii) article, section, subsection, clause, schedule and exhibit references are to this Agreement or other Loan Document, as the case may be, unless otherwise specified; (iv) reference to any Person includes such Person’s permitted successors and assigns; (v) unless otherwise provided, reference to any agreement, including this Agreement and any other Loan Document together with the schedules and exhibits hereto or thereto, document or instrument, order, declaration, understanding or other arrangement means such agreement, document, instrument, order, declaration, understanding or other arrangement as amended, restated, supplemented, modified, extended, renewed, refunded, superseded, substituted for, replaced, refinanced or increased in whole or in part, from time to time, to the extent not prohibited hereunder; (vi) any reference to any Law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such Law and any reference to any Law shall, unless otherwise specified, refer to such Law as amended, modified, supplemented or replaced from time to time; (vii) relative to the determination of any period of time, “from” means “from and including,” “to” means “to but excluding,” and “through” means “through and including”; (viii) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights; (ix) section headings herein and in each other Loan Document are included for convenience and shall not affect the interpretation of this Agreement or such Loan Document; (x) unless otherwise specified, all references herein to times of day shall be references to Eastern time; and (xi) references to the “date hereof” or “date of this Agreement” shall be to the Closing Date.
1.cAccounting Principles.
Except as otherwise provided in this Agreement, all computations and determinations as to accounting or financial matters and all financial statements to be delivered pursuant to this Agreement shall be made and prepared in accordance with GAAP (including principles of consolidation where appropriate), and all accounting or financial terms shall have the meanings ascribed to such terms by GAAP; provided, however, that all accounting terms used in Section 8.2 [Negative Covenants] (and all
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defined terms used in the definition of any accounting term used in Section 8.2 [Negative Covenants] shall have the meaning given to such terms (and defined terms) under GAAP as in effect on the date hereof applied on a basis consistent with those used in preparing the Historical Statements referred to in Section 6.9(a) [Historical Statements]). For the avoidance of doubt, (i) in no event shall any lease be deemed a capital lease for purposes of this Agreement if such lease would have been categorized as an operating lease as determined in accordance with GAAP prior to giving effect to the Accounting Standards Codification Topic 842, Leases and (ii) all lease liabilities and right of use assets in each case related to operating leases shall be excluded from all calculations made under this Agreement. If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.
1.dValuations.
Whenever this Agreement requires the determination of the monetary value of “other consideration,” a Guaranty, “other obligations” or an Investment and the computation method to determine such monetary value is not already addressed by GAAP, (i) the monetary value of “other consideration” or an Investment of tangible property shall be calculated as the Fair Market Value of such consideration or tangible property, (ii) the monetary value of any Guaranty at any time of a fixed monetary obligation shall be the amount of such fixed monetary obligation at such time, (iii) the monetary value of any Guaranty of a fixed stream of monetary obligations at any time shall be the present value of the remaining amounts of such stream of monetary obligations at such time discounted at a rate equal to the Borrower’s cost of funds at such time, (iv) the monetary value of a Guaranty of performance or of contingent liabilities at any time shall be the amount which, in light of all the facts and circumstances existing at the time, represent the amount which would reasonably be expected to become an actual or matured monetary obligation or liability of the Person making such Guaranty determined by such Person in good faith, or (v) the monetary value of “other obligations,” contingent or otherwise, at any time shall be the amount which, in light of all the facts and circumstances existing at the time, represent the amount which would reasonably be expected to become an actual or matured monetary obligation or liability of the Person who is obligated for such “other obligations.”
1.eLetter of Credit Amounts.
Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such time; provided, however, that with respect to any Letter of Credit that, by its terms or the terms of any Issuer Document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such times.
1.fInterest Rates.
Section 4.6(d) [Benchmark Replacement Setting] of this Agreement provides a mechanism for determining an alternative rate of interest in the event that the Term SOFR Rate is no longer available or in certain other circumstances. The Administrative Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to, the administration, submission or any other matter related to the Term SOFR Rate or with respect to any alternative or successor rate thereto, or replacement rate therefor.
- REVOLVING CREDIT AND SWING LOAN FACILITIES
2.1Commitments.
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2.1.1Revolving Credit Loans.
Subject to the terms and conditions hereof and relying upon the representations and warranties herein set forth, each Lender severally agrees to make Revolving Credit Loans in U.S. Dollars to the Borrower at any time or from time to time on or after the date hereof to, but not including, the Expiration Date; provided that after giving effect to each such Loan, (i) such Lender’s Revolving Exposure shall not exceed such Lender’s Revolving Credit Commitment, (ii) the Revolving Facility Usage shall not exceed the Revolving Credit Commitments and (iii) the aggregate amount of Indebtedness under this Agreement shall not exceed the Applicable Notes Indenture Cap; provided, further, that (x) at the Administrative Agent’s request, the Borrower shall provide the Administrative Agent calculations and supporting information reasonably satisfactory to the Administrative Agent showing compliance with clause (iii) and (y) notwithstanding the foregoing clause (x), the Administrative Agent shall have no obligation to request such calculation or information or to determine compliance with clause (iii), and shall be fully entitled to assume (without any further investigation) that each borrowing of Revolving Credit Loans complies with clause (iii) if the Borrower makes a Loan Request for such borrowing. Within such limits of time and amount and subject to the other provisions of this Agreement, the Borrower may borrow, repay and reborrow pursuant to this Section 2.1.1 [Revolving Credit Loans].
With respect to any Incoming Lender or Increased Lender, subject to the terms and conditions set forth in Section 7 of this Agreement, such Lender agrees to fund on the Closing Date such amounts to the Administrative Agent to the extent necessary so that the principal amounts of its Revolving Credit Loans and Participation Advances have been funded by such Lender in accordance with its Ratable Share and to acquire participations in Letters of Credit and Swing Loans so that such Lender’s participations therein are in accordance with its Ratable Share as of the Closing Date. Any such amounts so received by the Administrative Agent pursuant to the immediately preceding sentence shall be disbursed on the Closing Date to Decreased Lenders and Exiting Lenders, so that after such fundings and disbursements the Revolving Credit Loans and Participation Advances have been funded in accordance with each Lender’s Ratable Share as of the Closing Date. For the purposes of the fundings and other adjustments on the Closing Date pursuant to this paragraph only and for no other purpose, each Existing Lender (other than an Existing Lender that is a Exiting Lender) waives (x) the payment of any breakage costs pursuant to Section 5.9 of the Existing Credit Agreement in connection with the payments pursuant to the immediately preceding sentence, (y) delivery of any Loan Requests and notices of prepayment in connection with the adjustments pursuant to this paragraph, whether hereunder or under the Existing Credit Agreement and (z) minimum borrowing and prepayment amounts in connection with the fundings and other adjustments pursuant to this paragraph. Existing Commitment Fees, Existing Letter of Credit Fees and Existing Interest shall be paid on the Closing Date only to Exiting Lenders in the amounts owed to such Exiting Lenders and not to Increased Lenders or Decreased Lenders (and the Increased Lenders and Decreased Lenders shall be paid Existing Commitment Fees, Existing Letter of Credit Fees and Existing Interest (computed, for the avoidance of doubt, at the rate applicable to such Existing Commitment Fees, Existing Letter of Credit Fees and Existing Interest under the Existing Credit Agreement) from the date that such Existing Commitment Fees, Existing Letter of Credit Fees and Existing Interest had so accrued under the Existing Credit Agreement), and such Existing Commitment Fees, Existing Letter of Credit Fees and Existing Interest shall be payable on the earlier of the first Payment Date hereunder following the Closing Date or any earlier date on which any Commitment Fees, Letter of Credit Fees or interest, as applicable, shall become payable hereunder. In the case of any assignment of any Loans, Participation Advances or Letter of Credit Obligations prior to such first Payment Date or earlier date of payment, if not otherwise specified in the Assignment Agreement applicable thereto, any unpaid Existing Commitment Fees, Existing Letter of Credit Fees or Existing Interest shall be payable to the assignee.
“Decreased Lender” means any Existing Lender whose Revolving Credit Commitment hereunder as of the Closing Date is less than the Existing Revolving Credit Commitment of such Existing Lender.
“Existing Commitment Fees” means Commitment Fees (under and as defined in the Existing Credit Agreement) that are accrued and unpaid as of the Closing Date.
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“Existing Interest” means interest on Loans (under and as defined in the Existing Credit Agreement) and Participation Advances (under and as defined in the Existing Credit Agreement) that are accrued and unpaid as of the Closing Date.
“Existing Lender” means a Person that was a Lender (under and as defined in the Existing Credit Agreement) immediately prior to the effectiveness of this Agreement on the Closing Date.
“Existing Letter of Credit Fees” means Letter of Credit Fees (under and as defined in the Existing Credit Agreement) that are accrued and unpaid as of the Closing Date.
“Existing Revolving Credit Commitment” means, as to any Existing Lender, such Existing Lender’s Revolving Credit Commitment (under and as defined in the Existing Credit Agreement) immediately prior to the effectiveness of this Agreement on the Closing Date.
“Exiting Lender” means any Existing Lender but that has no Revolving Credit Commitment hereunder as of the Closing Date.
“Incoming Lender” means, any Lender as of the Closing Date that is not an Existing Lender.
“Increased Lender” means any Existing Lender whose Revolving Credit Commitment hereunder as of the Closing Date is greater than the Existing Revolving Credit Commitment of such Existing Lender.
2.1.2Swing Loans.
Subject to the terms and conditions hereof and relying upon the representations and warranties herein set forth, and in order to facilitate loans and repayments between Settlement Dates, the Swingline Lender may, at its option, cancelable at any time for any reason whatsoever, make swing loans (the “Swing Loans”) to the Borrower at any time or from time to time after the date hereof to, but not including, the Expiration Date, in an aggregate principal amount up to but not in excess of the Swingline Cap; provided that, after giving effect to each such Loan, (i) the Revolving Facility Usage shall not at any time exceed the Revolving Credit Commitments and (ii) the aggregate amount of Indebtedness under this Agreement shall not exceed the Applicable Notes Indenture Cap; provided, further, that (x) at the Administrative Agent’s request, the Borrower shall provide the Administrative Agent calculations and supporting information reasonably satisfactory to the Administrative Agent showing compliance with clause (ii) and (y) notwithstanding the foregoing clause (x), the Administrative Agent shall have no obligation to request such calculation or information or to determine compliance with clause (ii), and shall be fully entitled to assume (without any further investigation) that each borrowing of Swing Loans complies with clause (ii) if the Borrower borrows Swing Loans. Within such limits of time and amount and subject to the other provisions of this Agreement, the Borrower may borrow, repay and reborrow pursuant to this Section 2.1.2 [Swing Loans].
2.aNature of Lenders’ Obligations with Respect to Revolving Credit Loans.
Each Lender shall be obligated to participate in each request for Revolving Credit Loans pursuant to Section 2.5 [Loan Requests] in accordance with its Ratable Share. The obligations of each Lender hereunder are several. The failure of any Lender to perform its obligations hereunder shall not affect the Obligations of the Borrower to any other party nor shall any other party be liable for the failure of such Lender to perform its obligations hereunder. The Lenders shall have no obligation to make Revolving Credit Loans hereunder on or after the Expiration Date.
2.bCommitment Fees.
Accruing from the date hereof until the Expiration Date, the Borrower agrees to pay to the Administrative Agent for the account of each Lender, as consideration for such Lender’s Revolving Credit Commitment hereunder, a nonrefundable commitment fee (the “Commitment Fee”) equal to the
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Applicable Commitment Fee Rate (computed on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed) on the average daily difference between the amount of (a) such Lender’s Revolving Credit Commitment as the same may be constituted from time to time and (b) such Lender’s Revolving Exposure (for purposes of this computation, Swing Loans shall not be deemed to be borrowed amounts under its Revolving Credit Commitment); provided, however, that any Commitment Fee accrued with respect to the Revolving Credit Commitment of a Defaulting Lender during the period prior to the time such Lender became a Defaulting Lender and unpaid at such time shall not be payable by the Borrower so long as such Lender shall be a Defaulting Lender except to the extent that such Commitment Fee shall otherwise have been due and payable by the Borrower prior to such time; and provided further that no Commitment Fee shall accrue with respect to the Revolving Credit Commitment of a Defaulting Lender so long as such Lender shall be a Defaulting Lender. Subject to the proviso in the directly preceding sentence, all Commitment Fees shall be payable in arrears on each Payment Date.
2.cCommitment Reduction.
2.4.1Voluntary.
The Borrower shall have the right any time and from time to time, without premium or penalty, upon three (3) Business Days’ prior written notice to the Administrative Agent to permanently reduce, in whole multiples of $5,000,000, or terminate the Revolving Credit Commitments; provided that the Revolving Credit Commitments may not be reduced pursuant to this Section 2.4.1 below the Revolving Facility Usage. All notices to reduce Revolving Credit Commitments shall be irrevocable, except that any such notice may state that it is conditional upon the consummation of a financing transaction, in which case such notice may be revoked or delayed by the Borrower (by notice to the Administrative Agent on or prior to the specified date of reduction) if such condition is not satisfied.
2.4.2Mandatory.
The Revolving Credit Commitments shall terminate on the Expiration Date.
2.4.3Effect of Commitment Reduction.
Each reduction of Revolving Credit Commitments shall ratably reduce the Revolving Credit Commitments of the Lenders. Any reduction or termination of the Revolving Credit Commitments shall be accompanied by (a) the payment in full of any Commitment Fee then accrued on the amount of such reduction or termination and (b) to the extent that the Revolving Facility Usage exceeds the Revolving Credit Commitment as so reduced or terminated, first, the prepayment of Swing Loans, second, the prepayment of Revolving Credit Loans and third, the Cash Collateralization for the benefit of the Issuing Lenders (ratably among the Issuing Lenders) of the Borrower’s obligation under Letter of Credit Obligations (in an aggregate amount under the foregoing first, second and third clauses, equal to such excess), together with the full amount of interest accrued on the principal sum of Revolving Credit Loans to be prepaid (and all amounts referred to in Section 5.9 [Indemnity] hereof). From the effective date of any such reduction or termination, so long as any and all payments, prepayments and Cash Collateralizations required by either of the immediately preceding clauses (a) or (b) shall have been made in full, the Commitment Fee pursuant to Section 2.3 [Commitment Fees] shall correspondingly be reduced or cease to accrue. At the request of any Lender, the Administrative Agent shall promptly distribute to the Borrower, the Administrative Agent, each Issuing Lender and each Lender Schedule 1.1(B) as revised to reflect the reduction of Revolving Credit Commitments.
2.dLoan Requests.
2.5.iRevolving Credit Loan Requests.
Except as otherwise provided herein, subject to the notice requirements set forth in this Section 2.5.1 and the other terms and conditions hereof, the Borrower may from time to time prior to the Expiration Date request the Lenders to make Revolving Credit Loans, or renew or convert the Interest Rate Option applicable to existing Revolving Credit Loans pursuant to Section 4.2 [Interest Periods], by delivering to the Administrative Agent, not later than 11:00 a.m., (i) three (3) Business Days prior to the
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proposed Borrowing Date with respect to the making of Revolving Credit Loans to which the Term SOFR Rate Option applies or the conversion to or the renewal of the Term SOFR Rate Option for any Loans; and (ii) the same Business Day of the proposed Borrowing Date with respect to the making of a Revolving Credit Loan to which the Base Rate Option applies or the last day of the preceding Interest Period with respect to the conversion to the Base Rate Option for any Loan, of a duly completed request therefor substantially in the form of Exhibit 2.5.1 or a request by telephone immediately confirmed in writing in such form and delivered by facsimile or email (in “pdf,” “tif” or similar format) (each, a “Loan Request”); it being understood that the Administrative Agent may rely on the authority of any individual making such a telephonic request without the necessity of receipt of such written confirmation. Each Loan Request shall be irrevocable and shall specify or certify, as applicable (i) the proposed Borrowing Date; (ii) the aggregate amount of the proposed Loans comprising each Borrowing Tranche, which amount shall be in (x) an integral multiple of $1,000,000 and not less than $5,000,000 for each Borrowing Tranche under the Term SOFR Rate Option and (y) an integral multiple of $50,000 and not less than the lesser of $500,000 or the maximum amount available for Borrowing Tranches to which the Base Rate Option applies; (iii) whether the Term SOFR Rate Option or Base Rate Option shall apply to the proposed Loans comprising the applicable Borrowing Tranche; and (iv) in the case of a Borrowing Tranche to which the Term SOFR Rate Option applies, an appropriate Interest Period for the Loans comprising such Borrowing Tranche.
2.5.iiSwing Loan Requests.
Except as otherwise provided herein, the Borrower may from time to time prior to the Expiration Date request the Swingline Lender to make Swing Loans by delivery to the Swingline Lender not later than 2:00 p.m. on the proposed Borrowing Date of a duly completed request therefor substantially in the form of Exhibit 2.5.2 hereto or a request by telephone immediately confirmed in writing in such form and delivered by facsimile or email (in “pdf,” “tif” or similar format) (each, a “Swing Loan Request”); it being understood that the Swingline Lender may rely on the authority of any individual making such a telephonic request without the necessity of receipt of such written confirmation. Each Swing Loan Request shall be irrevocable and shall specify the proposed Borrowing Date and the principal amount of such Swing Loan, which shall be in integral multiples of $50,000 and shall be not less than $100,000.
2.2Making and Repayment of Loans.
2.6.iMaking Revolving Credit Loans.
The Administrative Agent shall, promptly after receipt by it of a Loan Request pursuant to Section 2.5.1 [Revolving Credit Loan Requests], notify the Lenders of its receipt of such Loan Request specifying the information provided by the Borrower and the apportionment among the Lenders of the requested Revolving Credit Loans as determined by the Administrative Agent in accordance with Section 2.2 [Nature of Lenders’ Obligations with Respect to Revolving Credit Loans]. Each Lender shall remit the principal amount of each Revolving Credit Loan to the Administrative Agent such that the Administrative Agent is able to, and the Administrative Agent shall, to the extent the Lenders have made funds available to it for such purpose and subject to Section 7.2 [Each Additional Loan or Letter of Credit], fund such Revolving Credit Loans to the Borrower in U.S. Dollars and immediately available funds at the Principal Office prior to 2:00 p.m. on the applicable Borrowing Date; provided that if any Lender fails to remit such funds to the Administrative Agent in a timely manner, the Administrative Agent may elect in its sole discretion to fund with its own funds the Revolving Credit Loans of such Lender on such Borrowing Date, and such Lender shall be subject to the repayment obligation in Section 2.6.2 [Presumptions by the Administrative Agent]. Each Lender may, at its option, make any Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect in any manner the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement.
2.6.iiPresumptions by the Administrative Agent.
Unless the Administrative Agent shall have received notice from a Lender prior to 1:00 p.m. on the proposed date of any Loan that such Lender will not make available to the Administrative
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Agent such Lender’s share of such Loan, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section 2.6.1 [Making Revolving Credit Loans] and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Loan available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of a payment to be made by such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation and (ii) in the case of a payment to be made by the Borrower, the interest rate applicable to Loans under the Base Rate Option. If such Lender pays its share of the applicable Loan to the Administrative Agent, then the amount so paid shall constitute such Lender’s Loan. Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.
2.6.iiiMaking Swing Loans.
So long as the Swingline Lender elects to make Swing Loans, the Swingline Lender shall, after receipt by it of a Swing Loan Request pursuant to Section 2.5.2 [Swing Loan Requests], fund such Swing Loan to the Borrower in U.S. Dollars and immediately available funds at the Principal Office prior to 3:00 p.m. on the Borrowing Date.
2.6.ivRepayment of Loans.
The Borrower shall repay all Loans together with all outstanding interest thereon on the Expiration Date.
2.3Notes.
2.7.iRevolving Credit Notes.
If requested by any Lender, the obligation of the Borrower to repay the aggregate unpaid principal amount of the Revolving Credit Loans made to it by such Lender, together with interest thereon, shall be evidenced by a Revolving Credit Note payable to the order of such Lender in a face amount equal to the Revolving Credit Commitment of such Lender. The Revolving Credit Loans shall mature, and the Borrower unconditionally agrees to pay in full the unpaid principal amount and all amounts outstanding and unpaid in respect of the Revolving Credit Loans to the Administrative Agent for the account of each Lender, on the Expiration Date.
2.7.iiSwing Loan Note.
The obligation of the Borrower to repay the unpaid principal amount of the Swing Loans made to it by the Swingline Lender, together with interest thereon, shall be evidenced by a Swing Loan Note payable to the order of the Swingline Lender in a face amount equal to the Swingline Cap.
2.4Use of Proceeds.
The proceeds of the Revolving Credit Loans will be used in accordance with Section 8.1.11 [Use of Proceeds].
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2.5[Reserved].
2.6Letters of Credit.
2.10.iIssuance of Letters of Credit.
(1)The Borrower may at any time prior to the Letter of Credit Expiration Date request the issuance of a letter of credit (each, a “Letter of Credit”), for its own account or the account of any Restricted Subsidiary, or the amendment or extension of an existing Letter of Credit, by delivering or transmitting by facsimile or email (in “pdf,” “tif” or similar format), to an Issuing Lender selected by the Borrower (with a copy to the Administrative Agent) a completed application for letter of credit, or request for such amendment or extension, as applicable, signed by the Borrower (or CNX Midstream GP, on behalf of the Borrower) (and, in the case of a Letter of Credit issued for the account of any Restricted Subsidiary, also signed by such Restricted Subsidiary) and otherwise in such form as such Issuing Lender may specify from time to time by no later than 10:00 a.m. at least five (5) Business Days, or such shorter period as may be agreed to by such Issuing Lender, in advance of the proposed date of issuance. The Borrower shall authorize and direct each Issuing Lender to name the Borrower as the “Applicant” or “Account Party” of each Letter of Credit and, in the case of a Letter of Credit issued for the account of any Restricted Subsidiary, to name such Restricted Subsidiary as the “Co-Applicant” of such Letter of Credit. Promptly after receipt of any letter of credit application, such Issuing Lender shall confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has received a copy of such Letter of Credit application and if not, such Issuing Lender will provide the Administrative Agent with a copy thereof. Letters of Credit may be issued in the form of a Standby Letter of Credit or a Commercial Letter of Credit; provided that in no event shall Truist Bank be required to issue any Commercial Letter of Credit. Letters of Credit shall be issued only in U.S. Dollars. For the avoidance of doubt, the Loan Parties acknowledge that each Letter of Credit issued for the account of Persons other than the Loan Parties shall constitute an Investment and Guaranty in an amount equal to the face amount of such Letter of Credit, without duplication, and shall be subject to the limitations set forth herein.
(2)Unless an Issuing Lender has received notice from any Lender, the Administrative Agent or any Loan Party, at least one day prior to the requested date of issuance, amendment or extension of the applicable Letter of Credit, that one or more applicable conditions in Section 7 [Conditions of Lending and Issuance of Letters of Credit] are not satisfied, then, subject to the terms and conditions hereof and in reliance on (among other things) the agreements of the other Lenders set forth in this Section 2.10 [Letters of Credit], such Issuing Lender or any of such Issuing Lender’s Affiliates will issue the proposed Letter of Credit or agree to such amendment or extension; provided that after giving effect thereto:
(1)no Letter of Credit shall expire later than the earlier of (x) subject to Section 2.10.1(c) [Issuance of Letters of Credit], twelve (12) months from the date of issuance or extension, unless the applicable Issuing Lender agrees, and (y) the Letter of Credit Expiration Date, unless the applicable Issuing Lender agrees and the Borrower complies with the requirements of Section 2.10.10 [Cash Collateral Prior to the Expiration Date]; and
(2)in no event shall (x) the aggregate amount of Letter of Credit Obligations exceed the Letter of Credit Aggregate Sublimit at any one time outstanding, (y) the aggregate amount of Letter of Credit Obligations with respect to Letters of Credit issued and outstanding by any Issuing Lender exceed its Letter of Credit Issuing Lender Sublimit at any one time (unless otherwise agreed to by such Issuing Lender) or (z) the Revolving Facility Usage exceed, at any one time, the Revolving Credit Commitments.
Each request for the issuance, amendment or extension of a Letter of Credit shall be deemed to be a representation by the Borrower that it shall be in compliance with the preceding sentence and with Section 7 [Conditions of Lending and Issuance of Letters of Credit] after giving effect to the requested issuance, amendment or extension of such Letter of Credit. Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to the beneficiary thereof, the applicable Issuing Lender
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will also deliver to the Borrower and the Administrative Agent a true and complete copy of such Letter of Credit or amendment.
(3)If the Borrower so requests in any applicable request for a Letter of Credit, the Issuing Lender may, in its discretion, agree to issue a Letter of Credit that has automatic extension provisions (each, an “Auto-Extension Letter of Credit”); provided that any such Auto-Extension Letter of Credit must permit the Issuing Lender to prevent any such extension at least once in each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the “Non-Extension Notice Date”) in each such twelve-month period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the Issuing Lender, the Borrower shall not be required to make a specific request to the Issuing Lender for any such extension. Once an Auto-Extension Letter of Credit has been issued, the Lenders shall be deemed to have authorized (but may not require) the Issuing Lender to permit the extension of such Letter of Credit at any time to an expiry date not later than the Letter of Credit Expiration Date; provided, however, that the Issuing Lender shall not permit any such extension if (A) the Issuing Lender has determined that it would not be permitted to issue such Letter of Credit in its revised form (as extended) under the terms hereof, or (B) it has received notice (which may be by telephone or in writing) on or before the day that is seven Business Days before the Non-Extension Notice Date (1) from the Administrative Agent that the Required Lenders have elected not to permit such extension or (2) from the Administrative Agent, any Lender or the Borrower that one or more of the applicable conditions specified in Section 7.2 [Each Additional Loan or Letter of Credit] are not then satisfied, and in each such case directing the Issuing Lender not to permit such extension.
(4)Notwithstanding Section 2.10.1(a) [Issuance of Letters of Credit], no Issuing Lender shall be under any obligation to issue any Letter of Credit if (i) any order, judgment or decree of any Official Body or arbitrator shall by its terms purport to enjoin or restrain such Issuing Lender from issuing the Letter of Credit, or any Law applicable to such Issuing Lender or any request or directive (whether or not having the force of law) from any Official Body with jurisdiction over such Issuing Lender shall prohibit, or request that such Issuing Lender refrain from, the issuance of letters of credit generally or the Letter of Credit in particular or shall impose upon such Issuing Lender with respect to the Letter of Credit any restriction, reserve or capital requirement (for which such Issuing Lender is not otherwise compensated hereunder) not in effect on the Existing Credit Agreement Closing Date, or shall impose upon such Issuing Lender any unreimbursed loss, cost or expense which was not applicable on the Existing Credit Agreement Closing Date and which such Issuing Lender in good faith deems material to it, or (ii) the issuance of the Letter of Credit would violate one or more policies of such Issuing Lender applicable to letters of credit generally.
(5)On the Closing Date, the outstanding Letters of Credit previously issued under the Existing Credit Agreement that are set forth on Schedule 2.10.1 (the “Existing Letters of Credit”) will automatically, without any action on the part of any Person, be deemed to be Letters of Credit issued hereunder for the account of the Borrower for all purposes of this Agreement and the other Loan Documents.
2.10.iiLetter of Credit Fees.
The Borrower shall pay (i) to the Administrative Agent for the ratable account of the Lenders a fee (the “Letter of Credit Fee”) equal to the Applicable Letter of Credit Fee Rate on the daily amount available to be drawn under each Letter of Credit, and (ii) to each Issuing Lender for its own account a fronting fee equal to 0.125% per annum on the daily amount available to be drawn under each Letter of Credit issued by such Issuing Lender. All Letter of Credit Fees and fronting fees shall be computed on the basis of a year of 360 days and actual days elapsed and shall be payable in arrears on each Payment Date following issuance of each Letter of Credit; provided, however, that fronting fees on Commercial Letters of Credit shall be payable at the time of issuance. The Borrower shall also pay to each Issuing Lender for such Issuing Lender’s sole account such Issuing Lender’s then in effect customary fees and administrative expenses payable with respect to the Letters of Credit issued by such Issuing Lender as such Issuing Lender may generally charge or incur from time to time in connection with the issuance, maintenance, extension, renewal, amendment (if any), assignment or transfer (if any), negotiation, and administration of Letters of Credit.
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2.10.iiiParticipations, Disbursements, Reimbursement.
(6)Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from such Issuing Lender a participation in such Letter of Credit and each drawing thereunder in an amount equal to such Lender’s Ratable Share of the maximum amount available to be drawn under such Letter of Credit and the amount of such drawing, respectively.
(7)In the event of any request for a drawing under a Letter of Credit by the beneficiary or transferee thereof, the applicable Issuing Lender will promptly notify the Borrower and the Administrative Agent thereof. The Borrower shall reimburse (such obligation to reimburse such Issuing Lender shall sometimes be referred to as a “Reimbursement Obligation”) such Issuing Lender prior to 12:00 noon on the next Business Day following the date that the Borrower has received such notice from such Issuing Lender (each such date, a “Reimbursement Date”) by paying to the Administrative Agent for the account of such Issuing Lender an amount equal to the amount so paid by such Issuing Lender plus interest at the interest rate applicable to Loans under the Base Rate Option from the date on which the amount was paid by such Issuing Lender to the date such Issuing Lender is reimbursed, unless otherwise required by the Administrative Agent or such Issuing Lender. In the event the Borrower fails to reimburse such Issuing Lender (through the Administrative Agent) for the full amount of any drawing under any Letter of Credit by 12:00 noon on the Reimbursement Date, the Administrative Agent will promptly notify each Lender thereof of the applicable LC Disbursement, the payment then due from the Borrower in respect thereof and each such Lender’s Ratable Share of the amount of such drawing. Any notice given by the Administrative Agent or Issuing Lender pursuant to this Section 2.10.3(b) may be oral if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.
(8)Each Lender shall upon any notice pursuant to Section 2.10.3(b) [Participations, Disbursements, Reimbursement] make available to the Administrative Agent for the account of the applicable Issuing Lender immediately available funds equal to its Ratable Share of the amount of the drawing, whereupon the Administrative Agent shall promptly pay to the Issuing Lender the amounts so received by it from the Lenders. If any Lender so notified fails to make available to the Administrative Agent for the account of such Issuing Lender the amount of such Lender’s Ratable Share of such amount by no later than 2:00 p.m. on the Reimbursement Date, then interest shall accrue on such Lender’s obligation to make such payment, from the Reimbursement Date to the date on which such Lender makes such payment (i) at a rate per annum equal to the Federal Funds Effective Rate during the first three (3) days following the Reimbursement Date and (ii) at a rate per annum equal to the rate applicable to Revolving Credit Loans under the Base Rate Option on and after the fourth day following the Reimbursement Date. Promptly following receipt by the Administrative Agent of any payment from the Borrower pursuant to this Section 2.10.3, the Administrative Agent shall distribute such payment to the Issuing Lender or, to the extent that Lenders have made payments pursuant to this Section 2.10.3(c) to reimburse the Issuing Lender, then to such Lender and the Issuing Lender as their interests may appear. Any payment made by a Lender pursuant to this Section 2.10.3(c) to reimburse the Issuing Lender for any LC Disbursement shall not constitute a Loan and shall not relieve the Borrower of its obligation to reimburse such LC Disbursement. The Administrative Agent and the applicable Issuing Lender will promptly give notice (as described in Section 2.10.3(b) [Participations, Disbursements, Reimbursement] above) of the occurrence of the Reimbursement Date, but failure of the Administrative Agent or such Issuing Lender to give any such notice on the Reimbursement Date or in sufficient time to enable any Lender to effect such payment on such date shall not relieve such Lender from its obligation under this Section 2.10.3(c) [Participations, Disbursements, Reimbursement].
(9)If the Issuing Lender shall make any LC Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in full as set forth in Section 2.10.3(b), the unpaid amount thereof shall bear interest, for each day from and including the first Business Day after receipt of notice to but excluding the date that the Borrower reimburses such LC Disbursement, at the rate per annum then applicable to Revolving Credit Loans under the Base Rate Option; provided that, if the Borrower fails to reimburse such LC Disbursement when due pursuant to Section 2.10.3(b), then Section 4.3(b) [Interest After Default] shall apply. Interest accrued pursuant to this paragraph shall be for the account of the Issuing Lender, except that interest accrued on and after the date of payment by any Lender pursuant to
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Section 2.10.3(b) to reimburse the Issuing Lender shall be for the account of such Lender to the extent of such payment.
2.10.iRepayment of Participation Advances.
(10)Upon (and only upon) receipt by the Administrative Agent for the account of an Issuing Lender of immediately available funds from the Borrower (i) in reimbursement of any payment made by such Issuing Lender under the Letter of Credit with respect to which any Lender has made a payment to the Administrative Agent for the account of such Issuing Lender pursuant to this Section 2.10.4 (each such payment by a Lender, a “Participation Advance”) to the Administrative Agent, or (ii) in payment of interest on such a payment made by such Issuing Lender under such a Letter of Credit, the Administrative Agent on behalf of such Issuing Lender will pay to each Lender, in the same funds as those received by the Administrative Agent, the amount of such Lender’s Ratable Share of such funds, except the Administrative Agent shall retain for the account of such Issuing Lender the amount of the Ratable Share of such funds of any Lender that did not make a Participation Advance in respect of such payment by such Issuing Lender.
(11)If an Issuing Lender or the Administrative Agent is required at any time to return to any Loan Party, or to a trustee, receiver, liquidator, custodian, or any official in any Insolvency Proceeding, any portion of any payment made by any Loan Party to the Administrative Agent for the account of the Issuing Lender pursuant to this Section in reimbursement of a payment made under any Letter of Credit or interest or fees thereon, each Lender shall, on demand of the Administrative Agent or such Issuing Lender, forthwith return to the Administrative Agent for the account of such Issuing Lender the amount of its Ratable Share of any amounts so returned by the Administrative Agent plus interest thereon from the date such demand is made to the date such amounts are returned by such Lender to the Administrative Agent, at a rate per annum equal to the Federal Funds Effective Rate in effect from time to time.
2.10.ivDocumentation.
Each Loan Party agrees to be bound by the terms of each Issuing Lender’s Issuer Documents and written regulations and customary practices relating to letters of credit, though such interpretation may be different from such Loan Party’s own. In the event of a conflict between an Issuer Document and this Agreement, this Agreement shall govern. It is understood and agreed that, except in the case of gross negligence or willful misconduct, no Issuing Lender shall be liable for any error, negligence and/or mistakes, whether of omission or commission, in following any Loan Party’s instructions or those contained in the Letters of Credit or any modifications, amendments or supplements thereto.
2.10.vDeterminations to Honor Drawing Requests.
In determining whether to honor any request for drawing under any Letter of Credit by the beneficiary thereof, the applicable Issuing Lender shall be responsible only to determine that the documents and certificates required to be delivered under such Letter of Credit have been delivered and that they comply on their face with the requirements of such Letter of Credit.
2.10.viNature of Participation and Reimbursement Obligations.
Each Lender’s obligation in accordance with this Agreement to make the Revolving Credit Loans or Participation Advances, as contemplated by Section 2.10.3 [Participations, Disbursements, Reimbursement] and the Obligations of the Borrower to reimburse each respective Issuing Lender upon a draw under a Letter of Credit shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Section 2.10 [Letters of Credit] under all circumstances, including the following circumstances:
(12)any set-off, counterclaim, recoupment, defense or other right which such Lender may have against the applicable Issuing Lender or any of its Affiliates, the Borrower or any other
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Person for any reason whatsoever, or which any Loan Party may have against the applicable Issuing Lender or any of its Affiliates, any Lender or any other Person for any reason whatsoever;
(13)any lack of validity or enforceability of any Letter of Credit;
(14)any claim of breach of warranty that might be made by any Loan Party or any Lender against any beneficiary of a Letter of Credit, or the existence of any claim, set-off, recoupment, counterclaim, crossclaim, defense or other right which any Loan Party or any Lender may have at any time against a beneficiary, successor beneficiary, any transferee or assignee of any Letter of Credit or the proceeds thereof (or any Persons for whom any such transferee may be acting), any Issuing Lender or its Affiliates or any Lender or any other Person or, whether in connection with this Agreement, the transactions contemplated herein or any unrelated transaction (including any underlying transaction between any Loan Party or Subsidiaries of a Loan Party and the beneficiary for which any Letter of Credit was procured);
(15)the lack of power or authority of any signer of (or any defect in or forgery of any signature or endorsement on) or the form of or lack of validity, sufficiency, accuracy, enforceability or genuineness of any draft, demand, instrument, certificate or other document presented under or in connection with any Letter of Credit, or any fraud or alleged fraud in connection with any Letter of Credit, or the transport of any property or provisions of services relating to a Letter of Credit, in each case even if such Issuing Lender or any of such Issuing Lender’s Affiliates has been notified thereof;
(16)payment by such Issuing Lender or any of its Affiliates under any Letter of Credit against presentation of a demand, draft or certificate or other document which does not comply with the terms of such Letter of Credit;
(17)the solvency of, or any acts or omissions by, any beneficiary of any Letter of Credit, or any other Person having a role in any transaction or obligation relating to a Letter of Credit, or the existence, nature, quality, quantity, condition, value or other characteristic of any property or services relating to a Letter of Credit;
(18)any failure by such Issuing Lender or any of such Issuing Lender’s Affiliates to issue any Letter of Credit in the form requested by any Loan Party, unless such Issuing Lender has received written notice from such Loan Party of such failure within three (3) Business Days after such Issuing Lender shall have furnished such Loan Party and the Administrative Agent a copy of such Letter of Credit and such error is material and no drawing has been made thereon prior to receipt of such notice;
(19)any adverse change in the business, operations, properties, assets, condition (financial or otherwise) or prospects of the Borrower or any of its Subsidiaries;
(20)any breach of this Agreement or any other Loan Document by any party thereto;
(21)the occurrence or continuance of an Insolvency Proceeding with respect to any Loan Party;
(22)the fact that an Event of Default or a Potential Default shall have occurred and be continuing;
(23)the fact that the Expiration Date shall have passed or this Agreement or any Commitments hereunder shall have been terminated or reduced; and
(24)any other circumstance or happening whatsoever, whether or not similar to any of the foregoing.
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2.10.iiIndemnity.
The Borrower hereby agrees to protect, indemnify, pay and save harmless each Issuing Lender and any of its Affiliates that has issued a Letter of Credit from and against any and all claims, demands, liabilities, damages, taxes (subject to the last sentence of this Section 2.10.8 [Indemnity]), penalties, interest, judgments, losses, costs, charges and expenses (including reasonable fees, expenses and disbursements of counsel) which such Issuing Lender or any of such Issuing Lender’s Affiliates may incur or be subject to as a consequence, direct or indirect, of the issuance of any Letter of Credit issued by it, other than as a result of the gross negligence or willful misconduct of such Issuing Lender as determined by a final non-appealable judgment of a court of competent jurisdiction. This Section 2.10.8 [Indemnity] shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.
2.10.iiiLiability for Acts and Omissions.
(25)As between any Loan Party and an Issuing Lender, or such Issuing Lender’s Affiliates, such Loan Party assumes all risks of the acts and omissions of, or misuse of the Letters of Credit by, the respective beneficiaries of such Letters of Credit. In furtherance and not in limitation of the foregoing, no Issuing Lender shall be responsible for any of the following including any losses or damages to any Loan Party or other Person or property relating therefrom: (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document (including all sight drafts, certificates and all other instruments) submitted by any party in connection with the application for an issuance of any such Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged (even if such Issuing Lender or such Issuing Lender’s Affiliates shall have been notified thereof); (ii) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) the failure of the beneficiary of any such Letter of Credit, or any other party to which such Letter of Credit may be transferred, to comply fully with any conditions required in order to draw upon such Letter of Credit or any other claim of any Loan Party against any beneficiary of such Letter of Credit, or any such transferee, or any dispute between or among any Loan Party and any beneficiary of any Letter of Credit or any such transferee; (iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (v) errors in interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any such Letter of Credit or of the proceeds thereof; (vii) the misapplication by the beneficiary of any such Letter of Credit of the proceeds of any drawing under such Letter of Credit; or (viii) any consequences arising from causes beyond the control of such Issuing Lender or such Issuing Lender’s Affiliates, as applicable, including any acts of any Official Body, and none of the above shall affect or impair, or prevent the vesting of, any of such Issuing Lender’s or such Issuing Lender’s Affiliates rights or powers hereunder. Nothing in the preceding sentence shall relieve the Issuing Lender from liability for such Issuing Lender’s gross negligence or willful misconduct in connection with actions or omissions described in clauses (i) through (viii) of such sentence, as determined by a final non-appealable judgment of a court of competent jurisdiction. In no event shall any Issuing Lender or any Issuing Lender’s Affiliates be liable to any Loan Party for any indirect, consequential, incidental, punitive, exemplary or special damages or expenses (including attorneys’ fees), or for any damages resulting from any change in the value of any property relating to a Letter of Credit.
(26)Without limiting the generality of the foregoing, each Issuing Lender and each of its Affiliates (i) may rely on any oral or other communication believed in good faith by such Issuing Lender or such Affiliate to have been authorized or given by or on behalf of the applicant for a Letter of Credit or any beneficiary, transferee, or assignee of proceeds thereof; (ii) may honor any presentation if the documents presented appear on their face substantially to comply with the terms and conditions of the relevant Letter of Credit; (iii) may honor a previously dishonored presentation under a Letter of Credit, whether such dishonor was pursuant to a court order, to settle or compromise any claim of wrongful dishonor, or otherwise, and shall be entitled to reimbursement to the same extent as if such presentation had initially been honored, together with any interest paid by such Issuing Lender or its Affiliate; (iv) may honor any drawing that is payable upon presentation of a statement advising negotiation or payment, upon receipt of such statement (even if such statement indicates that a draft or other document is being
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delivered separately), and shall not be liable for any failure of any such draft or other document to arrive, or to conform in any way with the relevant Letter of Credit; (v) may pay any paying or negotiating bank claiming that it rightfully honored under the laws or practices of the place where such bank is located; and (vi) may settle or adjust any claim or demand made on such Issuing Lender or its Affiliate in any way related to any order issued at the applicant’s request to an air carrier, a letter of guarantee or of indemnity issued to a carrier or any similar document (each, an “Order”) and honor any drawing in connection with any Letter of Credit that is the subject to such Order, notwithstanding that any drafts or other documents presented in connection with such Letter of Credit fail to conform in any way with such Letter of Credit. In furtherance and extension and not in limitation of the specific provisions set forth above, any action taken or omitted by such Issuing Lender or such Issuing Lender’s Affiliates under or in connection with the Letters of Credit issued by it, the Issuer Documents or any documents and certificates delivered thereunder, if taken or omitted in good faith, shall not put such Issuing Lender or such Issuing Lender’s Affiliates under any resulting liability to the Borrower or any Lender, unless such action taken or omitted is found in a final and nonappealable judgment by a court of competent jurisdiction to have constituted gross negligence or willful misconduct.
2.10.viiCash Collateral Prior to the Expiration Date.
If the Borrower or any other Loan Party requests the issuance, extension or renewal of any Letter of Credit and such Letter of Credit would have an expiration date which is after the Letter of Credit Expiration Date, no Issuing Lender shall be required to issue, extend or renew such Letter of Credit, but may elect to do so if the requirements of this Section 2.10.10 [Cash Collateral Prior to the Expiration Date] are satisfied. The Borrower shall, on or before the issuance, extension or renewal of such Letter of Credit, deposit and pledge Cash Collateral for each such Letter of Credit in an amount equal to 105% of the face value of such outstanding Letter of Credit plus the amount of fees that would be due under such Letter of Credit through the expiry date of such Letter of Credit. Such Cash Collateral shall be deposited pursuant to documentation reasonably satisfactory to the Administrative Agent and such Issuing Lender and the Borrower and shall be maintained in blocked deposit accounts at such Issuing Lender. The Borrower hereby grants to the applicable Issuing Lender and the Administrative Agent, on behalf of such Issuing Lender, a security interest in all Cash Collateral pledged to such Issuing Lender pursuant to this Section or otherwise under this Agreement. The Cash Collateral related to a particular Letter of Credit shall be released by the applicable Issuing Lender upon termination or expiration of such Letter of Credit and the reimbursement by the Loan Parties of all amounts drawn thereon and the payment in full of all fees accrued thereon through the date of such expiration or termination. After the Expiration Date, the Borrower shall pay any and all fees associated with any such Letter of Credit with an expiration date that extends beyond the Expiration Date directly to the applicable Issuing Lender.
2.10.viiiIssuing Lender Reporting Requirements.
Each Issuing Lender shall, on the first Business Day of each month, provide to the Administrative Agent and the Borrower a schedule of the Letters of Credit issued by it, in form and substance satisfactory to Administrative Agent, showing the date of issuance of each Letter of Credit, the account party, the original face amount (if any), and the expiration date of any Letter of Credit outstanding at any time during the preceding month, and any other information relating to such Letter of Credit that the Administrative Agent may request.
2.7Borrowings to Repay Swing Loans.
The Swingline Lender may, at its option, exercisable at any time for any reason whatsoever, demand repayment of the Swing Loans, and each Lender shall make a Revolving Credit Loan in an amount equal to such Lender’s Ratable Share of the aggregate principal amount of the outstanding Swing Loans, plus, if the Swingline Lender so requests, accrued interest thereon; provided that no Lender shall be obligated in any event to make Revolving Credit Loans in excess of the amount that would cause its Revolving Exposure to exceed its Revolving Credit Commitment. Revolving Credit Loans made pursuant to the preceding sentence shall bear interest at the Base Rate Option and shall be deemed to have been properly requested in accordance with Section 2.5.1 [Revolving Credit Loan Requests] without regard to any of the requirements of that provision. The Administrative Agent on behalf of the Swingline Lender shall provide notice to the Lenders (which may be telephonic or written
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notice by letter, facsimile or email (in “pdf,” “tif” or similar format)) no later than 11:00 a.m. on any Business Day that such Revolving Credit Loans are to be made under this Section 2.11 [Borrowings to Repay Swing Loans] and of the apportionment among the Lenders, and the Lenders shall be unconditionally obligated to fund such Revolving Credit Loans (whether or not the conditions specified in Section 2.5 [Loan Requests] or Section 7.2 [Each Additional Loan or Letter of Credit] are then satisfied) to the Administrative Agent on behalf of the Swingline Lender, no later than 3:00 p.m. on the Settlement Date.
2.8Increase in Revolving Credit Commitments.
(a) Increasing Lenders and New Lenders. The Borrower may, prior to the Expiration Date, request that (1) the current Lenders (each, a “Current Lender”) increase their Revolving Credit Commitments (any Current Lender which elects to increase its Revolving Credit Commitment shall be referred to as an “Increasing Lender”) and/or (2) one or more new lenders (each, a “New Lender”) join this Agreement and provide a Revolving Credit Commitment hereunder, subject to the following terms and conditions:
(i) No Obligation to Increase. No Current Lender shall be obligated to increase its Revolving Credit Commitment, and any increase in the Revolving Credit Commitment of any Current Lender shall be in the sole discretion of such Current Lender;
(ii) No Consent. No consent of any Lender, other than a Lender providing such Revolving Credit Commitment, shall be required to implement such increase;
(iii) Defaults. There shall exist no Event of Default or Potential Default on the effective date of such increase and after giving effect to such increase;
(iv) Increase in and Aggregate Amount of Revolving Credit Commitments. The amount of each individual increase in Revolving Credit Commitments is at least $50,000,000 (or such lesser amount as may be reasonably acceptable to the Administrative Agent) and all such increases in the aggregate shall not exceed $250,000,000;
(v) Resolutions; Opinion; Mortgage Amendments. The Loan Parties shall deliver to the Administrative Agent on or before the effective date of such increase the following documents in a form reasonably acceptable to the Administrative Agent: (1) certifications of their corporate secretaries with attached resolutions certifying that the increase in the Revolving Credit Commitments has been approved by the Loan Parties, (2) opinions of counsel, addressed to the Administrative Agent and the Lenders addressing the authorization, execution and enforceability of the Loan Documents executed in connection with such increase in the Revolving Credit Commitments, and (3) if requested by the Collateral Agent, amendments to the Mortgages executed and delivered by the applicable Loan Parties to the Collateral Agent for the benefit of the Secured Parties to reflect the increase in Revolving Credit Commitments, in form and substance reasonably satisfactory to the Administrative Agent, together with local counsel opinions regarding the due authorization, execution, delivery, and enforceability of such amendments to the Mortgages. The Loan Parties shall cause the amendments described in clause (3) above to be properly recorded and/or filed in the applicable filing or recording offices. Prior to the effectiveness of any such increase, the Loan Parties shall deliver the Required Flood Materials, and the effectiveness of any such increase shall be subject to the Required Flood Materials having been made available to the Lenders not less than five (5) Business Days prior to the effective date of such increase;
(vi) Notes. The Borrower shall execute and deliver (1) to each Increasing Lender that requests a Revolving Credit Note a replacement Revolving Credit Note reflecting the new amount of such Increasing Lender’s Revolving Credit Commitment after giving effect to the increase (and the prior Note issued to such Increasing Lender shall be deemed to be canceled and shall be returned to the Borrower as soon as practicable), and (2) to each New Lender that requests a Revolving Credit Note, a Revolving Credit Note reflecting the amount of such New Lender’s Revolving Credit Commitment;
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(vii) Approval of New Lenders. Any New Lender shall be subject to the consents specified in Section 11.8.2(c) [Required Consents] as if the increase in Revolving Commitments were an assignment;
(viii) Increasing Lenders. Each Increasing Lender shall confirm its agreement to increase its Revolving Credit Commitment pursuant to an acknowledgement in a form acceptable to the Administrative Agent, signed by it and the Borrower (or CNX Midstream GP, on behalf of the Borrower) and delivered to the Administrative Agent before the effective date of such increase;
(ix) New Lender Joinder. Each New Lender shall execute a New Lender Joinder pursuant to which such New Lender shall join and become a party to this Agreement and the other Loan Documents with a Revolving Credit Commitment in the amount set forth in such New Lender Joinder; and
(x) Financial Covenant Compliance. After giving effect to such increase in Revolving Credit Commitments and assuming the full amount of such increase in Revolving Credit Commitments were fully drawn as Loans, the Borrower shall be in compliance, on a Pro Forma Basis, with the Financial Covenants, and the Borrower shall deliver to the Administrative Agent prior to the effectiveness of such increase to the Revolving Credit Commitments an Officer’s Certificate certifying compliance with the requirements of this clause (x) and setting forth calculations in reasonable detail showing such compliance.
(b) Syndication. In the event that the Borrower elects to request an increase of the Revolving Credit Commitments, the Borrower and the Administrative Agent agree to mutually develop a syndication strategy, including timelines for commitments, to the extent the Administrative Agent agrees to assist in such syndication.
(c) Treatment of Outstanding Loans and Letters of Credit.
(i) Repayment of Outstanding Loans; Borrowing of New Loans. On the effective date of such increase, the Borrower shall (x) repay the Revolving Credit Loans then outstanding to each of the Current Lenders to the extent necessary so that after giving effect to the increase in the Revolving Credit Commitments each Current Lender will have its Ratable Share of the outstanding Revolving Credit Loans, subject to the Borrower’s indemnity obligations under Section 5.9 [Indemnity] and (y) borrow Revolving Credit Loans from Increasing Lenders and New Lenders to the extent necessary so that after giving effect to the increase in the Revolving Credit Commitments, each such Lender will have its Ratable Share of the outstanding Revolving Credit Loans. To facilitate the foregoing, the Borrower may, subject to its compliance with the other terms of this Agreement, borrow new Loans on the effective date of such increase. The Administrative Agent is hereby authorized to update Schedule 1.1(B) to reflect the increase in Revolving Credit Commitments.
(ii) Outstanding Letters of Credit; Repayment of Outstanding Loans; Borrowing of New Loans. On the effective date of such increase, (a) each Current Lender shall be deemed to have sold its existing participation in each then outstanding Letter of Credit and purchased a participation in each then outstanding Letter of Credit equal to its Ratable Share of such Letters of Credit, and (b) each New Lender will be deemed to have purchased a participation in each then outstanding Letter of Credit equal to its Ratable Share of such Letter of Credit. All fees shall accrue and be paid on the Letters of Credit based upon each Lender’s participation therein over the relevant period of time. To the extent necessary to enable each of the Current Lenders and the New Lenders to own a Ratable Share of the Participation Advances after any increase in the Revolving Credit Commitments, (a) the Current Lenders will sell a portion of its Participation Advances, and (b) the New Lenders and the Increasing Lenders will acquire Participation Advances (and will pay to the Administrative Agent, for the account of each selling Lender, in immediately available funds, an amount) equal to its Ratable Share of all outstanding Participation Advances. All fees and interest on Participation Advances shall be allocated based upon each Lender’s ownership therein from time to time.
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(iii) Equal and Ratable Benefit. The Revolving Credit Commitments established pursuant to this paragraph shall constitute Revolving Credit Commitments under, and shall be entitled to all the benefits afforded by, this Agreement and the other Loan Documents, and shall, without limiting the foregoing, benefit equally and ratably from the Guaranties under the Guaranty Agreement and security interests created by the Security Documents. The Loan Parties shall take any actions reasonably required by the Collateral Agent to ensure and/or demonstrate that the Lien and security interests granted by the Security Documents continue to be perfected under the UCC or otherwise after giving effect to the establishment of any such new Revolving Credit Commitments.
2.9Defaulting Lenders.
(27)Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:
(a)fees shall cease to accrue on the unfunded portion of the Commitment of such Defaulting Lender pursuant to Section 2.3 [Commitment Fees];
(b)the Commitment and outstanding Loans of such Defaulting Lender shall not be included in any vote of Lenders except as required by Section 11.1.5 [Defaulting Lenders];
(c)if any Swing Loans are outstanding or any Letter of Credit Obligations exist at the time such Lender becomes a Defaulting Lender, then:
(A) all or any part of the outstanding Swing Loans and Letter of Credit Obligations of such Defaulting Lender shall be reallocated among the non-Defaulting Lenders in accordance with their respective Ratable Shares but only to the extent that (x) the Revolving Facility Usage does not exceed the total of all non-Defaulting Lenders’ Revolving Credit Commitments, and (y) no Potential Default or Event of Default has occurred and is continuing at such time;
(B) if the reallocation described in clause (A) above cannot, or can only partially, be effected, the Borrower shall within one Business Day following notice by the Administrative Agent (x) first, prepay such outstanding Swing Loans, and (y) second, Cash Collateralize for the benefit of the Issuing Lenders (ratably among the Issuing Lenders) the Borrower’s obligations corresponding to such Defaulting Lender’s Letter of Credit Obligations (after giving effect to any partial reallocation pursuant to clause (A) above) in a deposit account held at the Administrative Agent for so long as such Letter of Credit Obligations are outstanding;
(C) if the Borrower Cash Collateralizes any portion of such Defaulting Lender’s Letter of Credit Obligations pursuant to clause (B) above, the Borrower shall not be required to pay any fees to such Defaulting Lender pursuant to Section 2.10.2 [Letter of Credit Fees] with respect to such Defaulting Lender’s Letter of Credit Obligations during the period such Defaulting Lender’s Letter of Credit Obligations are cash collateralized;
(D) if the Letter of Credit Obligations of the non-Defaulting Lenders are reallocated pursuant to clause (A) above, then the fees payable to the Lenders pursuant to Section 2.10.2 [Letter of Credit Fees] shall be adjusted in accordance with such non-Defaulting Lenders’ Ratable Share; and
(E) if all or any portion of such Defaulting Lender’s Letter of Credit Obligations are neither reallocated nor Cash Collateralized pursuant to clause (A) or (B) above, then, without prejudice to any rights or remedies of the Issuing Lender or any other Lender hereunder, all Letter of Credit Fees payable under Section 2.10.2 [Letter of
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Credit Fees] with respect to such Defaulting Lender’s Letter of Credit Obligations shall be payable to the Issuing Lenders ((ratably among them) and not to such Defaulting Lender) until and to the extent that such Letter of Credit Obligations are reallocated and/or Cash Collateralized; and
(d)so long as such Lender is a Defaulting Lender, (x) no Issuing Lender shall be required to issue, amend or increase any Letter of Credit, unless such Issuing Lender is satisfied that the related exposure and the Defaulting Lender’s then outstanding Letter of Credit Obligations will be 100% covered by the Revolving Credit Commitments of the non-Defaulting Lenders and/or cash collateral will be provided by the Borrower in accordance with Section 2.13(a)(iii)(B) [Defaulting Lenders], and (y) participating interests in any newly made Swing Loan or any newly issued or increased Letter of Credit shall be allocated among non-Defaulting Lenders in a manner consistent with Section 2.13(a)(iii)(A) [Defaulting Lenders] (and such Defaulting Lender shall not participate therein).
(28)In the event that the Administrative Agent, the Borrower, the Swingline Lender and the Issuing Lenders agree in writing that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the Administrative Agent will so notify the parties hereto, and the Ratable Share of the Swing Loans and Letter of Credit Obligations of the Lenders shall be readjusted to reflect the inclusion of such Lender’s Commitment, and on such date such Lender shall purchase at par such of the Loans of the other Lenders (other than Swing Loans) as the Administrative Agent shall determine may be necessary in order for such Lender to hold such Loans in accordance with its Ratable Share.
[RESERVED]
INTEREST RATES
4.aInterest Rate Options.
The Borrower shall pay interest in respect of the outstanding unpaid principal amount of the Loans as selected by it from the Base Rate Option or Term SOFR Rate Option set forth below applicable to the Loans, it being understood that, subject to the provisions of this Agreement, the Borrower may select different Interest Rate Options and different Interest Periods to apply simultaneously to the Loans comprising different Borrowing Tranches and may convert to or renew one or more Interest Rate Options with respect to all or any portion of the Loans comprising any Borrowing Tranche; provided that (i) there shall not be at any one time outstanding more than ten (10) Borrowing Tranches in the aggregate among all of the Loans and (ii) if an Event of Default or Potential Default exists and is continuing, the Borrower may not request, convert to, or renew the Term SOFR Rate Option for any Loans and the Required Lenders may demand that all existing Borrowing Tranches bearing interest under the Term SOFR Rate Option shall be converted immediately to the Base Rate Option, subject to the obligation of the Borrower to pay any indemnity under Section 5.9 [Indemnity] in connection with such conversion. If at any time the designated rate applicable to any Loan made by any Lender exceeds such Lender’s highest lawful rate, the rate of interest on such Lender’s Loan shall be limited to such Lender’s highest lawful rate.
4.1.iInterest Rate Options; Swing Line Interest Rate.
(29)The Borrower shall have the right to select from the following Interest Rate Options applicable to the Revolving Credit Loans:
(1)Revolving Credit Base Rate Option: A fluctuating rate per annum (computed on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed) equal to the Base Rate plus the Applicable Margin, such interest rate to change automatically from time to time effective as of the effective date of each change in the Base Rate; or
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(2)Revolving Credit Term SOFR Rate Option: A rate per annum (computed on the basis of a year of 360 days and actual days elapsed) equal to the Adjusted Term SOFR Rate as determined for each applicable Interest Period plus the Applicable Margin.
(30)Subject to Section 4.3 [Interest After Default], only the Base Rate Option applicable to Revolving Credit Loans shall apply to Swing Loans.
4.1.iiAmendment No. 1 Existing Loans.
With respect to the Amendment No. 1 Existing Loans of each Type, from the Amendment No. 1 Effective Date until the earlier of (x) the repayment of such Amendment No. 1 Existing Loans and (y) the Amendment No. 1 Existing Interest Period Termination Date (such earlier date with respect to such Type of Amendment No. 1 Existing Revolving Credit Loans, the “Amendment No. 1 Existing Loan Interest Payment Date”), the Amendment No. 1 Existing Loans of such Type shall continue to bear interest at the Amendment No. 1 Existing Interest Rate, subject to any increase after an Event of Default pursuant to Section 4.3 [Interest After Default] . On the Amendment No. 1 Existing Loan Interest Payment Date for each Type of Amendment No. 1 Existing Revolving Credit Loans, the Borrower shall pay interest in respect of the Amendment No. 1 Existing Loans of such Type accrued from the beginning of the Amendment No. 1 Existing Interest Period to the Amendment No. 1 Existing Loan Interest Payment Date at the Amendment No. 1 Existing Interest Rate. On the Amendment No. 1 Existing Interest Period Termination Date with respect to each Type of Amendment No. 1 Existing Revolving Credit Loans, any Amendment No. 1 Existing Loans of such type that remain outstanding shall be converted to Revolving Credit Loans at either the Base Rate Option or the Term SOFR Rate Option, as selected by the Borrower in accordance with Section 2.5.1. In the event that the Borrower does not provide notice of conversion to the Term SOFR Rate Option to the Administrative Agent prior to 11:00 a.m., three (3) Business Days prior to the Amendment No. 1 Existing Interest Period Termination Date with respect to each Type of Amendment No. 1 Existing Revolving Credit Loans, the Borrower shall be deemed to have elected to convert such Amendment No. 1 Existing Loans of such Type to the Base Rate Option and the Amendment No. 1 Existing Loans of such Type shall automatically be converted to Revolving Credit Loans at the Base Rate Option on the Amendment No. 1 Existing Interest Period Termination Date.
4.1.iiiRate Quotations.
The Borrower may call the Administrative Agent on or before the date on which a Loan Request is to be delivered to receive an indication of the rates then in effect, but it is acknowledged that such projection shall not be binding on the Administrative Agent or the Lenders nor affect the rate of interest which thereafter is actually in effect when the election is made.
4.1.ivConforming Changes Relating to Term SOFR Rate.
With respect to the Term SOFR Rate, the Administrative Agent may make Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Loan Document; provided that, the Administrative Agent shall provide notice to the Borrower and the Lenders of each amendment implementing Conforming Changes reasonably promptly after such amendment becomes effective.
4.bInterest Periods.
At any time when the Borrower shall select, convert to or renew a Term SOFR Rate Option, the Borrower shall notify the Administrative Agent thereof at least three (3) Business Days prior to the effective date of such Term SOFR Rate Option by delivering a Loan Request. The notice shall specify an Interest Period during which such Interest Rate Option shall apply. Notwithstanding the preceding sentence, the following provisions shall apply to any selection of, renewal of, or conversion to a Term SOFR Rate Option:
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(31)each Borrowing Tranche of Loans under the Term SOFR Rate Option shall be in integral multiples and not less than the respective amounts set forth in Section 2.5.1 [Revolving Credit Loan Requests] for Borrowings;
(32)in the case of the renewal of a Term SOFR Rate Option at the end of an Interest Period, the first day of the new Interest Period shall be the last day of the preceding Interest Period, without duplication in payment of interest for such day; and
(33)Section 4.5 [Selection of Interest Rate Options] shall apply to any Loan under the Term SOFR Rate Option as to which an interest election has not been made prior to the deadline for delivery of a notice set forth above.
4.aInterest After Default.
To the extent permitted by Law, upon the occurrence of an Event of Default and until such time such Event of Default shall have been cured or waived, and upon written demand by the Required Lenders:
(34)the Letter of Credit Fees and the rate of interest for each Loan otherwise applicable pursuant to Section 2.10.2 [Letter of Credit Fees] or Section 4.1 [Interest Rate Options], respectively, shall be increased by 2.0% per annum; and
(35)each other Obligation hereunder if not paid when due shall bear interest at a rate per annum equal to the sum of the rate of interest applicable under the Base Rate Option plus an additional 2.0% per annum from the time such Obligation becomes due and payable and until it is paid in full.
The Borrower acknowledges that the increase in rates referred to in this Section 4.3 [Interest After Default] reflects, among other things, the fact that such Loans or other amounts have become a substantially greater risk given their default status and that the Lenders are entitled to additional compensation for such risk; and all such interest shall be payable by Borrower upon demand by Administrative Agent.
4.cTerm SOFR Rate Unascertainable; Illegality; Increased Costs; Deposits Not Available.
4.4.iUnascertainable.
If on any date on which a Term SOFR Rate would otherwise be determined, the Administrative Agent shall have determined that:
(36)adequate and reasonable means do not exist for ascertaining such Term SOFR Rate, or
(37)a fundamental change has occurred with respect to the Term SOFR Rate (including, without limitation, changes in national or international financial, political or economic conditions) that materially and adversely affects the ability to determine the Term SOFR Rate,
the Administrative Agent shall have the rights specified in Section 4.4.3 [Administrative Agent’s and Lender’s Rights].
4.4.iiIllegality; Increased Costs.
If at any time any Lender shall have determined that:
(38)the making, maintenance or funding of any Loan to which a Term SOFR Rate Option applies has been made impracticable or unlawful by compliance by such Lender in good
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faith with any Law or any interpretation or application thereof by any Official Body or with any request or directive of any such Official Body (whether or not having the force of Law), or
(39)such Term SOFR Rate Option will not adequately and fairly reflect the cost to such Lender of the establishment or maintenance of any such Loan,
then the Administrative Agent shall have the rights specified in Section 4.4.3 [Administrative Agent’s and Lender’s Rights].
4.4.iAdministrative Agent’s and Lender’s Rights.
In the case of any event specified in Section 4.4.1 [Unascertainable] above, the Administrative Agent shall promptly so notify the Lenders and the Borrower thereof, and in the case of an event specified in Section 4.4.2 [Illegality; Increased Costs] above, such Lender shall promptly so notify the Administrative Agent and endorse a certificate to such notice as to the specific circumstances of such notice, and the Administrative Agent shall promptly send copies of such notice and certificate to the other Lenders and the Borrower. Upon such date as shall be specified in such notice (which shall not be earlier than the date such notice is given), the obligation of (A) the Lenders, in the case of such notice given by the Administrative Agent, or (B) such Lender, in the case of such notice given by such Lender, to allow the Borrower to select, convert to or renew a Term SOFR Rate Option shall be suspended until the Administrative Agent shall have later notified the Borrower, or such Lender shall have later notified the Administrative Agent, of the Administrative Agent’s or such Lender’s, as the case may be, determination that the circumstances giving rise to such previous determination no longer exist. If at any time the Administrative Agent makes a determination under Section 4.4.1 [Unascertainable] and the Borrower has previously notified the Administrative Agent of its selection of, conversion to or renewal of a Term SOFR Rate Option and such Interest Rate Option has not yet gone into effect, such notification shall be deemed to provide for selection of, conversion to or renewal of the Base Rate Option otherwise available with respect to such Loans. If any Lender notifies the Administrative Agent of a determination under Section 4.4.2 [Illegality; Increased Costs], the Borrower shall, subject to the Borrower’s indemnification Obligations under Section 5.9 [Indemnity], as to any Loan of the Lender to which a Term SOFR Rate Option applies, on the date specified in such notice either convert such Loan to the Base Rate Option otherwise available with respect to such Loan or prepay such Loan in accordance with Section 5.6 [Prepayments]. Absent due notice from the Borrower of conversion or prepayment, such Loan shall automatically be converted to the Base Rate Option otherwise available with respect to such Loan upon such specified date.
4.dSelection of Interest Rate Options.
If the Borrower fails to select a new Interest Period to apply to any Borrowing Tranche of Loans under the Term SOFR Rate Option at the expiration of an existing Interest Period applicable to such Borrowing Tranche in accordance with the provisions of Section 4.2 [Interest Periods], the Borrower shall be deemed to have selected an Interest Period of one month, commencing upon the last day of the existing Interest Period.
4.eBenchmark Replacement Setting.
(40)Benchmark Replacement. Notwithstanding anything to the contrary herein or in any other Loan Document (and, for the avoidance of doubt, any agreement executed in connection with a Specified Swap Agreement shall be deemed not to be a “Loan Document” for purposes of this Section 4.6), if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting of the then-current Benchmark, then (x) if a Benchmark Replacement is determined in accordance with clause (1) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Loan Document in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document and (y) if a Benchmark Replacement is determined in accordance with clause (2) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all
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purposes hereunder and under any Loan Document in respect of any Benchmark setting at or after 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided to the Lenders without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document so long as the Administrative Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Lenders comprising the Required Lenders.
(41)Benchmark Replacement Conforming Changes. In connection with the use, administration, adoption or implementation of a Benchmark Replacement, the Administrative Agent may make Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Loan Document.
(42)Notices; Standards for Decisions and Determinations. The Administrative Agent will promptly notify the Borrower and the Lenders of (i) the implementation of any Benchmark Replacement and (ii) the effectiveness of any Conforming Changes in connection with the use, administration, adoption or implementation of a Benchmark replacement. The Administrative Agent will notify the Borrower of (x) the removal or reinstatement of any tenor of a Benchmark pursuant to paragraph (d) below and (y) the commencement or conclusion of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Administrative Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section 4.6, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party to this Agreement or any other Loan Document, except, in each case, as expressly required pursuant to this Section 4.6.
(43)Unavailability of Tenor of Benchmark. Notwithstanding anything to the contrary herein or in any other Loan Document, at any time (including in connection with the implementation of a Benchmark Replacement), (i) if the then-current Benchmark is a term rate (including Term SOFR) and either (A) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion or (B) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is not or will not be representative, then the Administrative Agent may modify the definition of “Interest Period” (or any similar or analogous provision) for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor and (ii) if a tenor that was removed pursuant to clause (i) above either (A) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (B) is not, or is no longer, subject to an announcement that it is not or will not be representative for a Benchmark (including a Benchmark Replacement), then the Administrative Agent may modify the definition of “Interest Period” (or any similar or analogous provision) for all Benchmark settings at or after such time to reinstate such previously removed tenor.
(44)Benchmark Unavailability Period. Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, the Borrower may revoke any pending request for a Loan bearing interest based on the Term SOFR Rate, conversion to or continuation of Loans bearing interest based on the Term SOFR Rate to be made, converted or continued during any Benchmark Unavailability Period and, failing that, the Borrower will be deemed to have converted any such request into a request for a Loan of or conversion to Loans bearing interest under the Base Rate Option. During any Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the component of the Base Rate based upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of the Base Rate.
(45)[Reserved].
(46)Certain Defined Terms. As used in this Section 4.6:
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“Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, (x) if such Benchmark is a term rate or is based on a term rate, any tenor for such Benchmark (or component thereof) that is or may be used for determining the length of an Interest Period pursuant to this Agreement or (y) otherwise, any payment period for interest calculated with reference to such Benchmark (or component thereof) that is or may be used for determining any frequency of making payments of interest calculated with reference to such Benchmark pursuant to this Agreement, in each case, as of such date and not including, for the avoidance of doubt, any tenor of such Benchmark that is then-removed from the definition of “Interest Period” pursuant to Section 4.6(d).
“Benchmark” means, initially, the Term SOFR Rate; provided that if a Benchmark Transition Event, a Term SOFR Transition Event and its related Benchmark Replacement Date has occurred with respect to the Term SOFR Rate or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to Section 4.6(a).
“Benchmark Replacement” means, with respect to any Benchmark Transition Event, the first alternative set forth in the order below that can be determined by the Administrative Agent for the applicable Benchmark Replacement Date:
(1) the sum of: (A) Daily Simple SOFR and (B) the SOFR Adjustment;
(2) the sum of: (A) the alternate benchmark rate that has been selected by the Administrative Agent and the Borrower, giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Benchmark for U.S. dollar-denominated syndicated credit facilities at such time and (B) the related Benchmark Replacement Adjustment;
provided that, if the Benchmark Replacement as determined pursuant to clause (2) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents; and, provided, further, that any Benchmark Replacement shall be administratively feasible as determined by the Administrative Agent in its sole discretion.
“Benchmark Replacement Adjustment” means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Borrower, giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for U.S. dollar-denominated syndicated credit facilities at such time.
“Benchmark Replacement Date” means a date and time determined by the Administrative Agent, which date shall be no later than the earlier to occur of the following events with respect to the then-current Benchmark:
(1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof); or
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(2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the date determined by the Administrative Agent, which date shall promptly follow the date of the public statement or publication of information referenced therein.
For the avoidance of doubt, the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) or (2) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the then-current Benchmark:
(1) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); \
(2) a public statement or publication of information by an Official Body having jurisdiction over the Administrative Agent, the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Federal Reserve Board, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or
(3) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) or an Official Body having jurisdiction over the Administrative Agent announcing that all Available Tenors of such Benchmark (or such component thereof) are not, or as of a specified future date will not be, representative.
For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Unavailability Period” means the period (if any) (x) beginning at the time that a Benchmark Replacement Date has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with this Section 4.6 and (y) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with this Section 4.6.
“Floor” means the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to the Term SOFR Rate or, if no floor is specified, zero.
“Relevant Governmental Body” means the Federal Reserve Board or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board or the Federal Reserve Bank of New York, or any successor thereto.
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“Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.
- PAYMENTS
5.aPayments.
All payments and prepayments to be made in respect of principal, interest, Commitment Fees, Letter of Credit Fees, Administrative Agent’s Fee or other fees or amounts due from the Borrower hereunder shall be payable prior to 1:00 p.m. on the date when due without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived by the Borrower, and without set-off, counterclaim or other deduction of any nature, and an action therefor shall immediately accrue. Such payments shall be made to the Administrative Agent at the Principal Office for the account of the Swingline Lender with respect to the Swing Loans and for the ratable accounts of the Lenders with respect to the Revolving Credit Loans in U.S. Dollars and in immediately available funds, and the Administrative Agent shall promptly distribute such amounts to the Lenders in immediately available funds; provided that in the event payments are received by 1:00 p.m. by the Administrative Agent with respect to the Loans and such payments are not distributed to the Lenders on the same day received by the Administrative Agent, the Administrative Agent shall pay the Lenders interest at the Federal Funds Effective Rate with respect to the amount of such payments for each day held by the Administrative Agent and not distributed to the Lenders. The Administrative Agent’s and each Lender’s statement of account, ledger or other relevant record shall, in the absence of manifest error, be conclusive as the statement of the amount of principal of and interest on the Loans and other amounts owing under this Agreement and shall be deemed an “account stated.”
5.bPro Rata Treatment of Lenders.
Each Borrowing Tranche shall be allocated to each Lender according to its Ratable Share, and each selection of, conversion to or renewal of any Interest Rate Option and each payment or prepayment by the Borrower with respect to principal, interest, Commitment Fees, Letter of Credit Fees, or other fees (except for the Administrative Agent’s Fee and the fees payable to the Issuing Lender pursuant to Section 2.10.2 [Letter of Credit Fees]) or amounts due from the Borrower hereunder to the Lenders with respect to the Revolving Credit Commitments and the Loans, shall (except as otherwise may be provided with respect to a Defaulting Lender and except as provided in Section 4.4.3 [Administrative Agent’s and Lender’s Rights] in the case of an event specified in Section 4.4 [Term SOFR Rate Unascertainable; Illegality; Increased Costs], Section 5.6.2 [Replacement of a Lender] or Section 5.7 [Increased Costs]) be payable ratably among the Lenders entitled to such payment in accordance with the amount of principal, interest, Commitment Fees, Letter of Credit Fees, and other fees or amounts then due to such Lender as set forth in this Agreement. Notwithstanding any of the foregoing, each borrowing or payment or prepayment by the Borrower of principal, interest, fees or other amounts from the Borrower with respect to Swing Loans shall be made by or to the Swingline Lender according to Section 2.11 [Borrowings to Repay Swing Loans].
5.cSharing of Payments by Lenders.
If any Lender shall, by exercising any right of setoff, counterclaim or banker’s lien, by receipt of voluntary payment, by realization upon security, or by any other non-pro rata source, obtain payment in respect of any principal of or interest on any of its Loans or other obligations hereunder resulting in such Lender’s receiving payment of a proportion of the aggregate amount of its Loans and accrued interest thereon or other such obligations greater than the pro rata share of the amount such Lender is entitled thereto, then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Loans and such other obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and other amounts owing them, provided that:
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(1)if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, together with interest or other amounts, if any, required by Law (including court order) to be paid by the Lender or the holder making such purchase; and
(2)the provisions of this Section 5.3 shall not be construed to apply to (x) any payment made by the Loan Parties pursuant to and in accordance with the express terms of the Loan Documents or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or Participation Advances to any assignee or participant, other than to the Borrower or any Subsidiary thereof (as to which the provisions of this Section 5.3 [Sharing of Payments by Lenders] shall apply).
Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable Law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against each Loan Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of each Loan Party in the amount of such participation.
5.aPresumptions by Administrative Agent.
Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the Issuing Lender hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the Issuing Lender, as the case may be, the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders or the Issuing Lender, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or the Issuing Lender, with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.
5.bInterest Payment Dates.
Interest on Loans to which the Base Rate Option applies shall be due and payable in arrears on each Payment Date. Interest on Loans to which the Term SOFR Rate Option applies shall be due and payable on the last day of each Interest Period for those Loans and, if such Interest Period is longer than three (3) Months, also on each date that falls every three (3) Months after the beginning of such Interest Period and on the Expiration Date or upon termination of the Commitments. Interest on the principal amount of each Loan or other monetary Obligation shall be due and payable on demand after such principal amount or other monetary Obligation becomes due and payable (whether on the stated Expiration Date, upon acceleration or otherwise).
5.cPrepayments.
5.6.iRight to Prepay.
So long as the Borrower has repaid any unreimbursed LC Disbursements, the Borrower shall have the right at its option from time to time to prepay the Loans in whole or part, without premium or penalty (except as provided in Section 5.6.2 [Replacement of a Lender] below, in Section 5.7 [Increased Costs] and Section 5.9 [Indemnity]). Whenever the Borrower desires to prepay any part of the Loans, it shall provide a prepayment notice to the Administrative Agent by 1:00 p.m. at least one (1) Business Day prior to the date of prepayment of the Revolving Credit Loans to which the Term SOFR Rate Option applies or no later than 11:00 a.m. on the date of prepayment of Swing Loans and Revolving Credit Loans to which the Base Rate Option applies, setting forth the following information:
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(47)the date, which shall be a Business Day, on which the proposed prepayment is to be made;
(48)a statement indicating the application of the prepayment between the Revolving Credit Loans and Swing Loans;
(49)a statement indicating the application of the prepayment between Loans to which the Base Rate Option applies and Loans to which the Term SOFR Rate Option applies; and
(50)the total principal amount of such prepayment, which shall not be less than the lesser of (x) the aggregate principal amount of all outstanding Loans or (y) $100,000 for any Swing Loan or $1,000,000 for any Revolving Credit Loan and increments of $1,000,000 in excess thereof.
All prepayment notices shall be irrevocable, except that any notice of voluntary prepayment may state that such notice is conditional upon the consummation of a financing transaction, in which case such notice of prepayment may be revoked or delayed by the Borrower (by notice to the Administrative Agent on or prior to the specified date of prepayment) if such condition is not satisfied. The principal amount of the Loans for which a prepayment notice is given, together with interest on such principal amount, shall be due and payable on the date specified in such prepayment notice as the date on which the proposed prepayment is to be made. Except as provided in Section 4.4.3 [Administrative Agent’s and Lender’s Rights], if the Borrower prepays a Loan but fails to specify the applicable Borrowing Tranche which the Borrower is prepaying, the prepayment shall be applied (i) first to Swing Loans and then to Revolving Credit Loans; and (ii) after giving effect to the allocations in clause (i) above first to Loans to which the Base Rate Option applies, then to Loans to which the Term SOFR Rate Option applies. Any prepayment hereunder shall be subject to the Borrower’s obligation to indemnify the Lenders under Section 5.9 [Indemnity].
5.6.iiReplacement of a Lender.
In the event any Lender (a) gives notice under Section 4.4 [Term SOFR Rate Unascertainable; Illegality; Increased Costs], (b) requests compensation under Section 5.7 [Increased Costs], or requires the Borrower to pay any Indemnified Taxes or additional amount to any Lender or any Official Body for the account of any Lender pursuant to Section 5.8 [Taxes], (c) is a Defaulting Lender, or (d) is a Non-Consenting Lender referred to in Section 11.1.4 [Non-Consenting Lenders], then in any such event the Borrower may, at its sole expense, upon notice to such Lender and the Administrative Agent, either:
(51)prepay the Loans and Participation Advances of such Lender in whole, together with all interest accrued thereon and any accrued fees and all other amounts payable to such Lender hereunder and under the other Loan Documents (including any amounts under Section 5.9 [Indemnity]), and terminate such Lender’s Commitment; or
(52)at its sole expense, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 11.8 [Successors and Assigns]), all of its interests, rights (other than existing rights to payments pursuant to Sections 5.7 [Increased Costs] or 5.8 [Taxes]) and obligations under this Agreement and the related Loan Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment), provided that:
(1)the Borrower or such assignee shall have paid to the Administrative Agent the assignment fee specified in Section 11.8.2(d) [Assignment and Assumption Agreement];
(2)such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and Participation Advances, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 5.9 [Indemnity]) from the assignee (to
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the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts);
(3)in the case of any such assignment resulting from a claim for compensation under Section 5.7.1 [Increased Costs Generally] or payments required to be made pursuant to Section 5.8 [Taxes], such assignment will result in a reduction in such compensation or payments thereafter; and
(4)such assignment does not conflict with applicable Law.
A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply. Each Lender agrees that, if the Borrower elects to replace such Lender in accordance with this Section 5.6.2 [Replacement of a Lender], it shall promptly execute and deliver to the Administrative Agent an Assignment and Assumption Agreement to evidence the assignment and shall deliver to the Administrative Agent any Note (if Notes have been issued in respect of such Lender’s Loans) subject to such Assignment and Assumption Agreement; provided that the failure of any such Lender to execute an Assignment and Assumption Agreement shall not render such assignment invalid, and such assignment shall be recorded in the Register if all other requirements of such assignments have been satisfied.
5.6.iDesignation of a Different Lending Office.
If any Lender requests compensation under Section 5.7 [Increased Costs], or the Borrower is or will be required to pay any Indemnified Taxes or additional amounts to any Lender or any Official Body for the account of any Lender pursuant to Section 5.8 [Taxes], then such Lender shall (at the request of the Borrower) use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the reasonable judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 5.7 [Increased Costs] or Section 5.8 [Taxes], as the case may be, in the future, and (ii) would not subject such Lender to any material unreimbursed cost or expense and would not otherwise be materially disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.
5.6.iiMandatory Prepayments.
(53)Revolving Credit Commitments. If at any time the Revolving Facility Usage is in excess of the Revolving Credit Commitments (as used in this Section 5.6.4(a), a “deficiency”), the Borrower shall immediately make a principal payment on the Loans sufficient to cause the principal balance of the Loans then outstanding to be equal to or less than the Revolving Credit Commitments then in effect. If a deficiency cannot be eliminated pursuant to this Section 5.6.4(a) by prepayment of the Revolving Credit Loans as a result of outstanding Letter of Credit Obligations, the Borrower shall also deposit cash collateral with the Administrative Agent, to be held by the Administrative Agent to secure such outstanding Letter of Credit Obligations.
(54)Issuance of Debt. Within one Business Day following the incurrence of any Indebtedness within the meaning of clause (1)(a) of the definition thereof by the Borrower or any of the Restricted Subsidiaries (except if such Indebtedness is permitted under Section 8.2.1 [Indebtedness]), the Borrower shall apply an amount equal to 100% of the Net Cash Proceeds of such Indebtedness toward the prepayment of Loans as set forth in Section 5.6.4(e) [Application of Payments] below.
(55)Dispositions and Casualty Events. In the event of any Disposition pursuant to Section 8.2.7(j), (l) or (m) [Dispositions] or any Casualty Event which results in the receipt by the Borrower or any Restricted Subsidiary of any Net Cash Proceeds, the Borrower shall within five (5) Business Days following the receipt by the Borrower or a Restricted Subsidiary of such Net Cash Proceeds apply an amount equal to 100% of such Net Cash Proceeds of any Disposition by or Casualty Event of a Loan Party; provided that, as long as no Potential Default or Event of Default has occurred and
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is continuing at such time, with respect to any such Net Cash Proceeds, at the election of the Borrower, the applicable Loan Party or any non-wholly owned Restricted Subsidiary may reinvest all or any portion of such Net Cash Proceeds within twelve (12) months of receipt of such Net Cash Proceeds in assets (other than cash, Temporary Cash Investments and current assets (except for current assets acquired as part of a business)) held and to be used in the Permitted Business of the Loan Parties; provided further that if any portion of such Net Cash Proceeds are not so used prior to the expiration of such 12-month period, such portion shall thereupon be immediately applied to the prepayment of the Loans as set forth in Section 5.6.4(e) [Application of Payments] below. Notwithstanding the foregoing, the requirements of this Section 5.6.4(c) shall not apply with respect to an aggregate of $10,000,000 of Net Cash Proceeds from Dispositions pursuant to Section 8.2.7(j), (l) or (m) [Dispositions] and Casualty Events occurring in the same fiscal year.
(56)No Commitment Reductions. The Borrower shall not be required to permanently reduce the Revolving Credit Commitments in connection with any mandatory prepayment pursuant to this Section 5.6.4.
(57)Application of Payments. All prepayments pursuant to this Section 5.6.4 shall be applied (x) first, to any outstanding Swing Loans and (y) second, ratably to all outstanding Revolving Loans. All prepayments required pursuant to this Section 5.6.4 [Mandatory Prepayments] shall first be applied among the Interest Rate Options to the principal amount of the Loans subject to the Base Rate Option, then to Loans subject to a Term SOFR Rate Option. In accordance with Section 5.9 [Indemnity], the Borrower shall indemnify the Lenders for any loss or expense, including loss of margin, incurred with respect to any such prepayments applied against Loans subject to a Term SOFR Rate Option on any day other than the last day of the applicable Interest Period.
5.dIncreased Costs.
5.7.iIncreased Costs Generally.
If any Change in Law shall:
(58)impose, modify or deem applicable any reserve, special deposit, liquidity, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement reflected in the Term SOFR Rate) or the Issuing Lender;
(59)subject any Lender or the Issuing Lender to any Tax of any kind whatsoever with respect to this Agreement, any Letter of Credit, any participation in a Letter of Credit or any Loan under the Term SOFR Rate Option made by it, or its other obligations, deposits, reserves, other liabilities or capital attributable thereto, or change the basis of Taxation of payments to such Lender or the Issuing Lender in respect thereof (except for Indemnified Taxes and any Excluded Taxes); or
(60)impose on any Lender, the Issuing Lender or the relevant market any other condition, cost or expense (other than Taxes) affecting this Agreement or any Loan under the Term SOFR Rate Option made by such Lender or any Letter of Credit or participation therein,
and the result of any of the foregoing shall be to increase the cost to such Recipient of making, converting to, continuing or maintaining any Loan (or of maintaining its obligation to make any such Loan), or to increase the cost to such Recipient of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Recipient hereunder (whether of principal, interest or any other amount) then, upon request of such Recipient, the Borrower will pay to such Recipient such additional amount or amounts as will compensate such Recipient for such additional costs incurred or reduction suffered.
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5.7.iiCapital Requirements.
If any Lender or the Issuing Lender determines that any Change in Law affecting such Lender or the Issuing Lender or any lending office of such Lender or such Lender’s or the Issuing Lender’s holding company, if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s or the Issuing Lender’s capital or on the capital of such Lender’s or the Issuing Lender’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the Issuing Lender, to a level below that which such Lender or the Issuing Lender or such Lender’s or the Issuing Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or the Issuing Lender’s policies and the policies of such Lender’s or the Issuing Lender’s holding company with respect to capital adequacy and liquidity), then from time to time the Borrower will pay to such Lender or the Issuing Lender, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Lender or such Lender’s or the Issuing Lender’s holding company for any such reduction suffered.
5.7.iiiCertificates for Reimbursement; Repayment of Outstanding Loans; Borrowing of New Loans.
A certificate of a Lender or the Issuing Lender setting forth the amount or amounts necessary to compensate such Lender or the Issuing Lender or its holding company, as the case may be, as specified in Sections 5.7.1 [Increased Costs Generally] or Section 5.7.2 [Capital Requirements] and delivered to the Borrower shall be conclusive absent manifest error. The Borrower shall pay such Lender or the Issuing Lender, as the case may be, the amount shown as due on any such certificate within ten (10) Business Days after receipt thereof.
5.7.ivDelay in Requests.
Failure or delay on the part of any Lender or the Issuing Lender to demand compensation pursuant to this Section 5.7 [Increased Costs] shall not constitute a waiver of such Lender’s or the Issuing Lender’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender or the Issuing Lender pursuant to this Section 5.7 [Increased Costs] for any increased costs incurred or reductions suffered more than nine (9) months prior to the date that such Lender or the Issuing Lender, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or the Issuing Lender’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine (9) month period referred to above shall be extended to include the period of retroactive effect thereof).
5.eTaxes.
5.8.iPayments Free of Taxes.
All payments by or on account of any obligation of any Loan Party hereunder or under any other Loan Document shall be made free and clear of and without reduction or withholding for any Taxes; provided that if any Loan Party or any other applicable withholding agent shall be required by applicable Law to deduct any Taxes from such payments, then (i) if the Tax in question is an Indemnified Tax, the sum payable by the applicable Loan Party shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 5.8 [Taxes]) each Lender (or, in the case of a payment made to the Administrative Agent for its own account, the Administrative Agent) receives an amount equal to the sum it would have received had no such deductions been made (provided that, if the applicable withholding agent in respect of an Indemnified Tax is a Person other than a Loan Party or the Administrative Agent (e.g., a Lender), the additional amounts required to be paid by a Loan Party under this clause (i) in respect of such Tax shall not be greater than the additional amounts such Loan Party would have been obligated to pay had such Loan Party made payment of such sum directly to the applicable beneficial owner of such payment, provided further, that such Tax would not have been an Excluded Tax had such beneficial owner been a Lender hereunder and had complied with Section 5.8.5 [Status of Lenders]), (ii) the applicable withholding agent shall make
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such deductions and (iii) the applicable withholding agent shall timely pay the full amount deducted to the relevant Official Body in accordance with applicable Law.
5.8.iiPayment of Other Taxes by the Borrower.
Without limiting the provisions of Section 5.8.1 [Payments Free of Taxes] above, the Borrower shall timely pay any Other Taxes to the relevant Official Body in accordance with applicable Law.
5.8.iiiIndemnification by the Borrower.
The Borrower shall indemnify the Administrative Agent and each Lender, within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 5.8 [Taxes]) paid by the Administrative Agent or such Lender, as the case may be, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Official Body. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.
5.8.ivEvidence of Payments.
As soon as practicable after any payment of any Taxes by the Borrower to an Official Body, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Official Body evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.
5.8.vStatus of Lenders.
(61)Each Lender that is entitled to an exemption from or reduction of withholding Tax with respect to any payments hereunder or under any other Loan Document shall deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable Law or reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation prescribed by applicable Law as will permit such payments to be made without withholding or at a reduced rate of withholding. Each such Lender shall, whenever a lapse in time or change in circumstances renders any such documentation (including any specific documentation required below in this Section 5.8.5 [Status of Lenders] obsolete, expired or inaccurate in any respect, deliver promptly to the Borrower and the Administrative Agent updated or other appropriate documentation (including any new documentation reasonably requested by the Borrower or the Administrative Agent) or promptly notify the Borrower and the Administrative Agent in writing of its legal ineligibility to do so. 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.
(62)Without limiting the generality of the foregoing:
(5)Each Foreign Lender shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the request of the Borrower or the Administrative Agent), whichever of the following is applicable:
(A) two (2) duly completed valid originals (or an electronically transmitted original) of IRS Form W-8BEN or W-8BEN-E (or any successor forms) claiming eligibility for benefits of an income tax treaty to which the United States of America is a party,
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(B) two (2) duly completed valid originals (or an electronically transmitted original) of IRS Form W-8ECI (or any successor forms),
(C) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code, (x) a certificate to the effect that such Foreign Lender is not (A) a “bank” within the meaning of section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the Borrower within the meaning of section 881(c)(3)(B) of the Code, or (C) a “controlled foreign corporation” described in section 881(c)(3)(C) of the Code and that no payments under any Loan Document are effectively connected with such Foreign Lender’s conduct of a U.S. trade or business (a “United States Tax Compliance Certificate”) and (y) two (2) duly completed valid originals (or an electronically transmitted original) of IRS Form W-8BEN or W-8BEN-E (or any successor forms),
(D) to the extent a Foreign Lender is not the beneficial owner (for example, where the Foreign Lender is a partnership or a participating Lender), two (2) duly completed valid originals (or an electronically transmitted original) of IRS Form W-8IMY (or any successor forms) of the Foreign Lender, accompanied by a Form W-8ECI, W-8BEN or W-8BEN-E, United States Tax Compliance Certificate, Form W-9, Form W-8IMY or any other required information (or any successor forms) from each beneficial owner that would be required under this Section 5.8.5 [Status of Lenders] if such beneficial owner were a Lender, as applicable (provided that if the Foreign Lender is a partnership (and not a participating Lender) and one or more direct or indirect partners are claiming the portfolio interest exemption, the United States Tax Compliance Certificate may be provided by such Foreign Lender on behalf of such direct or indirect partner(s)), or
(E) two (2) duly completed valid originals (or an electronically transmitted original) of any other form prescribed by applicable Law as a basis for claiming exemption from or a reduction in United States federal withholding Tax duly completed together with such supplementary documentation as may be prescribed by applicable Law to permit the Borrower to determine the withholding or deduction required to be made.
(6)Each Lender that is a “United States person” as defined in section 7701 of the Code 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 request of the Borrower or the Administrative Agent) two (2) duly completed valid originals (or an electronically transmitted original) of an IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding.
(7)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 Sections 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 FATCA obligations, to determine whether such Lender has or has not complied with such Lender’s FATCA obligations and to determine the amount, if any, to deduct and withhold from such payment.
(63)Notwithstanding any other provision of this Section 5.8.5 [Status of Lenders], a Lender shall not be required to deliver any documentation that such Lender is not legally eligible to deliver.
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(64)Each Lender hereby authorizes the Administrative Agent to deliver to the Loan Parties and to any successor Administrative Agent any documentation provided by such Lender to the Administrative Agent pursuant to this Section 5.8.5 [Status of Lenders].
5.8.viRefunds.
If the Administrative Agent or any Lender receives a refund of any Indemnified Taxes as to which it has been indemnified by any Loan Party or with respect to which any Loan Party has paid additional amounts pursuant to this Section 5.8 [Taxes], it shall pay to such Loan Party an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by such Loan Party under this Section 5.8 [Taxes] with respect to the Indemnified Taxes giving rise to such refund), net of all out-of-pocket expenses (including any Taxes imposed with respect to such refund) of the Administrative Agent or such Lender, as the case may be, and without interest (other than any interest paid by the relevant Official Body with respect to such refund); provided that such Loan Party, upon the request of the Administrative Agent or such Lender, shall repay the amount paid over to such Loan Party (plus any penalties, interest or other charges imposed by the relevant Official Body) to the Administrative Agent or such Lender in the event the Administrative Agent or such Lender is required to repay such refund to such Official Body. This Section 5.8 [Taxes] 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.
5.8.viiDefinition of Lender.
For the avoidance of doubt, the term “Lender” shall, for purposes of this Section 5.8 [Taxes], include any Issuing Lender and any Swingline Lender.
5.8.viiiAdministrative Agent Forms.
The Administrative Agent (and any assignee or successor) will deliver, to the Borrower, on or prior to the date on which it becomes a party to this Agreement, either (i) (A) two (2) executed copies of IRS Form W-8ECI with respect to any amounts payable to the Administrative Agent for its own account and (B) two (2) duly completed copies of IRS Form W-8IMY (certifying that it is either a “qualified intermediary” or a “U.S. branch” that agrees to be treated as a United States person with respect to payments made to and on behalf of the Lenders) for the amounts the Administrative Agent receives for the account of others, or (ii) two (2) executed copies of IRS Form W-9, whichever is applicable. Notwithstanding anything to the contrary in this Section 5.8.8, the Administrative Agent shall not be required to deliver any documentation that the Administrative Agent is not legally eligible to deliver as a result of any Change in Law after the Existing Credit Agreement Closing Date.
5.fIndemnity.
In addition to the compensation or payments required by Section 5.7 [Increased Costs] or Section 5.8 [Taxes], the Borrower shall indemnify each Lender against all liabilities, losses, claims, damages or expenses (including loss of anticipated profits, any foreign exchange losses and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan, from fees payable to terminate the deposits from which such funds were obtained or from the performance of any foreign exchange contract) which such Lender sustains or incurs as a consequence of any:
(65)payment, prepayment, conversion or renewal of any Loan to which a Term SOFR Rate Option applies on a day other than the last day of the corresponding Interest Period (whether or not such payment or prepayment is mandatory, voluntary or automatic and whether or not such payment or prepayment is then due),
(66)attempt by the Borrower to revoke (expressly, by later inconsistent notices or otherwise) in whole or part any Loan Requests under Section 2.5 [Loan Requests] or Section 4.2 [Interest Periods] or notice relating to prepayments under Section 5.6 [Prepayments],
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(67)default by the Borrower in the performance or observance of any covenant or condition contained in this Agreement or any other Loan Document, including any failure of the Borrower to pay when due (by acceleration or otherwise) any principal, interest, Commitment Fee or any other amount due hereunder, or
(68)the assignment of any Revolving Credit Loans under the Term SOFR Rate Option other than on the last day of the Interest Period as a result of a request by the Borrower pursuant to Section 5.6.2 [Replacement of a Lender]; provided, however, that with respect to this clause (d), the Borrower shall not be required to indemnify any Defaulting Lender whose Revolving Credit Loans are being replaced as a result of a request by the Borrower pursuant to Section 5.6.2 [Replacement of a Lender].
If any Lender sustains or incurs any such loss or expense, it shall from time to time notify the Borrower of the amount determined in good faith by such Lender (which determination may include such assumptions, allocations of costs and expenses and averaging or attribution methods as such Lender shall deem reasonable) to be necessary to indemnify such Lender for such loss or expense. Such notice shall set forth in reasonable detail the basis for such determination. Such amount shall be due and payable by the Borrower to such Lender ten (10) Business Days after such notice is given.
5.dSettlement Date Procedures.
In order to minimize the transfer of funds between the Lenders and the Administrative Agent, the Borrower may borrow, repay and reborrow Swing Loans and the Swingline Lender may make Swing Loans as provided in Section 2.1.2 [Swing Loans] hereof during the period between Settlement Dates. The Administrative Agent shall notify each Lender of its Ratable Share of the total of the Revolving Credit Loans and the Swing Loans (each a “Required Share”). On such Settlement Date, each Lender shall pay to the Administrative Agent the amount equal to the difference between its Required Share and its Revolving Credit Loans, and the Administrative Agent shall pay to each Lender its Ratable Share of all payments made by the Borrower to the Administrative Agent with respect to the Revolving Credit Loans. The Administrative Agent shall also effect settlement in accordance with the foregoing sentence on the proposed Borrowing Dates for Revolving Credit Loans and on dates on which mandatory prepayments are due under Section 5.6.4 [Mandatory Prepayments] and may at its option effect settlement on any other Business Day. These settlement procedures are established solely as a matter of administrative convenience, and nothing contained in this Section 5.10 [Settlement Date Procedures] shall relieve the Lenders of their obligations to fund Revolving Credit Loans on dates other than a Settlement Date pursuant to Section 2.1.2 [Swing Loans]. The Administrative Agent may at any time at its option for any reason whatsoever require each Lender to pay immediately to the Administrative Agent such Lender’s Ratable Share of the outstanding Revolving Credit Loans and each Lender may at any time require the Administrative Agent to pay immediately to such Lender its Ratable Share of all payments made by the Borrower to the Administrative Agent with respect to the Revolving Credit Loans.
- REPRESENTATIONS AND WARRANTIES
The Loan Parties, jointly and severally, represent and warrant to the Administrative Agent and each of the Lenders as follows:
6.aOrganization and Qualification.
The Borrower and each Restricted Subsidiary is a corporation, partnership or limited liability company duly organized (in the case of the Borrower, in a United States jurisdiction), validly existing and in good standing (if the concept of “good standing” is recognized under the laws of the applicable jurisdiction with respect to the Borrower or such Restricted Subsidiary) under the laws of its jurisdiction of organization. The Borrower and each Restricted Subsidiary has the lawful power to own or lease its properties and to conduct its business in which it is currently engaged, except where the failure to have such power would not reasonably be expected to result in any Material Adverse Change. The Borrower and each Restricted Subsidiary is duly licensed or qualified and in good standing in each jurisdiction listed on Schedule 6.1 and in all other jurisdictions where the property owned or leased by it or the nature of the business transacted by it or both makes such licensing or qualification necessary
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except to the extent that the failure to be so duly licensed or qualified or in good standing would not reasonably be expected to result in any Material Adverse Change.
6.bEEA Financial Institutions.
No Loan Party is an Affected Financial Institution.
6.cSubsidiaries.
As of the Closing Date, Schedule 6.3 states the name of each Subsidiary of the Borrower, its jurisdiction of incorporation, the issued and outstanding shares (referred to herein as the “Subsidiary Shares”) and the owners thereof if it is a corporation, its outstanding partnership interests (the “Partnership Interests”) if it is a partnership, its outstanding limited liability company interests, interests assigned to managers thereof and the voting rights associated therewith (the “LLC Interests”) if it is a limited liability company, identifies each Subsidiary as either a Restricted Subsidiary or an Unrestricted Subsidiary and for each Restricted Subsidiary whether or not it is a Guarantor and, if it is not a Guarantor, the clause in the definition of “Excluded Subsidiaries” applicable to such Restricted Subsidiary. There are no options, warrants or other rights outstanding to purchase any such Subsidiary Shares, Partnership Interests or LLC Interests except as indicated on Schedule 6.3.
6.dPower and Authority.
Each Loan Party has full power to enter into, execute, deliver and carry out this Agreement and the other Loan Documents to which it is a party, to incur the Indebtedness contemplated by the Loan Documents and to perform its Obligations under the Loan Documents to which it is a party, and all such actions have been duly authorized by all necessary proceedings on its part.
6.eValidity and Binding Effect.
This Agreement has been duly and validly executed and delivered by each Loan Party, and each other Loan Document which any Loan Party is required to execute and deliver has been duly executed and delivered by such Loan Party. This Agreement and each other Loan Document constitutes legal, valid and binding obligations of each Loan Party which is a party thereto, enforceable against such Loan Party in accordance with its terms, except to the extent that enforceability of any of such Loan Document may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other similar laws affecting the enforceability of creditors’ rights generally or limiting the right of specific performance.
6.fNo Conflict; Borrower and Subsidiaries’ Status Under CNX Debt Documents.
(a) Neither the execution and delivery of this Agreement or the other Loan Documents to which it is a party by any Loan Party nor the consummation of the transactions herein or therein contemplated or compliance with the terms and provisions hereof or thereof by any of them will conflict with, constitute a default under or result in any breach of (i) the terms and conditions of the certificate of incorporation, bylaws, certificate of limited partnership, partnership agreement, certificate of formation, limited liability company agreement or other organizational documents of any Loan Party, (ii) any material Law, instrument, order, writ, judgment, injunction or decree to which any Loan Party is a party or by which it is bound or to which it is subject, or result in the creation or enforcement of any Lien, charge or encumbrance whatsoever upon any property (now or hereafter acquired) of any Loan Party (other than Liens granted under the Loan Documents) or (iii) the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien upon any material property or assets of such Loan Party or any of the Restricted Subsidiaries (other than Liens created under the Loan Documents and Liens permitted hereunder) pursuant to the terms of any material indenture, loan agreement, lease agreement, mortgage, deed of trust, agreement or other instrument to which such Loan Party or any of the Restricted Subsidiaries is a party or by which it or any of its property or assets is bound (any such term, covenant, condition or provision, a “Contractual Requirement”), except that certain consents may be required under
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various contracts and agreements in connection with any attempt to assign such various contracts and agreements pursuant to the assertion of remedies under the Loan Documents.
(b) The Borrower and its Subsidiaries constitute “unrestricted subsidiaries” under each indenture, loan agreement or other debt facility or agreement governing any Indebtedness for borrowed money (to the extent such indenture, loan agreement or other debt facility or agreement governing any Indebtedness provides for such distinction) of CNX or any of its Subsidiaries (other than the Borrower and its Subsidiaries).
6.gLitigation.
There are no actions, suits, proceedings or investigations pending or, to the knowledge of any Responsible Officer of the Borrower, threatened against the Borrower or any Restricted Subsidiary at law or equity before any Official Body (including the FERC or any equivalent state regulatory agency) or arbitrator that individually or in the aggregate would reasonably be expected to result in any Material Adverse Change. To the knowledge of any Responsible Officer of the Borrower, none of the Borrower or any Restricted Subsidiary is in violation of any order, writ, injunction or any decree of any Official Body that would reasonably be expected to result in any Material Adverse Change.
6.hProperties.
(a) The Borrower and each Restricted Subsidiary has good and marketable title to or valid leasehold or easement interest in all properties, assets and other rights, which it purports to own, lease or otherwise hold or which are reflected as owned, leased or otherwise held on its books and records, free and clear of all Liens and encumbrances except Permitted Liens, and subject to the terms and conditions of the applicable leases or conveyance instrument; provided that a Loan Party shall not be in breach of the foregoing (i) in the event that it fails to own a valid fee, leasehold or easement interest which, either considered alone or together with all other such valid fee, leaseholds or easements that it fails to own, is not material, and (ii) as a result of certain title defects and exceptions, if the Loan Parties are working to cure such title defects and exceptions as provided for in Section 8.1.18 [Title] until such time as such title defects and exceptions are cured by the Loan Parties or waived by the Administrative Agent (or Lenders) as provided by such Section, except to the extent that the failure to hold such title or interest, either alone or together with all other title defects, would not reasonably be expected to result in a Material Adverse Change.
(b) The Gathering Systems are covered by valid and subsisting recorded fee deeds, leases, easements, rights of way, servitudes, permits, licenses and other instruments and agreements (collectively, “Rights of Way”) in favor of the Borrower or any other applicable Restricted Subsidiary (or their respective predecessors in interest), except where the failure of the Gathering Systems to be so covered, individually or in the aggregate, (i) does not interfere with the ordinary conduct of business of the Borrower or any Restricted Subsidiary, (ii) does not materially detract from the value or the use of the portion of the Gathering Systems which are not covered and (iii) would not reasonably be expected to result, individually or in the aggregate, in a Material Adverse Change.
(c) The Rights of Way establish contiguous and continuous rights of way for the Gathering Systems and grant the Borrower or any applicable Restricted Subsidiary (or their respective predecessors in interest) the right to construct, operate, and maintain the Gathering Systems in, over, under, or across the land covered thereby in the same way that a prudent owner and operator would inspect, operate, repair, and maintain similar assets and in the same way as the Borrower and applicable Restricted Subsidiary have inspected, operated, repaired, and maintained the Gathering Systems prior to the Closing Date; provided, however, (i) some of the Rights of Way granted to the Borrower or applicable Restricted Subsidiary (or their respective predecessors in interest) by private parties and Official Bodies are revocable at the right of the applicable grantor, (ii) some of the Rights of Way cross properties that are subject to liens in favor of third parties that have not been subordinated to the Rights of Way, and (iii) some of the Rights of Way are subject to certain defects, limitations and restrictions; provided, further, none of the limitations, defects, and restrictions described in subclauses (i), (ii) and (iii) above, individually or in the aggregate, (A) interfere with the ordinary conduct of business of the Borrower or any Restricted Subsidiary, (B) materially detract from the value or the use of the portion of the Gathering
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Systems which are covered or (C) would reasonably be expected to result, individually or in the aggregate, in a Material Adverse Change.
(d) Each Processing Plant is or will be located on lands covered by fee deeds, real property leases, or other instruments (collectively, “Deeds”) in favor of the Borrower or any applicable Restricted Subsidiary (or their respective predecessors in interest) and their respective successors and assigns. The Deeds grant the Borrower or any applicable Restricted Subsidiary (or their respective predecessors in interest) the right to construct, operate, and maintain such Processing Plant on the land covered thereby in the same way that a prudent owner and operator would inspect, operate, repair, and maintain similar assets.
(e) All Rights of Way and all Deeds necessary for the conduct of the business of the Borrower and the Restricted Subsidiaries are valid and subsisting, in full force and effect, and there exists no breach, default or event or circumstance that, with the giving of notice or the passage of time or both, would give rise to a default under any such Rights of Way or Deeds that would reasonably be expected to result, individually or in the aggregate, in a Material Adverse Change. All rental and other payments due under any Rights of Way or Deeds by the Borrower or any Restricted Subsidiary (and their respective predecessors in interest) have been duly paid in accordance with the terms thereof, except to the extent that a failure to do so, individually or in the aggregate, would not reasonably be expected to result, individually or in the aggregate, in a Material Adverse Change.
(f) The rights and properties presently owned, leased, licensed or otherwise held by the Borrower or any Restricted Subsidiary, including all Rights of Way and Deeds, include all rights and assets and properties necessary to permit the Borrower and the Restricted Subsidiaries to conduct their businesses in all material respects in the same manner as such businesses have been conducted prior to the Closing Date.
(g) The Gathering Systems are located within the confines of the Rights of Way and the other real property held or leased by the Borrower or any of its Restricted Subsidiaries and do not encroach outside of the Rights of Way and real property held or leased by the Borrower or any of its Restricted Subsidiaries upon any adjoining property in any way that, individually or in the aggregate, (i) materially detracts from the value or the use of any Gathering System and (ii) would reasonably be expected to result in a Material Adverse Effect.
6.iFinancial Statements.
(1)Historical Statements. The Borrower has delivered to the Administrative Agent copies of its audited consolidated year-end financial statements as of December 31, 2020 and 2019 and for the fiscal years then ended (the “Historical Statements”). The Historical Statements were compiled from the books and records maintained by management of the Borrower and its Subsidiaries, are correct and complete in all material respects and fairly represent the consolidated financial condition of the Borrower and its Subsidiaries as of their dates and their results of operations and cash flows for the fiscal periods specified and have been prepared in accordance with GAAP consistently applied.
(2)Financial Projections. The Borrower has delivered to the Administrative Agent financial projections (including balance sheets and statements of operation and cash flows) for the period from the Closing Date through 2026 (broken out on a quarterly basis for the first year after the Closing Date and annually thereafter) derived from various assumptions of the Borrower’s management (the “Financial Projections”). The Financial Projections have been prepared in good faith based upon reasonable assumptions; it being understood that such Financial Projections are subject to significant uncertainties and contingencies, many of which are beyond the Borrower’s control, and that no assurance can be given that the Financial Projections will be realized.
(3)Accuracy of Financial Statements. Neither the Borrower nor any of its Subsidiaries has any material liabilities, contingent or otherwise, or forward or long-term commitments that are not disclosed in the Historical Statements or in the notes thereto, and except as disclosed therein there are no unrealized or anticipated losses from any commitments of the Borrower or any of its
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Subsidiaries that would reasonably be expected to cause a Material Adverse Change. Since December 31, 2020, no Material Adverse Change has occurred.
6.aUse of Proceeds.
The Loan Parties intend to use the proceeds of the Loans in accordance with Section 8.1.11 [Use of Proceeds].
6.bLiens in the Collateral.
(4)Security Interests. The Security Agreement is effective to create valid Liens and security interests in the Collateral described therein in favor of the Collateral Agent for the benefit of the Secured Parties. Except to the extent that the Loan Parties are not required to perfect Liens in certain Collateral pursuant to this Agreement or the Security Agreement, the Liens and security interests granted to the Collateral Agent for the benefit of the Secured Parties pursuant to the Security Agreement in the Collateral (of the type that can be perfected under the Uniform Commercial Code or by filing with the United States Patent and Trademark Office or United States Copyright Office), subject to the actions described in the following sentence, constitute and will continue to constitute first-priority security interests, subject to Permitted Liens, under the Uniform Commercial Code as in effect in each applicable jurisdiction or other applicable Law entitled to all the rights, benefits and priorities provided by the Uniform Commercial Code or such Law. Upon the due filing of financing statements relating to said security interests in each office and in each jurisdiction where required in order to perfect the security interests described above, the filing of the Patent, Trademark and Copyright Security Agreement with the United States Patent and Trademark Office and United States Copyright Office, taking possession of any stock certificates or other certificates evidencing the Pledged Securities, and upon the taking of possession or control by the Collateral Agent of the Collateral with respect to which a security interest may be perfected only by possession or control (which possession or control shall be given to the Collateral Agent to the extent possession or control by the Collateral Agent is required by this Agreement or the Security Agreement), all such action as is necessary or advisable to perfect the Lien in favor of the Collateral Agent with respect to the Collateral described above will have been taken except to the extent that the Loan Parties are not required to perfect Liens in certain Collateral pursuant to this Agreement or the Security Agreement. All filing fees and other expenses in connection with each such action have been or will be paid by the Borrower.
(5)Mortgages.
(8)Schedule 3 to the Perfection Certificate sets forth a complete and accurate list as of the Closing Date of all Real Property and Easements of any Loan Party, and such Schedule indicates which Real Property and Easements are or shall be, pursuant to any Loan Document, required to be subject to a Mortgage pursuant to the Mortgage Requirement and indicates whether any such Real Property has a Building thereon.
(9)Subject to the qualifications and limitations set forth expressly in the Mortgages, upon execution and delivery thereof, the Liens granted to the Collateral Agent pursuant to each Mortgage will constitute a valid first priority Lien on the Real Property under applicable law, subject only to Permitted Liens.
(6)Pledged Securities. All Equity Interests included in the Pledged Securities to be pledged pursuant to the Security Agreement are or will be upon issuance validly issued and nonassessable and owned beneficially and of record by the pledgor free and clear of any Lien or restriction on transfer, except for nonconsensual Permitted Liens and inchoate Permitted Liens that do not have priority over the Liens granted under the Loan Documents and as otherwise provided by the Security Agreement and except as the right of the Lenders to dispose of such Equity Interests may be limited by the Securities Act and the regulations promulgated by the SEC thereunder and by applicable state securities laws. There are no shareholder or other agreements or understandings other than partnership agreements, limited liability company agreements or operating agreements, with respect to the Equity Interests included in the Pledged Securities, except as described on Schedule 6.11. As of the Closing Date, the Loan Parties have delivered
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true and correct copies of such partnership agreements and limited liability company agreements to the Administrative Agent pursuant to Section 7.1.1(b)(iii) [Secretary’s Certificate].
(7)Transmitting Utility. Except as identified to the Administrative Agent in writing, each of the Borrower and the Restricted Subsidiaries is a “transmitting utility” as defined in Section 9-102(a)(80) of the New York Uniform Commercial Code.
6.jFull Disclosure.
(a) Neither this Agreement nor any other Loan Document, nor any certificate, statement, agreement or other documents furnished to any Agent or any Lender in connection herewith or therewith, contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein and therein, in light of the circumstances under which they were made, not misleading. There is no fact known to any Loan Party which materially adversely affects the business, property, assets, financial condition, or results of operations of the Loan Parties taken as a whole that has not been set forth in this Agreement or in the certificates, statements, agreements or other documents furnished in writing to the Agents and the Lenders prior to or at the date hereof in connection with the transactions contemplated hereby or prior to or at the Closing Date.
(b) As of the Closing Date, the information included in the Beneficial Ownership Certification is true and correct in all respects.
6.kTaxes.
All material federal, state, local and other Tax returns required to have been filed with respect to the Borrower and each Restricted Subsidiary have been filed, and payment or adequate provision has been made for the payment of all material Taxes, fees, assessments and other governmental charges (including in its capacity as withholding agent), except to the extent that such Taxes, fees, assessments and other charges are being contested in good faith by appropriate proceedings diligently conducted and for which such reserves or other appropriate provisions, if any, as shall be required by GAAP shall have been made. There are no agreements or waivers extending the statutory period of limitations applicable to any material federal income Tax return of the Borrower or any Restricted Subsidiary for any period.
6.lConsents and Approvals.
Except for the filings or recordings required pursuant to Section 7.1.1(i) [Security Documents], no consent, approval, exemption, order or authorization of, or a registration or filing with, any Official Body or any other Person is necessary to authorize or permit the execution, delivery or performance of this Agreement and the other Loan Documents or for the validity or enforceability hereof or thereof.
6.mNo Event of Default; Compliance with Instruments.
No event has occurred and is continuing and no condition exists or will exist after giving effect to the borrowings or other extensions of credit to be made under or pursuant to the Loan Documents which constitutes an Event of Default or Potential Default. None of the Loan Parties is in violation of (i) any term of its certificate of incorporation, bylaws, certificate of limited partnership, partnership agreement, certificate of formation, limited liability company agreement or other organizational documents, or (ii) any material agreement or instrument to which it is a party or by which it or any of its properties may be subject or bound where such violation would reasonably be expected to result in a Material Adverse Change.
6.nPatents, Trademarks, Copyrights, Licenses, Permits, Etc.
The Borrower and the Restricted Subsidiaries own or possess all the material patents, trademarks, service marks, trade names, copyrights, licenses, registrations, franchises, Required Permits
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and rights, without known or actual conflict with the rights of others, necessary for the Borrower and the Restricted Subsidiaries, taken as a whole, to own and operate their properties and to carry on their businesses as presently conducted and planned to be conducted by them, except where the failure to so own or possess with or without such conflict would reasonably be expected to result in a Material Adverse Change.
6.oSolvency.
The Borrower and its Subsidiaries, taken as a whole, are Solvent. On the Closing Date, on the Amendment No. 2 Effective Date, at the time of each borrowing of the Loans, the issuance of the Letters of Credit (including extensions, renewals and amendments thereof) and at the time of selection of, renewal of or conversion to an Interest Rate Option, the Borrower and its Subsidiaries, taken as a whole, shall be Solvent after giving effect to the transactions contemplated by the Loan Documents and any incurrence of Indebtedness and all other Obligations.
6.pMaintenance of Properties.
Except for such acts or failures to act as would not be reasonably expected to result, individually or in the aggregate, in a Material Adverse Change, the offices, plants, gas processing plants, pipelines, improvements, fixtures, equipment, and other property and assets owned, leased or used by the Borrower or any Restricted Subsidiary in the conduct of its business is (i) being maintained in a state adequate to conduct normal operations, (ii) in good operating condition, subject to ordinary wear and tear, and routine maintenance or repair, (iii) sufficient for the operation of such business as currently conducted, and (iv) in conformity with all Laws relating thereto.
6.qInsurance.
Schedule 9 of the Perfection Certificate is a copy of the insurance certificate of the Borrower and the Restricted Subsidiaries that lists all material insurance policies of the Borrower and the Restricted Subsidiaries as of the Closing Date, all of which are valid and in full force and effect as of the Closing Date. Such policies provide adequate insurance coverage from reputable and financially sound insurers in amounts sufficient to insure the assets and risks of the Borrower and the Restricted Subsidiaries in accordance with prudent business practice in the industry of the Borrower and the Restricted Subsidiaries.
6.rCompliance with Laws.
(a) The Borrower and its Subsidiaries are in compliance with all applicable Laws (other than Environmental Laws which are specifically addressed in Section 6.25 [Environmental Matters]) in all jurisdictions in which the Borrower or any of its Subsidiaries is presently or will be doing business, except where the failure to do so would not reasonably be expected to result in a Material Adverse Change.
(b) The Borrower and each Restricted Subsidiary is in compliance with all rules, regulations and orders of any State Pipeline Regulatory Agency to the extent that failure to comply therewith could reasonably be expected to result, individually or in the aggregate, in a Material Adverse Change, and as of the Closing Date none of the Borrower or any Restricted Subsidiary is liable for any refunds or interest thereon as a result of an order from any such State agency.
(c) To the extent, if any, that any portion of the Gathering Systems is an interstate common carrier pipeline subject to the jurisdiction of the FERC (an “Interstate Pipeline”):
(i) the rates on file with the FERC with respect to such Interstate Pipeline are just and reasonable pursuant to the Energy Policy Act, and to the knowledge of the Borrower, no provision of the tariff containing such rates is unduly discriminatory or preferential;
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(ii) each of the Borrower and its Restricted Subsidiaries is in compliance, in all material respects, with all rules, regulations and orders of the FERC applicable to such Interstate Pipeline;
(iii) none of the Borrower or any Restricted Subsidiary is liable for any refunds or interest thereon as a result of an order from the FERC;
(iv) each of the Borrower’s and its Restricted Subsidiaries’ report, if any, on Form 6 filed with the FERC complies as to form with all applicable legal requirements and does not contain any untrue statement of a material fact or omit to state a material fact required to make the statements therein not misleading; and
(v) without limiting the generality of Section 6.14 [Consents and Approvals], no certificate, license, permit, consent, authorization or order (to the extent not otherwise obtained) is required by the Borrower or any Restricted Subsidiary from the FERC to construct, own, operate and maintain any such Interstate Pipeline or to transport and/or distribute Refined Products on such Interstate Pipeline under existing contracts and agreements as the Interstate Pipelines are presently owned, operated and maintained.
6.sMaterial Contracts; Burdensome Restrictions.
Schedule 6.21 contains a complete list, as of the Closing Date, of all Material Contracts, including all amendments thereto, and the Borrower has delivered to the Administrative Agent a complete and current copy of each Material Contract existing on the Closing Date. Except to the extent that the failure to be in full force and effect would not reasonably be expected to result in a Material Adverse Change, all Material Contracts of the Borrower and each Restricted Subsidiary are in full force and effect. None of the Borrower or any Restricted Subsidiary is bound by any contractual obligation, or subject to any restriction in any organization document, or any requirement of Law which would reasonably be expected to result in a Material Adverse Change.
6.tInvestment Companies; Regulated Entities.
None of the Borrower or any Restricted Subsidiary is an “investment company” registered or required to be registered under the Investment Company Act of 1940 or under the “control” of an “investment company” as such terms are defined in the Investment Company Act of 1940 and shall not become such an “investment company” or under such “control.” None of the Borrower or any Restricted Subsidiary is subject to any other Law limiting its ability to incur Indebtedness for borrowed money.
6.uERISA Compliance.
Except as could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Change:
(8)each Pension Plan and Multiemployer Plan is in compliance with the applicable provisions of ERISA, the Code and other Laws (except that with respect to any Multiemployer Plan, such representation is deemed made only to the knowledge of the Borrower);
(9)the Borrower and each ERISA Affiliate have met all applicable minimum funding requirements under the Pension Funding Rules in respect of each Pension Plan, and no waiver of the minimum funding standards under the Pension Funding Rules has been applied for or obtained;
(10)as of the most recent valuation date for any Pension Plan, the funding target attainment percentage (as defined in Section 430(d)(2) of the Code and Section 303(d)(2) of ERISA) is 80% or higher and neither the Borrower nor any ERISA Affiliate knows of any facts
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or circumstances which would cause the funding target attainment percentage for any such plan to drop below 80% as of the most recent valuation date;
(11)with respect to any Multiemployer Plan to which the Borrower or its ERISA Affiliates contribute, the Borrower has not been notified of an “accumulated funding deficiency” (within the meaning of Section 412 of the Code) or that application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made;
(12)there has been no nonexempt “prohibited transaction” (as defined in Section 406 of ERISA) or violation of the fiduciary responsibility rules with respect to any Pension Plan;
(13)no ERISA Event has occurred or is reasonably expected to occur; and
(14)neither the Borrower nor any ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or 4212(c) of ERISA.
6.aEmployment Matters.
The Borrower and each of the Restricted Subsidiaries is in compliance with the Labor Contracts and all applicable federal, state and local labor and employment Laws including those related to equal employment opportunity and affirmative action, labor relations, minimum wage, overtime, child labor, medical insurance continuation, worker adjustment and relocation notices, immigration controls and worker and unemployment compensation, except where the failure to comply would not reasonably be expected to constitute a Material Adverse Change. There are no outstanding grievances, arbitration awards or appeals therefrom arising out of the Labor Contracts or current or threatened strikes, picketing, handbilling or other work stoppages or slowdowns at facilities of the Borrower or any of the Restricted Subsidiaries which in any case would constitute a Material Adverse Change.
6.bEnvironmental Matters.
Except as disclosed in the Borrower’s Annual Report on Form 10-K for the year ended December 31, 2020, or as otherwise could not reasonably be expected to have a Material Adverse Change:
(15)The Borrower and its Subsidiaries, their operations, facilities and properties are and for the past three years have been in compliance with all Environmental Laws.
(16)The facilities and properties currently owned, leased or operated by the Borrower or any of its Subsidiaries or, to the knowledge of the Borrower or any of its Subsidiaries, formerly owned, leased or operated by the Borrower or any of its Subsidiaries (the “Properties”), do not contain any Hazardous Materials in amounts or concentrations which (i) constitute or constituted a violation of Environmental Law by, or (ii) could reasonably be expected to give rise to any Environmental Liability for, the Borrower or any of its Subsidiaries.
(17)Neither the Borrower nor any of its Subsidiaries has received any written notice of violation, alleged violation, non-compliance, liability or potential liability regarding compliance with or other liabilities under Environmental Laws, including any with regard to their activities at any of the Properties or the business currently or formerly operated by the Borrower or any of its Subsidiaries, or any prior business for which the Borrower or any of its Subsidiaries is subject to liability under any Environmental Law.
(18)Hazardous Materials have not been transported or Released from the Properties in violation of, or in a manner or to a location which could reasonably be expected to give rise to liability for the Borrower or any of its Subsidiaries under, any applicable Environmental Law, nor have any Hazardous Materials been generated, treated, stored or Released by or on behalf of the Borrower or any of its Subsidiaries at, on, from or under any of the Properties in violation of any
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Environmental Law or in a manner that could reasonably be expected to give rise to Environmental Liability for the Borrower or any of its Subsidiaries.
6.vAnti-Terrorism Laws.
(19)(i) No Covered Entity and no director or officer of any Covered Entity, nor, to the knowledge of the Borrower, any employees or agents of any Covered Entity, is a Sanctioned Person, and (ii) no Covered Entity and no director or officer of any Covered Entity nor, to the knowledge of the Borrower, any employees or agents of any Covered Entity, either in its own right or through any third party, (a) has any of its assets in a Sanctioned Country or in the possession, custody or control of a Sanctioned Person in violation of any Anti-Terrorism Law, (b) does business in or with, or derives any of its income from investments in or transactions with, any Sanctioned Country or Sanctioned Person in violation of any Anti-Terrorism Law; or (c) engages in any dealings or transactions prohibited by any Anti-Terrorism Law.
(20)No Covered Entity and no director or officer of any Covered Entity nor, to the knowledge of the Borrower, any employees or agents of any Covered Entity, is doing business in violation of any Anti-Corruption Laws.
6.cTitle to Refined Products.
None of the Borrower or any Restricted Subsidiary has title to any of the Refined Products which are transported and/or distributed through the Gathering Systems, except pursuant to agreements under which the Borrower and the Restricted Subsidiaries have no exposure to commodity price volatility as a result of having title to such Refined Products.
- CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT
The obligation of each Lender to make Loans, of an Issuing Lender to issue Letters of Credit hereunder, and of the Swingline Lender to make Swing Loans is subject to the following conditions:
7.aFirst Loans and Letters of Credit.
7.1.iDeliveries.
On the Closing Date, the Administrative Agent shall have received each of the following, in form and substance reasonably satisfactory to the Administrative Agent:
(1)Officer’s Certificate. A certificate of each of the Loan Parties signed by a Responsible Officer, dated the Closing Date stating that (i) each of the representations and warranties of the Loan Parties are true and accurate on and as of the Closing Date (except representations and warranties which relate solely to an earlier date or time, which representations and warranties shall be true and correct on and as of the specific dates or times referred to therein), (ii) no Event of Default or Potential Default exists and (iii) since December 31, 2020, no Material Adverse Change has occurred.
(2)Secretary’s Certificate. A certificate dated the Closing Date and signed by an Authorized Officer of each of the Loan Parties, certifying:
(10)that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors of such Loan Party (or its managing general partner, managing member or equivalent) authorizing the execution, delivery and performance of the Loan Documents to which such Person is a party and, in the case of the Borrower, the borrowings hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect on the Closing Date;
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(11)the names of the officer or officers authorized to sign this Agreement and the other Loan Documents and the true signatures of such officer or officers and specifying the Authorized Officers permitted to act on behalf of such Loan Party for purposes of this Agreement and the true signatures of such officers, on which the Administrative Agent, the Issuing Lenders, and each Lender may conclusively rely; and
(12)copies of its organizational documents, including its certificate of incorporation, bylaws, certificate of limited partnership, partnership agreement, certificate of formation, and limited liability company agreement as in effect on the Closing Date, recently certified by the appropriate state official where such documents are filed in a state office, together with recently dated certificates from the appropriate state officials as to the continued existence and good standing of such Loan Party in each state where organized.
(3)Delivery of Loan Documents. This Agreement, each of the other Loan Documents and the Perfection Certificate signed by an Authorized Officer of each of the Loan Parties party thereto.
(4)Opinion of Counsel. A written opinion of Latham & Watkins LLP, counsel to the Loan Parties (who may rely on the opinions of such other counsel as may be acceptable to the Administrative Agent), dated the Closing Date, addressed to the Lenders, the Issuing Lenders, the Swingline Lender and the Agents, substantially in the form provided to the Agents prior to the Closing Date.
(5)Legal Details. All legal details and proceedings in connection with the transactions contemplated by this Agreement and the other Loan Documents shall be in form and substance reasonably satisfactory to the Administrative Agent and its counsel, and the Administrative Agent shall have received all such other counterpart originals or certified or other copies of such documents and proceedings in connection with such transactions, in form and substance reasonably satisfactory to the Administrative Agent and its counsel, as the Administrative Agent or its counsel may reasonably request.
(6)Insurance. Evidence that adequate insurance required to be maintained under the Loan Documents is in full force and effect and evidence in the form of insurance certificates and endorsements that the Collateral Agent is named as an additional insured (in the case of liability) and loss payee (in the case of property) in the Loan Parties’ insurance policies.
(7)Evidence of Filing. UCC financing statements in appropriate form for filing under the UCC and such other documents under applicable requirements of Law in each jurisdiction as may be necessary or appropriate or, in the reasonable opinion of the Administrative Agent or Collateral Agent, desirable to perfect the Liens created, or purported to be created, by the Security Documents.
(8)Existing Credit Agreement. Concurrently with the effectiveness and initial borrowings under this Agreement, (i) all principal amounts outstanding under the Existing Credit Agreement shall be prepaid and (ii) all unpaid interest, breakage fees and all other fees and charges owing to Exiting Lenders under the Existing Credit Agreement as of the Closing Date shall be paid; provided that (x) such payment of principal shall be made by way of reallocations and payments pursuant to the second paragraph of Section 2.1.1 and (y) Existing Commitment Fees, Existing Letter of Credit Fees and Existing Interest shall be paid to Increased Lenders and Decreased Lenders in accordance with Section 2.1.1.
(9)Security Documents. Each of the Security Documents (other than the Mortgages) shall have been signed by an Authorized Officer, and to the extent required under applicable requirements of Law, such Security Documents shall be properly recorded or filed with the applicable recording or filing offices and be in proper form for such recording.
(10)Lien Searches. The lien searches listed on Schedule 7.1.1(j) shall have been completed, and the Administrative Agent shall be satisfied with the results thereof.
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(11)Pledged Securities. All certificates, agreements or instruments representing or evidencing the Pledged Securities accompanied by instruments of transfer and stock powers undated and endorsed in blank have been delivered to the Collateral Agent.
(12)Other Documentation. All other certificates, agreements, including instruments necessary to perfect the Collateral Agent’s security interest (to the extent required by the Security Documents) in all Chattel Paper, Instruments and Investment Property (as each such term is defined in the Security Agreement) of each Loan Party have been delivered or assigned to the Collateral Agent.
(13)Solvency Certificate. A certificate of the chief financial officer of the Borrower (or CNX Midstream GP, on behalf of the Borrower) stating that, after giving effect to the Transactions, the Borrower and its Subsidiaries, taken as a whole, are Solvent.
(14)Financial Statements. The Administrative Agent shall have received the Historical Statements and the Financial Projections.
(15)Required Flood Materials. The Collateral Agent shall have received the Required Flood Materials with respect to each existing Mortgage as of the Closing Date.
7.1.iiPayment of Fees.
The Borrower shall have paid or caused to be paid to the Agents, the Lead Arrangers and the Lenders to the extent not previously paid, all fees payable on or before the Closing Date (including upfront fees) and all costs and expenses for which the Agents are entitled to be reimbursed, including the reasonable fees and expenses of Cahill Gordon & Reindel LLP.
7.1.iiiUSA PATRIOT Act.
The Administrative Agent shall have received, at least three (3) Business Days prior to the Closing Date (or such later date satisfactory to the Administrative Agent), all documentation and other information required by bank regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including but not restricted to the USA PATRIOT Act to the extent requested at least ten (10) Business Days prior to the Closing Date.
7.bEach Additional Loan or Letter of Credit.
At the time of making any Loans or issuing any Letters of Credit (or amendments or extensions thereto) and after giving effect to the proposed extensions of credit:
(16)the representations and warranties of the Loan Parties contained in Section 6 [Representations and Warranties] and in the other Loan Documents shall be true and correct in all material respects on and as of the date of the making of any Loan Request, any Swing Loan Request and the making of such additional Loan or the issuance such Letter of Credit (or amendments or extensions thereto) with the same effect as though such representations and warranties had been made on and as of such date (except that (i) any representation and warranty that is already qualified as to materiality shall be true and correct in all respects as so qualified and (ii) representations and warranties which expressly relate solely to an earlier date or time, which representations and warranties shall be true and correct on and as of the specific dates or times referred to therein);
(17)no Event of Default or Potential Default shall have occurred and be continuing; and
(18)the Borrower shall have delivered to the Administrative Agent a duly executed and completed Loan Request or to the applicable Issuing Lender the Issuer Documents for a Letter of Credit, as the case may be.
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Each request for the making of any Loans or issuance of any Letters of Credit and each issuance, amendment, renewal, increase or extension of a Letter of Credit shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in clauses (a), (b) and (c) of this Section 7.2.
- COVENANTS
8.aAffirmative Covenants.
The Loan Parties, jointly and severally, covenant and agree that until Payment in Full of the Loans and Reimbursement Obligations and interest thereon, expiration or termination of all Letters of Credit, and satisfaction of all of the Loan Parties’ other Obligations under the Loan Documents and termination of the Commitments, the Loan Parties shall comply at all times with the following affirmative covenants:
8.1.iPreservation of Existence, Etc.
Each of the Borrower and the Restricted Subsidiaries shall maintain (i) its legal existence as a corporation, limited partnership or limited liability company and (ii) its license or qualification and good standing, in each case, in each jurisdiction in which its failure to so qualify, individually or in the aggregate, would reasonably be expected to result in a Material Adverse Change, except as otherwise expressly permitted by Section 8.2.6 [Liquidations, Mergers, Consolidations, Acquisitions].
8.1.iiPayment of Liabilities, Including Taxes, Etc.
Each of the Borrower and the Restricted Subsidiaries shall duly pay and discharge all liabilities to which it is subject or which are asserted against it, promptly as and when the same shall become due and payable (including extensions), including all Taxes, assessments and governmental charges upon it or any of its properties, assets, income or profits, prior to the date on which penalties attach thereto, except to the extent that such liabilities, including Taxes, assessments or charges, are being contested in good faith and by appropriate and lawful proceedings diligently conducted and for which such reserve or other appropriate provisions, if any, as shall be required by GAAP shall have been made, but only to the extent that failure to pay or discharge any such liabilities would not result in any additional liability which would adversely affect to a material extent the financial condition of the Borrower and the Restricted Subsidiaries, taken as a whole, or which would materially and adversely affect the Collateral; provided that the Loan Parties will pay all such liabilities forthwith upon the commencement of proceedings to enforce any Lien which may have attached as security therefor or take other action as is required to suspend such enforcement action unless such Lien otherwise qualifies as a Permitted Lien.
8.1.iiiMaintenance of Insurance.
(19)The Borrower and the Restricted Subsidiaries shall insure their properties and assets against loss or damage by fire and such other insurable hazards (including flood, fire, property damage, workers’ compensation, business interruption and public liability insurance) and against other risks, and in such amounts as similar properties and assets, as are commonly insured by prudent companies in similar circumstances carrying on similar businesses, and with reputable and financially sound insurers, including self-insurance to the extent customary. At the request of the Collateral Agent, the Borrower shall deliver to the Collateral Agent (x) annually an original certificate of insurance signed by its independent insurance broker describing and certifying as to the existence of the insurance on the Collateral required to be maintained by this Agreement and the other Loan Documents, together with a copy of the endorsement described in the next sentence attached to such certificate and (y) from time to time a summary schedule indicating all commercial insurance then in force with respect to the Borrower and the Restricted Subsidiaries. Such policies of insurance shall contain the necessary endorsements or policy language, which shall (i) specify the Collateral Agent on behalf of the Secured Parties as an additional insured on the liability policies and mortgagee and lender loss payee as their interests may appear on the property policies, with the understanding that any obligation imposed upon the insured (including the liability to pay premiums) shall be the sole obligation of the Borrower and the Restricted Subsidiaries and not that of the additional insured, (ii) provide that the interest of the Collateral Agent,
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under the lender’s loss payable endorsement in a form similar to the form provided prior to the Closing Date, shall be insured regardless of any breach or violation by the Borrower or any of its Subsidiaries of any warranties, declarations or conditions contained in such policies or any action or inaction of the Borrower or any of its Subsidiaries, (iii) provide a waiver of any right of the insurers to set off or counterclaim or any other deduction, whether by attachment or otherwise (to the extent that the Loan Parties are able on a commercially reasonable efforts basis to obtain such waiver from the insurers), (iv) provide that no cancellation of such policies for any reason (including non-payment of premium) nor any change therein shall be effective until at least ten (10) days after notification to the Collateral Agent of such cancellation or change, (v) be primary without right of contribution of any other liability insurance carried by or on behalf of any additional insureds with respect to their respective interests in the Collateral, and (vi) provide that inasmuch as any liability policy covers more than one insured, all terms, conditions, insuring agreements and endorsements (except limits of liability) shall operate as if there were a separate policy covering each insured.
(20)Each Loan Party shall take all actions required under the Flood Laws and otherwise reasonably requested by the Collateral Agent to assist in ensuring that each Lender is in compliance with the Flood Laws applicable to the Collateral, including, but not limited to, (i) maintaining such flood insurance in full force and effect and otherwise sufficient to comply with all applicable rules and regulations promulgated pursuant to the Flood Laws and otherwise reasonably requested by the Collateral Agent, (ii) delivering to the Collateral Agent evidence of such compliance in form and substance reasonably acceptable to the Collateral Agent and (iii) delivering to the Collateral Agent an executed acknowledgment of each “Life-of-Loan” flood hazard determination delivered to the Borrower promptly following receipt of each such determination.
(21)If a Casualty Event affecting assets with a book value, when taken together with the book value of the assets affected by all other Casualty Events during the same fiscal year, in excess of $10,000,000 occurs, the Borrower shall promptly notify the Administrative Agent of such event or events and the estimated (or actual, if available) amount of such loss or losses.
8.1.ivMaintenance of Properties and Equipment.
(a) The Borrower and the Restricted Subsidiaries shall (x) maintain in good repair, working order and condition (ordinary wear and tear excepted) in accordance with the general practice of other businesses of similar character and size, all of those material properties and equipment (including all material properties and equipment included in the Gathering Systems) useful or necessary to their businesses and (y) make or cause to be made, in a reasonably diligent fashion, all appropriate repairs, renewals or replacements thereof, in each case if the failure to so maintain, repair, renew or replace the same would reasonably be expected to constitute a Material Adverse Change.
(b) The Borrower will, and will cause each Restricted Subsidiary to:
(i) maintain or cause the maintenance of the interests and rights (i) which are necessary to maintain the Easements for the Gathering Systems and to maintain the other Midstream Assets, and (ii) which individually or in the aggregate, would, if not maintained, reasonably be expected to result in a Material Adverse Change;
(ii) subject to Permitted Liens, maintain the Gathering Systems within the confines of the Easements without material encroachment upon any adjoining property and maintain the Processing Plants within the boundaries of the Deeds and without material encroachment upon any adjoining property;
(iii) maintain such rights of ingress and egress necessary to permit the Borrower and the Restricted Subsidiaries to inspect, operate, repair, and maintain the Gathering Systems and the other Midstream Assets to the extent that failure to maintain such rights, individually or in the aggregate, would reasonably be expected to result, individually or in the aggregate, in a Material Adverse Change and provided that the Borrower and the Restricted Subsidiaries may hire third parties to perform these functions; and
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(iv) maintain all material agreements, licenses, permits, and other rights required for any of the foregoing described in this Section 8.1.4 in full force and effect in accordance with their terms, timely make any payments due thereunder, and prevent any default thereunder which could result in a termination or loss thereof, except any such failure to pay or default that could not reasonably, individually or in the aggregate, be expected to cause a Material Adverse Effect.
(c) To the extent the Borrower or one of its Restricted Subsidiaries is not the operator of any asset or property, the Borrower and its Restricted Subsidiaries, as applicable, shall use commercially reasonable efforts to cause the operator to comply with this Section 8.1.4.
8.1.vMaintenance of Patents, Trademarks, Etc.
The Borrower and the Restricted Subsidiaries shall maintain in full force and effect all patents, trademarks, service marks, trade names, copyrights, licenses, franchises, rights, privileges, permits, consents, approvals and other authorizations necessary or desirable for the ownership and normal operation of their properties and business if the failure so to maintain the same would constitute a Material Adverse Change.
8.1.viVisitation Rights.
The Borrower and the Restricted Subsidiaries shall permit any of the officers or authorized employees or representatives of any Agent or any Lender (so long as no Event of Default has occurred and is continuing, at such Agent’s or Lender’s expense) to visit and inspect their properties during normal business hours and to examine and make excerpts from their books and records and discuss their business affairs, finances and accounts with their officers, all in such detail and at such times and as often as any of the Lenders may reasonably request; provided that each Lender shall provide the Borrower and the Administrative Agent with reasonable notice prior to any visit or inspection, all such visits and inspections shall be made in accordance with the standard safety, visit, and inspection procedures of the Borrower and the Restricted Subsidiaries and no such visit or inspection shall interfere with their normal business operation. In the event any Lender desires to conduct an audit of the Borrower or any Restricted Subsidiary, such Lender shall make a reasonable effort to conduct such audit contemporaneously with any audit to be performed by the Administrative Agent.
8.1.viiKeeping of Records and Books of Account.
The Borrower and the Restricted Subsidiaries shall maintain and keep proper books of record and account which enable the Borrower to issue financial statements in accordance with GAAP and as otherwise required by applicable Laws, and in which full, true and correct entries shall be made in all material respects of all their dealings and business and financial affairs. Without limiting the generality of the foregoing, the Borrower and the Restricted Subsidiaries shall maintain adequate allowances on their books in accordance with GAAP for (i) future costs associated with retiree and health care benefits, (ii) future costs associated with reclamation of disturbed acreage, removal of facilities and other closing costs in connection with its mining activities and (iii) future costs associated with other potential Environmental Liabilities.
8.1.viiiFurther Assurances.
Each Loan Party shall, from time to time, at its expense, faithfully preserve and protect the Lien on the Collateral in favor of the Collateral Agent for the benefit of the Secured Parties as a continuing first priority perfected Lien, subject only to Permitted Liens, and shall do such other acts and things as the Administrative Agent in its reasonable discretion may deem necessary or advisable from time to time in order to preserve, perfect and protect the Liens granted under the Loan Documents and to exercise and enforce the Collateral Agent’s rights and remedies thereunder with respect to the Collateral.
8.1.ixAdditional Guarantors.
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If (i) the Borrower forms or acquires, directly or indirectly, any Subsidiary (other than an Excluded Subsidiary) or (ii) any Subsidiary that was an Excluded Subsidiary ceases to be an Excluded Subsidiary, the Borrower shall cause such Subsidiary to join this Agreement within 30 days after the date of acquisition or formation of such Subsidiary or within 30 days after the date any Subsidiary that was an Excluded Subsidiary ceases to be an Excluded Subsidiary (in each case, or such longer period as the Administrative Agent may agree in its reasonable discretion) as a Guarantor by delivering to the Administrative Agent and Collateral Agent, as applicable, (A) a signed Guarantor Joinder, (B) documents in the forms described in Sections 7.1.1(b), (c), (d) (if requested by the Administrative Agent), (f), (g), (k), (l) and (m) [Deliveries], and 8.1.17 [Collateral], modified as appropriate, and (C) documents necessary to grant and perfect Liens to the Collateral Agent for the benefit of the Secured Parties in the Collateral held by such Subsidiary. For the avoidance of doubt, such Subsidiary, and if applicable, the other Loan Parties shall execute and deliver to the Administrative Agent and the Collateral Agent such amendments or supplements to the relevant Security Documents or such other documents as the Administrative Agent or the Collateral Agent shall deem necessary or advisable to grant to the Collateral Agent, for its benefit and for the benefit of the other Secured Parties, a Lien in the property and equity of such Subsidiary to the extent required by the Loan Documents, subject to no Liens other than Permitted Liens, and shall take all actions necessary or advisable in the opinion of the Administrative Agent or the Collateral Agent to cause the Lien created by the applicable Security Documents to be duly perfected in accordance with all applicable requirements of Law to the extent required by the Loan Documents, including the filing of financing statements in such jurisdictions as may be reasonably requested by the Administrative Agent or the Collateral Agent.
8.1.xCompliance with Laws.
The Borrower and its Subsidiaries shall comply with all applicable Laws and regulations (including all Environmental Laws and all rules, regulations and orders of all State Pipeline Regulatory Agencies and the FERC to the extent applicable) in all material respects, except where the failure to so comply would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Change.
8.1.xiUse of Proceeds.
(22)The Loan Parties will use the Letters of Credit and the proceeds of the Loans only as follows: (i) on the Closing Date, repay all outstanding indebtedness under the Existing Credit Agreement and to cash collateralize any letters of credit outstanding under the Existing Credit Agreement that are not Existing Letters of Credit and (ii) after the Closing Date, to provide for general corporate purposes of the Borrower, the Restricted Subsidiaries, and to the extent permitted in this Agreement, any Unrestricted Subsidiaries, including Permitted Acquisitions, transaction fees and expenses, working capital and capital expenditures of the Borrower, the Restricted Subsidiaries, and to the extent permitted in this Agreement, any Unrestricted Subsidiaries.
(23)None of the Loan Parties engages or will engage principally, or as one of its important activities, in the business of extending credit for the purpose, immediately, incidentally or ultimately, of purchasing or carrying margin stock (within the meaning of Regulation U). No part of the proceeds of any Loan has been or shall be used for any purpose which entails a violation of or which is inconsistent with the provisions of the regulations of the Board of Governors of the Federal Reserve System, and the Borrower shall assist the Lenders, as reasonably requested by the Administrative Agent, with the Lenders’ compliance with Regulation U as such compliance relates to the Borrower and the Loans, including by providing the Administrative Agent with all documents, forms and certificates reasonably requested by the Administrative Agent in relation thereto.
8.1.iSubordination of Intercompany Loans.
Each Loan Party shall cause any Indebtedness, loans or advances owed by any Loan Party to any Restricted Subsidiary that is not a Guarantor to be subordinated pursuant to the terms of the Intercompany Subordination Agreement.
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8.1.iiAnti-Terrorism Laws; Anti-Corruption Laws.
(24)(i) No Covered Entity, nor to the knowledge of the Borrower, any directors, officers or employees of any Covered Entity, will become a Sanctioned Person, (ii) no Covered Entity, either in its own right or through any third party, nor to the knowledge of the Borrower, any of a Covered Entity’s directors, officers or employees, will (1) have any of its assets in a Sanctioned Country or in the possession, custody or control of a Sanctioned Person in violation of any Anti-Terrorism Law; (2) do business in or with, or derive any of its income from investments in or transactions with, any Sanctioned Country or Sanctioned Person in violation of any Anti-Terrorism Law; (3) engage in any dealings or transactions prohibited by any Anti-Terrorism Law; or (4) use the Loans or Letters of Credit to fund any operations in, finance any investments or activities in, or, make any payments to, a Sanctioned Country or Sanctioned Person or in any manner that would cause a violation of the Anti-Terrorism Laws by any party to this Agreement, (iii) the funds used to repay the Obligations will not be derived from any unlawful activity, (iv) each Covered Entity shall comply with all Anti-Terrorism Laws in all material respects and (v) the Borrower shall promptly notify the Administrative Agent in writing upon the occurrence of a Reportable Compliance Event.
(25)No part of the proceeds of any Loans shall be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of any Anti-Corruption Laws.
8.1.xiiCompliance with Certain Contracts.
(26)Each of the Borrower and the Restricted Subsidiaries shall enforce its rights under each Material Contract, except, in each case, where the failure to do so, either individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Change.
(27)The Borrower and the Restricted Subsidiaries shall maintain and materially comply with the terms and conditions of all Material Contracts, the nonperformance of which would reasonably be expected to result in a Material Adverse Change.
8.1.iii[Reserved].
8.1.iv[Reserved].
8.1.vCollateral.
(28)Pursuant to the Loan Documents, the Loan Parties shall grant, or cause to be granted, to the Collateral Agent, for the benefit of the Secured Parties, a first priority lien and security interest, subject only to Permitted Liens:
(1)on the date hereof and, with respect to any Equity Interests acquired after the Closing Date, not later than the applicable deadline specified in Section 8.1.9 [Additional Guarantors] (or such longer period as reasonably acceptable to the Administrative Agent), in all Equity Interests owned by the Loan Parties;
(2)on the date hereof and with respect to any Person that becomes a Subsidiary (other than an Excluded Subsidiary) after the Closing Date or any Subsidiary that ceases to be an Excluded Subsidiary, not later than the applicable deadline specified in Section 8.1.9 [Additional Guarantors] (or such longer period as reasonably acceptable to the Administrative Agent), in all of the other assets of the Loan Parties (except as excluded or limited above or below or as excluded or limited in any other Loan Document) (including all Midstream Assets, accounts receivable, inventory, chattel paper, intellectual property and other general intangibles, equipment, Applicable Accounts and other investment property whether owned on the Closing Date or subsequently acquired) and products and proceeds of the foregoing; and
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(3)(x) within 90 days following the end of any fiscal quarter in which Real Property or Easements were acquired or leased, in all Real Property or Easements (other than Excluded Assets) acquired or leased by a Loan Party after the Closing Date, (y) within 90 days following the end of any fiscal quarter in which any Real Property or Easement ceases to be an Excluded Asset and (z) to the extent the Borrower cannot provide the certification that the Mortgage Requirement is then satisfied as contemplated by Section 8.3.4(vi) [Certificate of the Borrower], in such Real Property or Easement, in each case to the extent required to satisfy the Mortgage Requirement, by delivering a Mortgage or an amendment to an existing Mortgage, as applicable, within 30 days of such failure to provide the certification that the Mortgage Requirement is then satisfied; provided that (A) each Mortgage or amendment delivered pursuant to this Section 8.1.17(a)(iii) shall be accompanied by (1) local counsel opinions with respect thereto as reasonably requested by the Collateral Agent, (2) the Required Flood Materials and (3) title work, if any, as required pursuant to Section 8.1.18 [Title] and (B) the applicable Loan Party shall not execute and deliver any Mortgage pursuant to this Section 8.1.17(a)(iii) until the date that occurs sixty (60) days after the Collateral Agent has made available to the Lenders a copy of the Required Flood Materials; provided that if any deadline specified in clause (x), (y) or (z) above would pass prior to the end of the 60-day period described in this clause (B), such deadline shall be extended to the end of such 60-day period;
provided that any of the deadlines in this Section 8.1.17(a) may be extended (by notice to the Borrower in writing) by the Collateral Agent in its sole discretion upon reasonable request of the Borrower.
(29)Notwithstanding the foregoing, Liens will not be required on any of the following (collectively, the “Excluded Assets”):
(e)Real Property and Easements not required to be subject to a Mortgage in order for the Mortgage Requirement to be satisfied;
(f)(x) Excluded Accounts described in clauses (i), (ii), and (iii) of the definition of “Excluded Accounts” or (y) funds in Excluded Accounts described in clause (v) of the definition of “Excluded Accounts” solely to the extent such funds will be swept into one or more Excluded Accounts described in clauses (i), (ii) and (iii) of the definition of “Excluded Accounts”;
(g)any right, title and interests in and to any Manufactured (Mobile) Home (as defined in the applicable Flood Laws), and any Building that does not meet the threshold required by the Mortgage Requirement;
(h)motor vehicles (and other assets covered by certificates of title or ownership) and Letter-of-Credit Rights (as defined in the UCC in the State of New York), in each case, except to the extent the security interest in such assets can be perfected by the filing of an “all assets” UCC financing statement;
(i)Commercial Tort Claims (as defined in the UCC) that do not exceed $7,500,000 in the aggregate for all Pledgors;
(j)assets owned by any Pledgor on the Closing Date or hereafter acquired and any proceeds thereof that are subject to a Lien permitted by clause (9) in the definition of “Permitted Liens” to the extent and for so long as the contract or other agreement in which such Lien is granted (or the documentation providing for the Capital Lease Obligations, equipment lease or purchase money obligation subject to such Lien) validly prohibits the creation of any other Lien on such assets and proceeds;
(k)those assets over which the granting of security interests in such assets would be prohibited by (1) any contract in effect on the Closing Date and listed on Schedule 8.2.15 or Schedule 8.2.16 (or, as to any assets acquired after the Closing Date in an acquisition permitted hereunder, in effect at the time of acquisition thereof and not
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entered into in contemplation thereof) or (2) applicable law or regulation or to the extent that such security interests would require obtaining the consent of any governmental or regulatory authority, but only to the extent and for so long as a grant of a security interest therein in favor of the Collateral Agent would (x) violate or invalidate such contract, cause the acceleration or the termination thereof or create a right of termination in favor of any other party thereto (other than the Borrower or any of its Subsidiaries) or (y) violate such applicable law or regulation or require such consent;
(l)any intent-to-use trademark application to the extent and for so long as creation by a Pledgor of a security interest therein would result in the loss by such Pledgor of any material rights therein;
(m)except for Equity Interests of Foreign Subsidiaries to the extent required pursuant to Section 8.1.17(a) [Collateral], any foreign collateral or credit support;
(n)any Voting Stock of any CFC or CFC Holdco in excess of 65% of the total voting power of all outstanding Voting Stock of such Subsidiary, it being understood that any Equity Interests constituting “stock entitled to vote” within the meaning of Treasury Regulation Section 1.956-2(c)(2) shall be treated as Voting Stock for purposes of this clause (xi);
(o)subject to the last paragraph of this Section 8.1.17(b), Equity Interests of any non-wholly owned Subsidiary to the extent that the organization documents of such Subsidiary prohibit the pledge thereof to the Collateral Agent (so long as such prohibitions were not effectuated in contemplation of such Subsidiary becoming a Subsidiary of Borrower);
(p)assets owned by any Pledgor on the Closing Date or hereafter acquired and any proceeds thereof as to which the Borrower reasonably determines (and the Collateral Agent agrees in writing (which may be by e-mail)) that the cost of obtaining such a security interest or perfection thereof are excessive in relation to the benefit to the Secured Parties of the security to be afforded thereby;
(q)any permit or license issued by an Official Body to any Pledgor or any agreement to which any Pledgor is a party, in each case, only to the extent and for so long as the terms of such permit, license or agreement or any requirement of Law applicable thereto, validly prohibit the creation by such Pledgor of a security interest in such permit, license or agreement in favor of the Collateral Agent;
(r)any right, title and interests in and to all locomotives, rail cars and rolling stock now or hereafter owned or leased by the Loan Parties;
(s)any right, title and interest in and to any ship, boat or other vessel; and
(t)the Loan Parties’ timber to be cut other than to the extent encumbered by any Mortgage;
provided that (x) clauses (vi), (vii), (xi)(y) and (xiii) shall be after giving effect to applicable provisions of the Uniform Commercial Code of any applicable jurisdiction or other applicable law, and shall not include proceeds and receivables of assets described in such clauses, the assignment of which is expressly deemed effective under the Uniform Commercial Code of any applicable jurisdiction notwithstanding the prohibition described in such clause and (y) Excluded Assets shall not include any Proceeds (as defined in the UCC), substitutions or replacements of any assets referred to in any of the foregoing clauses (i) through (xvii) unless such Proceeds (as defined in the UCC), substitutions or replacements would constitute assets expressly referred to in any such clause.
(30) [Reserved].
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(31)No actions in any non-U.S. jurisdiction or required by the laws of any non-U.S. jurisdiction shall be required to be taken (x) to create any security interests in assets located or titled outside of the U.S. or (y) to perfect or make enforceable any security interests in any assets (other than delivery of Equity Interests of any Foreign Subsidiary pursuant to Section 8.1.17) (it being understood that no security agreements or pledge agreements governed under the laws of any non U.S. jurisdiction shall be required).
(32)No Loan Party shall effect any change (i) in any Loan Party’s legal name, (ii) in the location of any Loan Party’s chief executive office, (iii) in any Loan Party’s identity or organizational structure, (iv) in any Loan Party’s Federal Taxpayer Identification Number or organizational identification number, if any, or (v) in any Loan Party’s jurisdiction of organization (in each case, including by merging with or into any other entity, reorganizing, dissolving, liquidating, reorganizing or organizing in any other jurisdiction), until (A) it shall have given the Collateral Agent and the Administrative Agent not less than 5 days’ prior written notice, or such lesser notice period agreed to by the Collateral Agent, of its intention so to do, clearly describing such change and providing such other information in connection therewith as the Collateral Agent or the Administrative Agent may reasonably request and (B) it shall have taken all action reasonably satisfactory to the Collateral Agent to maintain the perfection and priority of the security interest of the Collateral Agent for the benefit of the Secured Parties in the Collateral, if applicable. Each Loan Party agrees to promptly provide the Collateral Agent with certified organizational documents reflecting any of the changes described in the preceding sentence.
8.1.xiiiTitle.
The Loan Parties shall comply with the requirements set forth on Schedule 8.1.18.
8.1.xivMaintenance of Permits.
The Borrower and the Restricted Subsidiaries shall maintain all Required Permits in full force and effect in accordance with their terms except where the failure to do so would not reasonably be expected to result in a Material Adverse Change.
8.1.xvPost-Closing Matters.
The Loan Parties will execute and deliver to the Administrative Agent the documents and complete the tasks set forth on Schedule 8.1.20, within the time frames set forth therein, unless otherwise waived or extended by the Administrative Agent in its sole discretion.
8.1.xviAccounts.
(33)No Loan Party shall establish or maintain an Applicable Account unless it is subject to a Control Agreement; provided that, in the case of any Applicable Account acquired pursuant to a Permitted Acquisition (and which Applicable Account was not established in contemplation of such acquisition), so long as such acquiring Loan Party provides the Administrative Agent with written notice of the existence of such Applicable Account within five (5) Business Days following the date of such acquisition (or such later date as the Administrative Agent may agree in its sole discretion), such Loan Party will have sixty (60) days following the date of such acquisition (or such later date as the Administrative Agent may agree in its discretion; provided that any extension of more than thirty (30) additional days shall require the consent of the Required Lenders) to cause such Applicable Account to be subject to a Control Agreement.
(34)Each Loan Party shall maintain, and shall cause each of its Subsidiaries to maintain, at all times its Applicable Accounts with the Administrative Agent, a Lender or an Affiliate of the Administrative Agent or a Lender (a “Permitted Account Counterparty”); provided that in the case of any Applicable Account acquired pursuant to a Permitted Acquisition (and which Applicable Account was not established in contemplation of such acquisition) and not maintained with a Permitted Account Counterparty, the foregoing prohibition shall not apply until the date which is sixty (60) days after such Permitted Acquisition (or such later date as the Administrative Agent may agree in its discretion;
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provided that any extension of more than thirty (30) additional days shall require the consent of the Required Lenders).
8.bNegative Covenants.
The Loan Parties, jointly and severally, covenant and agree that until Payment in Full of the Loans and Reimbursement Obligations and interest thereon, expiration or termination of all Letters of Credit, satisfaction of all of the Loan Parties’ other Obligations hereunder and termination of the Commitments, the Loan Parties shall comply with the following negative covenants:
8.2.iIndebtedness.
The Borrower shall not, and shall not cause or permit any Restricted Subsidiary to, directly or indirectly, incur, assume or otherwise become liable, contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness, and the Borrower will not issue any Disqualified Stock and will not permit any Restricted Subsidiary to issue any Preferred Stock, except:
(35)Indebtedness under the Loan Documents;
(36)Indebtedness existing on the Closing Date and set forth on Schedule 8.2.1, and Refinancing Indebtedness of such Indebtedness;
(37)Indebtedness owed by (i) a Loan Party to another Loan Party, (ii) a Restricted Subsidiary that is not a Loan Party to another Restricted Subsidiary that is not a Loan Party, (iii) a Restricted Subsidiary to a Loan Party and (iv) any Loan Party to a Restricted Subsidiary that is not a Loan Party; provided that (x) any Indebtedness pursuant to clause (iii) is permitted by Section 8.2.4 [Loans and Investments] and (y) any Indebtedness pursuant to clause (iv) is subordinated to the extent required by, and in accordance with, Section 8.1.12 [Subordination of Intercompany Loans];
(38)Indebtedness represented by mortgage financings, purchase money obligations or other Indebtedness, in each case incurred for the purpose of financing all or any part of the price or cost of acquisition, design, construction, installation, development, repair or improvement of plant, property or equipment used in the business of the Borrower or any Restricted Subsidiary, and Capital Lease Obligations, and Refinancing Indebtedness of any of the foregoing, in an aggregate amount, when taken together with the outstanding amount of all other Indebtedness or Refinancing Indebtedness incurred pursuant to this clause (d), not to exceed at any time outstanding under this clause (d) $25,000,000; provided that the aggregate amount of Indebtedness incurred pursuant to this clause (d) by Restricted Subsidiaries that are not Guarantors shall not exceed $5,000,000 at any time outstanding;
(39)Indebtedness of any Person that becomes a Restricted Subsidiary after the Closing Date as permitted by this Agreement, which Indebtedness is existing at the time such Person becomes a Restricted Subsidiary (and was not incurred in connection with or in contemplation of such Person’s becoming a Subsidiary of the Borrower) in an aggregate amount not to exceed $15,000,000 at any time outstanding;
(40)Indebtedness under Swap Agreements permitted under Section 8.2.12 [Swaps];
(41)Indebtedness in respect of self-insurance obligations or bid, plugging and abandonment, appeal, reimbursement, performance, reclamation, employment, surety and similar obligations and completion guarantees provided by or for the account of the Borrower or any Restricted Subsidiary in the ordinary course of business, and any Guaranties and letters of credit functioning as or supporting any of the foregoing in the ordinary course of business;
(42)liability in respect of the Indebtedness of any Unrestricted Subsidiary or any Joint Venture in an aggregate amount not to exceed $15,000,000 at any time outstanding; provided
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that, in the case of Indebtedness of an Unrestricted Subsidiary, (i) such liability shall arise only as a result of the pledge of (or a Guaranty limited in recourse solely to) Equity Interests in such Unrestricted Subsidiary held by the Borrower or a Restricted Subsidiary to secure such Indebtedness and (ii) such Indebtedness shall be Non-Recourse Debt;
(43)(x) Permitted Unsecured Notes; provided that (i) after giving effect to the incurrence of such Indebtedness, the Borrower shall be in compliance, on a Pro Forma Basis, with the Financial Covenants and (ii) the Borrower shall deliver to the Administrative Agent prior to the incurrence of the Permitted Unsecured Notes an Officer’s Certificate certifying compliance with the requirements of this clause (i) and setting forth calculations in reasonable detail showing such compliance; and (y) Permitted Unsecured Notes that refinance Permitted Unsecured Notes outstanding on the Closing Date or incurred under clause (x) or this clause (y); provided, further, that the 2026 Notes shall be redeemed or repurchased in full on or before October 31, 2021; and
(44)Indebtedness or Disqualified Stock of one or more Loan Parties in an aggregate principal amount not to exceed $50,000,000 at any time outstanding;
provided that (i) in the case of clause (h), (i) or (j), at the time of and after giving effect to the incurrence of any such Indebtedness no Potential Default or Event of Default shall exist and (ii) notwithstanding anything to the contrary herein, in no event shall any Restricted Subsidiary that is not a Loan Party incur any Indebtedness pursuant to this Section 8.2.1 other than pursuant to clause (c) (subject to the requirements set forth in such clause), (d) (subject to the proviso to such clause) or (g).
In the event that an item of Indebtedness meets the criteria of more than one of the categories of Indebtedness described in the clauses of the preceding paragraph, the Borrower shall, in its sole discretion, divide, classify or reclassify (or later divide, classify, redivide or reclassify) such item of Indebtedness in any manner that complies with this covenant (including splitting into multiple exceptions) and will only be required to include the amount and type of such Indebtedness in one of such clauses of the preceding paragraph.
The accrual of interest or Preferred Stock or Disqualified Stock dividends or distributions, 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, the reclassification of Preferred Stock or Disqualified Stock as Indebtedness due to a change in accounting principles, and the payment of dividends or distributions on Preferred Stock or Disqualified Stock in the form of additional securities of the same class of Preferred Stock or Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Preferred Stock or Disqualified Stock for purposes of this covenant.
8.2.iiLiens.
The Borrower shall not, and shall not cause or permit any Restricted Subsidiary to, at any time, directly or indirectly, create, incur, assume or suffer to exist any Lien on any property or assets of the Borrower or any Restricted Subsidiary, tangible or intangible, now owned or hereafter acquired, or agree or become liable to do so, except Permitted Liens, subject to the proviso in Section 6.8(a) [Properties].
8.2.iiiDesignation of Unrestricted Subsidiaries.
(45)The Board of Directors of the Borrower may at any time designate any Restricted Subsidiary as an Unrestricted Subsidiary (including any newly acquired or newly formed Restricted Subsidiary at or prior to the time it is so acquired or formed but excluding any Restricted Subsidiary that was previously an Unrestricted Subsidiary), or any Unrestricted Subsidiary as a Restricted Subsidiary; provided that (i) immediately before and after such designation, no Potential Default or Event of Default shall have occurred and be continuing, (ii) immediately after giving effect to such designation, the Borrower shall be in compliance, on a Pro Forma Basis, with the Financial Covenants and (iii) no Subsidiary may be designated as an Unrestricted Subsidiary if it is a “Restricted Subsidiary” for the purpose of any Permitted Unsecured Notes (unless it is substantially concurrently being designated as an Unrestricted Subsidiary under such Indebtedness). Any (x) designation of a Subsidiary as an Unrestricted
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Subsidiary or (y) redesignation as a Restricted Subsidiary will be evidenced to the Administrative Agent by delivering to the Administrative Agent a copy of a Board Resolution giving effect to such designation and an Officer’s Certificate certifying that such designation complied with the requirements of this Section 8.2.3. The designation of any Subsidiary as an Unrestricted Subsidiary shall constitute an Investment by the Borrower or the relevant Restricted Subsidiary (as applicable) therein at the date of designation in an amount equal to the Fair Market Value of the Borrower’s or such relevant Restricted Subsidiary’s (as applicable) investment therein, as determined in good faith by the Borrower or such relevant Restricted Subsidiary, and the Investment resulting from such designation must otherwise be permitted under Section 8.2.4 [Loans and Investments]. The designation of any Unrestricted Subsidiary as a Restricted Subsidiary shall constitute the incurrence at the time of designation of any Investment, Indebtedness or Liens of such Subsidiary existing at such time.
(46)No Unrestricted Subsidiary shall:
(1) have any Indebtedness other than Non-Recourse Debt;
(2) except as permitted by Section 8.2.8 [Affiliate Transactions], be party to any agreement, contract, arrangement or understanding with the Borrower or any Restricted Subsidiary 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 that are not Affiliates of the Borrower;
(3) be a Person with respect to which either the Borrower or any Restricted Subsidiary has any direct or indirect obligation (x) to subscribe for additional Equity Interests (except pursuant to an Investment that would be permitted hereunder at the time such obligation is incurred and such Investment is made) or (y) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results; or
(4) Guaranty or otherwise directly or indirectly provide credit support for any Indebtedness of the Borrower or any Restricted Subsidiary (other than pursuant to the Guaranty Agreement), except to the extent such Guaranty would be and is released upon such designation as an Unrestricted Subsidiary.
8.2.iLoans and Investments.
The Borrower shall not, and shall not cause or permit any Restricted Subsidiary to, at any time, directly or indirectly, make or suffer to remain outstanding any Investment or become or remain liable for any Investments, except:
(47)Temporary Cash Investments;
(48)any transaction permitted under Section 8.2.6 [Liquidations, Mergers, Consolidations, Acquisitions] (including any Permitted Acquisition);
(49)in connection with the management of employee benefit trust funds of the Borrower or any Restricted Subsidiary, investment of such employee benefit trust funds in Investments of a type generally and customarily used in the management of employee benefit trust funds;
(50)such Investments consisting of prepaid expenses, negotiable instruments held for collection and lease, utility and workers’ compensation, performance and other similar deposits made in the ordinary course of business by the Borrower or any Restricted Subsidiary;
(51)any Investment existing on, or made pursuant to binding commitments existing on, the Closing Date and described on Schedule 8.2.4, and any Investment consisting of an
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extension, modification or renewal of any such Investment existing on, or made pursuant to a binding commitment existing on, the Closing Date; provided that the amount of any such Investment may be increased (i) as required by the terms of such Investment as in existence on the Closing Date or (ii) as otherwise permitted under this Section 8.2.4 [Loans and Investments];
(52)Investments (i) in any Loan Party or (ii) by any Restricted Subsidiary that is not a Loan Party in any other Restricted Subsidiary that is not a Loan Party;
(53)any Investments received in compromise or resolution of (i) obligations of trade creditors or customers that were incurred in the ordinary course of business of the Borrower or any Restricted Subsidiary, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer or (ii) litigation, arbitration or other disputes;
(54)other Investments in an aggregate amount not to exceed the greater of $50,000,000 and (ii) 5.0% of Consolidated Net Tangible Assets at any one time outstanding;
(55)Investments in any Joint Venture made directly by a Loan Party; provided that (i) such Joint Venture is engaged in a Permitted Business, (ii) after giving effect to the making of such Investment, the Borrower shall be in compliance, on a Pro Forma Basis, with the Financial Covenants and the Borrower shall deliver to the Administrative Agent prior to the making of any such Investment an Officer’s Certificate certifying compliance with the requirements of this subclause (ii) and setting forth calculations in reasonable detail showing such compliance, (iii) the Equity Interests in such Joint Venture owned by a Loan Party shall be pledged on a first priority basis in favor of the Collateral Agent to secure the Obligations and the Collateral Agent shall have a perfected, first priority Lien on such Equity Interests and (iv) the aggregate amount of Investments made pursuant to this Section 8.2.4(i) shall not exceed the greater of (A) $75,000,000 and (B) 7.5% of Consolidated Net Tangible Assets at any one time;
(56)Investments constituting acquisitions of Midstream Assets and related assets by a Loan Party from CNX; provided that after giving effect to the making of such Investment, the Borrower shall be in compliance, on a Pro Forma Basis, with the Financial Covenants and the Borrower shall deliver to the Administrative Agent prior to the making of any such Investment an Officer’s Certificate certifying compliance with the requirements of this proviso to this subclause (j) and setting forth calculations in reasonable detail showing such compliance;
(57)[reserved];
(58)[reserved];
(59)an Investment in receivables owing to the Borrower or any Restricted Subsidiary if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms, including such concessionary trade terms as the Borrower or any such Restricted Subsidiary deems reasonable under the circumstances;
(60)Hedging Obligations permitted under Section 8.2.1(f) [Indebtedness];
(61)endorsements of negotiable instruments and documents in the ordinary course of business;
(62)any Investment made as a result of the receipt of Designated Non-Cash Consideration in an aggregate amount not to exceed the Threshold Amount at any one time outstanding; and
(63)Guarantees of performance or other obligations (other than for payment of Indebtedness or letter of credit reimbursement obligations) arising in the ordinary course in the Permitted Business;
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provided that in the case of clause (i) and (j) after giving effect to any such Investment no Event of Default or Potential Default shall exist or shall result from any such Investment.
8.2.ivRestricted Payments.
The Borrower shall not, and shall not cause or permit any Restricted Subsidiary to, directly or indirectly, make a Restricted Payment, except:
(64)the repurchase of Equity Interests deemed to occur upon the exercise of stock or other equity options to the extent such Equity Interests represent a portion of the exercise price of those stock or other equity options and any repurchase or other acquisition of Equity Interests made in lieu of withholding taxes in connection with any exercise or exchange of stock options, warrants, incentives or other rights to acquire Equity Interests;
(65)payments of cash, dividends, distributions, advances or other Restricted Payments by the Borrower or any Restricted Subsidiary to allow the payment of cash in lieu of the issuance of fractional shares upon (i) the exercise of options or warrants or (ii) the conversion or exchange of Equity Interests of any such Person;
(66)payments to dissenting stockholders of the Borrower not to exceed $5,000,000 in the aggregate made (i) pursuant to applicable law or (ii) in connection with the settlement or other satisfaction of legal claims made pursuant to or in connection with a consolidation, merger or transfer of assets in connection with a transaction not prohibited by this Agreement;
(67)so long as no Potential Default or Event of Default shall have occurred and be continuing or shall result therefrom, Restricted Payments; provided that after giving effect thereto and any incurrence of Indebtedness in connection therewith, (x) the Borrower shall be in compliance on a Pro Forma Basis with the Financial Covenants and (y) Availability would equal not less than 10% of the Commitments;
(68)any repurchase of outstanding Equity Interests of the Borrower in exchange for Equity Interests (other than Disqualified Stock) of the Borrower;
(69)prepayment of any Subordinated Obligations with Refinancing Indebtedness thereof; and
(70)repurchases of Subordinated Obligations of the Borrower or any Guarantor at a purchase price not greater than 100% of the principal amount of such Subordinated Obligations in the event of an asset disposition, in each case plus accrued and unpaid interest thereon, to the extent required by the terms of such Subordinated Obligations, but only if the Borrower has complied with and fully satisfied its obligations in accordance with Section 8.2.7 [Dispositions].
8.2.iiLiquidations, Mergers, Consolidations, Acquisitions.
The Borrower shall not, and shall not cause or permit any Restricted Subsidiary to, dissolve, liquidate or wind-up its affairs, or become a party to any merger or consolidation, effect a Division or make any acquisition described in subclause (y) of clause (b) below (including by acquisition of the Equity Interests of another Person); provided that:
(71)(i) any Restricted Subsidiary may consolidate or merge into any other Restricted Subsidiary; provided that in the case of a consolidation or merger involving a Loan Party, a Loan Party is the surviving entity, (ii) any Restricted Subsidiary may consolidate or merge into the Borrower; provided that the Borrower is the surviving entity and (iii) any Restricted Subsidiary may effect a division; provided that in the event of any division of a Loan Party, all Persons resulting from such division shall be Loan Parties;
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(72)the Borrower or any Restricted Subsidiary may acquire whether by purchase or by merger or consolidation, (x) Equity Interests of another Person or (y) substantially all of the assets of another Person or the assets constituting a business or division of another Person (each, a “Permitted Acquisition”); provided that each of the following requirements is met:
(4)no Potential Default or Event of Default shall exist immediately prior to and after giving effect to such Permitted Acquisition;
(5)after giving effect to such Permitted Acquisition, the Borrower shall be in compliance on a Pro Forma Basis with the Financial Covenants and the Borrower shall deliver to the Administrative Agent prior to the making of any such Permitted Acquisition an Officer’s Certificate certifying compliance with the requirements of this subclause (ii) and setting forth calculations in reasonable detail showing such compliance;
(6)all assets acquired pursuant to this clause (b) shall be acquired by a Loan Party, and each Person acquired pursuant to this clause (b) shall become a Guarantor, in each case, within the timeframe set forth in Section 8.1.9 [Additional Guarantors] with respect to the acquisition of a Subsidiary; and
(7)if the Consideration to be paid by the Restricted Subsidiaries for such Permitted Acquisition exceeds the Threshold Amount, the Restricted Subsidiaries shall deliver to the Administrative Agent before or contemporaneously with such Permitted Acquisition: (1) a certificate of the Borrower in substantially the form of Exhibit 8.2.6 evidencing (x) compliance, on a Pro Forma Basis, with the Financial Covenants and (y) compliance with the applicable requirements of clauses (b)(i) and (ii) of this Section 8.2.6 and (2) copies of any agreements entered into or proposed to be entered into by such Loan Parties in connection with such Permitted Acquisition and such other information about such Person or its assets as the Administrative Agent may reasonably require, and the Administrative Agent shall, to the extent it receives any such copies of agreements or information, provide such copies of agreements or information to the Lenders;
(73)[reserved];
(74)Dispositions permitted by Section 8.2.7 [Dispositions] and any liquidation, merger, consolidation or acquisition to effect such Disposition; provided that in the case of a consolidation or merger, the requirements of Section 8.2.6(a) [Liquidations, Mergers, Consolidations, Acquisitions] are complied with, to the extent applicable; and
(75)any Restricted Subsidiary that holds only de minimis assets and is not conducting any material business may dissolve.
8.2.vDispositions.
The Borrower shall not, and shall not cause or permit any Restricted Subsidiary to, make any Disposition, except:
(76)any Disposition (i) to any Loan Party or (ii) by any Restricted Subsidiary that is not a Loan Party to any other Restricted Subsidiary that is not a Loan Party; provided that in the case of a consolidation or merger, the requirements of Section 8.2.6(a) [Liquidations, Mergers, Consolidations, Acquisitions] are complied with, to the extent applicable;
(77)any Disposition that constitutes a Restricted Payment permitted by Section 8.2.5 [Restricted Payments] or an Investment permitted by Section 8.2.4 [Loans and Investments];
(78)[reserved];
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(79)[reserved];
(80)any Disposition of surplus, damaged, worn-out or obsolete assets in the ordinary course of business (including the abandonment or other disposition of intellectual property that is, in the reasonable judgment of the Borrower, no longer economically practicable to maintain or useful in the conduct of the business of the Borrower and the Restricted Subsidiaries taken as whole);
(81)licenses and sublicenses by the Borrower or any Restricted Subsidiary of software or intellectual property in the ordinary course of business;
(82)any surrender or waiver of contract rights or settlement, release, recovery on or surrender of contract, tort or other claims in the ordinary course of business;
(83)the granting of Permitted Liens and dispositions in connection with Permitted Liens;
(84)the sale or other disposition of cash or Temporary Cash Investments or other financial instruments;
(85)any Disposition of Equity Interests in an Unrestricted Subsidiary;
(86)the early termination or unwinding of any Swap Agreements;
(87)any Disposition; provided that:
(8)at the time that the definitive agreement for such Disposition is entered into, no Potential Default or Event of Default is then in existence or will result therefrom;
(9)the Borrower is in compliance, on a Pro Forma Basis, with Financial Covenants;
(10)the Borrower or the Restricted Subsidiary making such Disposition shall receive consideration from the Person or Persons acquiring such assets in such Disposition that is at least equal to the Fair Market Value of the assets Disposed of in such Disposition;
(11)at least 75% of the consideration received by the Borrower and the Restricted Subsidiary from such Disposition is in the form of cash and Temporary Cash Investments; provided that each of the following will be deemed to be cash: (1) 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 liabilities that are by their terms subordinated to the Obligations or the Guaranty thereof) that are assumed by the transferee by written agreement that releases the Borrower or such Restricted Subsidiary from or indemnifies the Borrower or such Restricted Subsidiary against further liability; (2) any securities, notes or other obligations received by the Borrower or any Restricted Subsidiary from the transferee that are, within 180 days of the Disposition, converted by the Borrower or such Restricted Subsidiary into cash, to the extent of the cash received in that conversion, (3) any Designated Non-Cash Consideration received by the Borrower or such Restricted Subsidiary in such Disposition having an aggregate Fair Market Value, taken together with all other Designated Non-Cash Consideration received pursuant to this clause (3), not to exceed $10,000,000, with the Fair Market Value of each item of Designated Non-Cash Consideration being measured at the time received and without giving effect to subsequent changes in value and (4) similar replacement assets received promptly by the Borrower or Restricted Subsidiary effectuating such Disposition (and, in calculating the 75% threshold set forth in this clause (4), the value of such similar replacement assets shall be the Fair Market Value thereof as of the date of receipt of such similar assets by the Borrower or the applicable Restricted Subsidiary without giving effect
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to subsequent changes in value) received in exchange for such Disposition; provided that to the extent any Disposition contemplated by this clause (4) is made by a Loan Party, a Loan Party shall receive such similar replacement assets given as consideration for such Disposition; and
(12)in the case of any disposition or series of related dispositions for at least $10,000,000, the Borrower shall deliver to the Administrative Agent prior to the making of such Disposition an Officer’s Certificate certifying compliance with the requirements of this clause (l) and setting forth calculations in reasonable detail showing compliance with subclause (ii);
(88)Casualty Events; and
(89)any Disposition that is not permitted by the other clauses of this Section 8.2.7 [Dispositions], which is approved by the Required Lenders.
8.2.iAffiliate Transactions.
The Borrower shall not, and shall not cause or permit any Restricted Subsidiary to, enter into or permit to exist any transaction or series of transactions (including the purchase, sale, lease or exchange of any property, employee compensation arrangements or the rendering of any service) with, or for the benefit of, any Affiliate of the Borrower (an “Affiliate Transaction”) unless (i) the terms thereof, taken as a whole, are not materially less favorable to the Borrower or such Restricted Subsidiary than those that could reasonably be obtained at the time of such transaction in arm’s-length dealings with a Person who is not such an Affiliate or (ii) if no comparable transaction is available with which to compare such Affiliate Transaction, such Affiliate Transaction is otherwise fair to the Borrower or the relevant Restricted Subsidiary from a financial point of view; provided, that in the case of this clause (ii) with respect to affiliate transactions involving value (in an individual transaction or series of related transactions) of at least $20,000,000, such fairness determination has been made in the good faith judgment of the Board of Directors of the Borrower.
The following items will not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of foregoing paragraph:
(90)any employment agreement, employee benefit plan, officer or director indemnification agreement or any similar arrangement entered into by the Borrower or any Restricted Subsidiary in the ordinary course of business and payments pursuant thereto;
(91)the sale or issuance to an Affiliate of the Borrower of Capital Stock of the Borrower that does not constitute Disqualified Stock, and the sale to an Affiliate of the Borrower of Indebtedness (including Disqualified Stock) of the Borrower in connection with an offering of such Indebtedness in a market transaction and on terms substantially identical to those of other purchasers in such market transaction;
(92)transactions between the Borrower or any Restricted Subsidiary with a Person that is an Affiliate of the Borrower (other than an Unrestricted Subsidiary of the Borrower) solely because of the ownership by the Borrower or any Restricted Subsidiary of Equity Interests in such Person (including the transaction pursuant to which the Borrower or any Restricted Subsidiary acquired such Equity Interests);
(93)transactions between the Borrower or any Restricted Subsidiary and any Person, a director of which is also a director of the Borrower and such director is the sole cause for such Person to be deemed an Affiliate of the Borrower or such Restricted Subsidiary; provided that such director shall abstain from voting as a director of the Borrower on any matter involving such other Person;
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(94)the payment of reasonable fees to and reimbursements of expenses (including travel and entertainment expenses and similar expenditures in the ordinary course of business) of employees, officers, directors or consultants of the Borrower or any of its Subsidiaries;
(95)transactions between or among the Loan Parties;
(96)payments that are permitted under Section 8.2.5 [Restricted Payments];
(97)transactions effected, and payments made, in accordance with the terms of any agreement to which the Borrower or any Restricted Subsidiary is a party as of the Closing Date as set forth on Schedule 8.2.8, and any amendments, modifications, supplements, extensions, renewals or replacements thereof so long as such amendments, modifications, supplements, extensions, renewals or replacements do not materially and adversely affect the rights, taken as a whole, of the Lenders as compared to the terms of such agreement in effect on the Closing Date, as determined in good faith by the Borrower;
(98)any transaction in which the Borrower or any Restricted Subsidiary, as the case may be, delivers to the Administrative Agent a letter from an accounting, appraisal or investment banking firm of national standing (or otherwise reasonably acceptable to the Administrative Agent) 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 the preceding paragraph;
(99)pledges by the Borrower or any Restricted Subsidiary of (or any Guaranty by the Borrower or any Restricted Subsidiary limited in recourse solely to) Equity Interests in Unrestricted Subsidiaries for the benefit of lenders or other creditors of the Borrower’s Unrestricted Subsidiaries; and
(100)non-material commercial transactions in the ordinary course of business that are in the best interests of the Borrower and its Restricted Subsidiaries.
8.2.viChange in Business.
The Borrower shall not, and shall not cause or permit any Restricted Subsidiary to, engage in any business other than a Permitted Business.
8.2.viiFiscal Year.
The Borrower shall not, and shall not cause or permit any Restricted Subsidiary to, change its fiscal year from the twelve-month period beginning January 1 and ending December 31.
8.2.viiiAmendments to Organizational Documents; Amendments or Prepayments of Certain Other Indebtedness.
(101)The Borrower shall not, and shall not cause or permit any Restricted Subsidiary to, amend its certificate of incorporation (including any provisions or resolutions relating to Capital Stock), by-laws, certificate of limited partnership, partnership agreement (including the Partnership Agreement), certificate of formation, limited liability company agreement or other organizational documents in a manner that would be adverse in any material respect to the Lenders; it being understood that any conversion of the Borrower into a limited liability company or a corporation organized under the laws of a jurisdiction of the United States having customary organizational documents shall be permitted.
(102)The Borrower shall not, and shall not cause or permit any of its Subsidiaries to, amend any Permitted Unsecured Notes Indenture in a manner that would be adverse to the Lenders in any material respect.
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(103)The Borrower shall not, and shall not cause or permit any Subsidiary to (in whole or in part), defease or make any prepayments, purchases, repurchases, or redemptions of or in respect of any Permitted Unsecured Notes or any Refinancing Indebtedness in respect thereof, except any such prepayment, purchase, repurchase or redemption (i) to the extent effectuated through a Refinancing thereof with Refinancing Indebtedness in respect thereof, (ii) with the Net Cash Proceeds of a substantially concurrent issuance and sale by the Borrower of its Equity Interests (other than Disqualified Stock) that are not used for any other purpose or (iii) if after giving effect to such prepayment, purchase, repurchase, or redemption and any incurrence of Indebtedness in connection therewith, (x) no Potential Default or Event of Default shall have occurred and be continuing, (y) the Borrower shall be in compliance on a Pro Forma Basis with the Financial Covenants and (z) Availability would equal not less than 10% of the Commitments.
8.2.iiiSwaps.
The Borrower shall not, and shall not cause or permit any Restricted Subsidiary to, enter into any Swap Agreement, other than those entered into to hedge or mitigate risks to which the Borrower or any Restricted Subsidiary is exposed in the conduct of its business or the management of its liabilities.
8.2.iv[Reserved].
8.2.vFinancial Covenants.
(104)Maximum Total Leverage Ratio. The Borrower shall not permit the Total Leverage Ratio, calculated as of (x) the end of such fiscal quarter (other than any such fiscal quarter within an Acquisition Period), to be greater than 5.00:1.00 and (y) the end of such fiscal quarter within an Acquisition Period (including any fiscal quarter ending on the last day of an Acquisition Period), to be greater than 5.25:1.00.
(105)Maximum Secured Leverage Ratio. The Borrower shall not permit the Secured Leverage Ratio, calculated as of the end of each fiscal quarter to be greater than 3.25 to 1.00.
(106)Minimum Interest Coverage Ratio. The Borrower shall not permit the Interest Coverage Ratio, calculated as of the end of each fiscal quarter, to be less than 2.50 to 1.00.
8.2.ixRestrictions on Distributions from Restricted Subsidiaries.
The Borrower shall not, and shall not cause or permit any Restricted Subsidiary to, create or otherwise cause 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 or pay any Indebtedness owed to the Borrower or any Restricted Subsidiary (provided that (x) the priority that any series of Preferred Stock of a Restricted Subsidiary has in receiving dividends or liquidating distributions shall not be deemed to be a restriction on the ability to pay dividends or make other distributions on its Capital Stock for purposes of this covenant and (y) the subordination of Indebtedness owed to the Borrower or any Restricted Subsidiary to other Indebtedness incurred by any Restricted Subsidiary shall not be deemed a restriction on the ability to pay Indebtedness);
(2) make any loans or advances to the Borrower or a Restricted Subsidiary (it being understood that the subordination of loans or advances made to the Borrower or any Restricted Subsidiary to other Indebtedness incurred by the Borrower or any Restricted Subsidiary shall not be deemed a restriction on the ability to make loans or advances); or
(3) sell, lease or transfer any of its property or assets to the Borrower or a Restricted Subsidiary.
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The foregoing restrictions of this Section 8.2.15 [Restrictions on Distributions from Restricted Subsidiaries] will not apply to encumbrances or restrictions existing under or by reason of:
(107)any encumbrance or restriction in any agreement in effect on the Closing Date and (to the extent not otherwise permitted by this Section 8.2.15) set forth on Schedule 8.2.15;
(108)any encumbrance or restriction with respect to a Restricted Subsidiary pursuant to an agreement relating to any Indebtedness incurred by such Restricted Subsidiary on or prior to the date on which such Restricted Subsidiary was acquired by the Borrower or became a Restricted Subsidiary (other than Indebtedness incurred as consideration in, or to provide all or any portion of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was acquired by the Borrower) and outstanding on such date;
(109)any encumbrance or restriction pursuant to an agreement effecting a Refinancing of Indebtedness incurred pursuant to an agreement referred to in clause (a) or (b) of this paragraph or this clause (c) or contained in any amendment to an agreement referred to in clause (a) or (b) of this paragraph or this clause (c); provided that the encumbrances and restrictions with respect to such Restricted Subsidiary contained in any such refinancing agreement or amendment are no less favorable to the Lenders than encumbrances and restrictions with respect to such Restricted Subsidiary contained in such agreements, as determined in good faith by the Borrower;
(110)(i) customary non-assignment provisions in any contract, license, lease, easement or sale or exchange agreement and (ii) cash, other deposits, or net worth or similar requirements, in each case, imposed by suppliers, customers, lessors or grantors under contracts, leases or other agreements, in the case of each of clauses (i) and (ii), entered into in the ordinary course of business;
(111)in the case of clause (3) of the preceding paragraph, restrictions contained in Capital Lease Obligations, purchase money obligations, security agreements or mortgages securing Indebtedness of a Restricted Subsidiary to the extent such restrictions restrict the transfer of the property subject to such Capital Lease Obligations, purchase money obligations, security agreements or mortgages;
(112)any restriction with respect to a Restricted Subsidiary imposed pursuant to an agreement entered into for the sale or disposition of all or substantially all the Capital Stock or assets of such Restricted Subsidiary pending the closing of such sale or disposition;
(113)[reserved];
(114)Liens otherwise permitted to be incurred under the provisions of Section 8.2.2 [Liens] that limit the right of the debtor to Dispose of the assets subject to such Liens;
(115)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 (including, without limitation, agreements entered into in connection with an Investment) entered into with the approval of the Borrower’s Board of Directors, which limitation is applicable only to the assets that are the subject of such agreements;
(116)encumbrances or restrictions applicable only to a Foreign Subsidiary;
(117)[reserved];
(118)Swap Agreements permitted under Section 8.2.12 [Swaps];
(119)any encumbrance or restriction with respect to an Unrestricted Subsidiary pursuant to or by reason of an agreement that the Unrestricted Subsidiary is a party to or entered
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into before the date on which such Unrestricted Subsidiary became a Restricted Subsidiary; provided that such agreement was not entered into in anticipation of the Unrestricted Subsidiary becoming a Restricted Subsidiary and any such encumbrance or restriction does not extend to any assets or property of the Borrower or any other Restricted Subsidiary other than the assets and property of such Unrestricted Subsidiary; and
(120)any encumbrances or restrictions imposed by any amendments of the contracts, instruments or obligations referred to in clauses (a) through (m) of this paragraph; provided that such amendments are not materially more restrictive with respect to such encumbrances and restrictions than those prior to such amendment or refinancing, as determined in good faith by the Borrower.
8.2.iiNegative Pledge Agreements.
The Borrower shall not, and shall not cause or permit any Restricted Subsidiary to, enter into or permit to exist any Contractual Requirement (other than this Agreement or any other Loan Document) that limits the ability of the Borrower or any Restricted Subsidiary to create, incur, assume or suffer to exist Liens on property of such Person (other than property specifically excluded from the Collateral requirements pursuant to Section 8.1.17(b) [Collateral]) for the benefit of the Secured Parties with respect to the Obligations or under the Loan Documents; provided that the foregoing shall not apply to each of the following Contractual Requirements that:
(121)(i) exist on the Closing Date and (to the extent not otherwise permitted by this Section 8.2.16) are listed on Schedule 8.2.16 and (ii) to the extent Contractual Requirements permitted by subclause (i) are set forth in an agreement evidencing Indebtedness or other obligations, are set forth in any agreement evidencing any Refinancing Indebtedness of such Indebtedness or obligation so long as such Refinancing Indebtedness does not expand the scope of such Contractual Requirement;
(122)are binding on a Restricted Subsidiary at the time such Restricted Subsidiary first becomes a Restricted Subsidiary, so long as such Contractual Requirements were not entered into solely in contemplation of such Person becoming a Restricted Subsidiary;
(123)arise pursuant to agreements entered into with respect to any Disposition permitted by Section 8.2.7 [Dispositions] and applicable solely to assets under such Disposition;
(124)are customary provisions in joint venture agreements and other similar agreements permitted by Section 8.2.4 [Loans and Investments] and applicable to joint ventures or otherwise arise in agreements which restrict the Disposition or distribution of assets or property in oil and gas leases, joint operating agreements, joint exploration and/or development agreements, participation agreements and other similar agreements entered into in the ordinary course of the oil and gas exploration and development business;
(125)are negative pledges and restrictions on Liens in favor of any holder of Indebtedness permitted under Section 8.2.1 [Indebtedness], but solely to the extent any negative pledge relates to the property financed by or the subject of such Indebtedness;
(126)are customary restrictions on leases, subleases, licenses, easements or asset sale agreements otherwise permitted hereby so long as such restrictions relate to the assets subject thereto;
(127)comprise restrictions imposed by any agreement relating to secured Indebtedness permitted pursuant to Section 8.2.1 [Indebtedness] to the extent that such restrictions apply only to the property or assets securing such Indebtedness;
(128)are customary provisions restricting subletting or assignment of any lease or easement governing a leasehold or easement interest of the Borrower or any Restricted Subsidiary;
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(129)are customary provisions restricting assignment of any agreement entered into in the ordinary course of business;
(130)restrict the use of cash or other deposits imposed by customers under contracts entered into in the ordinary course of business;
(131)are imposed by requirements of Law;
(132)are customary net worth provisions contained in real property leases entered into by any Restricted Subsidiary, so long as the Borrower has determined in good faith that such net worth provisions would not reasonably be expected to impair the ability of the Borrower and the Restricted Subsidiaries to meet their ongoing obligation;
(133)are customary restrictions and conditions contained in the document relating to any Lien, so long as (i) such Lien is a Permitted Lien that does not secure Indebtedness for borrowed money and such restrictions or conditions relate only to the specific asset subject to such Lien and (ii) such restrictions and conditions are not created for the purpose of avoiding the restrictions imposed by this Section 8.2.16;
(134)are restrictions imposed by any agreement relating to Indebtedness incurred pursuant to Section 8.2.1 [Indebtedness] or Refinancing Indebtedness in respect thereof, to the extent such restrictions are not materially more restrictive, taken as a whole, than the restrictions contained in the Loan Documents as determined by the Borrower in good faith and do not restrict Liens on the Collateral to secure the Obligations;
(135)are restrictions regarding licenses or sublicenses by the Borrower and the Restricted Subsidiaries of intellectual property in the ordinary course of business (in which case such restriction shall relate only to such intellectual property);
(136)are encumbrances or restrictions contained in an agreement or other instrument of a Person acquired by or merged or consolidated with or into the Borrower or any Restricted Subsidiary, or of an Unrestricted Subsidiary that is designated a Restricted Subsidiary, or that is assumed in connection with the acquisition of assets from such Person, in each case that is in existence at the time of such transaction (but not created in contemplation thereof), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person and its Subsidiaries, or the property or assets of the Person and its Subsidiaries, so acquired or designated; and
(q) are encumbrances or restrictions imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (a) through (p) above; provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of the Board of Directors of the Borrower, no more restrictive in any material respect with respect to such encumbrance and other restrictions taken as a whole than those prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing.
8.cReporting Requirements.
The Loan Parties, jointly and severally, covenant and agree that until Payment in Full of the Loans and Reimbursement Obligations and interest thereon, expiration or termination of all Letters of Credit, satisfaction of all of the Loan Parties’ other Obligations hereunder and under the other Loan Documents and termination of the Commitments, the Loan Parties will furnish or cause to be furnished to the Administrative Agent and each of the Lenders:
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8.3.iQuarterly Financial Statements.
As soon as available and in any event within 45 calendar days after the end of each of the first three fiscal quarters in each fiscal year, financial statements of the Borrower, consisting of a consolidated balance sheet as of the end of such fiscal quarter and related consolidated statements of operations, partners’ capital and noncontrolling interest and cash flows for the fiscal quarter then ended and the fiscal year through that date and which shall include a capital expenditure schedule and a reconciliation of the Consolidated Net Income and Consolidated EBITDA attributable to the non-controlling interest in any non-wholly owned Subsidiary or any Unrestricted Subsidiary, all in reasonable detail and certified (subject to normal year-end audit adjustments) by the Chief Financial Officer or Treasurer of the Borrower as having been prepared in accordance with GAAP, consistently applied, and setting forth in comparative form the respective financial statements for the corresponding date and period in the previous fiscal year and accompanied by management’s narrative analysis of the results of operations of the Borrower for such period, as compared to amounts for the period in the previous fiscal year.
8.3.iiAnnual Financial Statements.
As soon as available and in any event within 90 days after the end of each fiscal year of the Borrower, financial statements of the Borrower consisting of a consolidated balance sheet as of the end of such fiscal year, and related consolidated statements of operations, partners’ capital and noncontrolling interest and cash flows for the fiscal year then ended, all in reasonable detail and setting forth in comparative form the financial statements as of the end of and for the preceding fiscal year and which shall include a Capital Expenditure schedule and a reconciliation of the Consolidated Net Income and Consolidated EBITDA attributable to the non-controlling interest in any non-wholly owned Subsidiary or any Unrestricted Subsidiary, and certified by independent certified public accountants of nationally recognized standing reasonably satisfactory to the Administrative Agent (it being understood that Ernst & Young is satisfactory to the Administrative Agent) and accompanied by management’s narrative analysis of the results of operations of the Borrower for such fiscal year, as compared to amounts for the prior fiscal year. The certificate or report of accountants shall be free of qualifications (other than any consistency qualification that may result from a change in the method used to prepare the financial statements as to which such accountants concur) or explanation statement as to “going concern” or similar matter or the scope of such audit.
8.3.iiiSEC Website.
Reports or other information required to be delivered pursuant to Section 8.3.1 [Quarterly Financial Statements], Section 8.3.2 [Annual Financial Statements] and Sections 8.3.7(a) and (b) [Budgets, Forecasts, Other Reports and Information] shall be deemed to have been delivered on the date on which such report or other information is posted on the SEC’s website at www.sec.gov, and such posting shall be deemed to satisfy the reporting and delivery requirements of Sections 8.3.1 [Quarterly Financial Statements], 8.3.2 [Annual Financial Statements] and 8.3.7(a) and (b) [Budgets, Forecasts, Other Reports and Information].
8.3.ivCertificate of the Borrower.
On the date that the financial statements of the Borrower furnished to the Administrative Agent and to the Lenders pursuant to Section 8.3.1 [Quarterly Financial Statements] and Section 8.3.2 [Annual Financial Statements] are required to be furnished, a certificate (each a “Compliance Certificate”) of the Borrower signed by the Chief Financial Officer or Treasurer of the Borrower, in the form of Exhibit 8.3.4, (i) to the effect that, except as described pursuant to Section 8.3.5 [Notice of Default], (i) no Event of Default or Potential Default exists and is continuing on the date of such certificate and, if an Event of Default or Potential Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (ii) containing calculations in sufficient detail to demonstrate compliance as of the date of such financial statements with the Financial Covenants, (iii) if Consolidated EBITDA for the period of four fiscal quarters ended as of the last day of the period covered by the applicable financial statements includes or has included any Capital Expansion Project Adjustment, including a description of such Capital Expansion Project, the Capital Expansion Project
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Adjustments related thereto, any variances between the Capital Expansion Project Adjustment made and actual Consolidated EBITDA from such Capital Expansion Project for the period of four fiscal quarters ended as of the last day of the period covered by the applicable financial statements, and such other information to determine compliance with the relevant provisions relating to such adjustment and other related information reasonably requested by the Administrative Agent, (iv) describing the commodity Swap Agreements in place to which any Loan Party is a party and confirming that all such Swap Agreements are Swap Agreements that the Loan Parties are permitted to enter under Section 8.2.12 [Swaps] and (v) a certification as to whether the Mortgage Requirement is then satisfied, which certification shall, on the date that the financial statements of the Borrower furnished to the Administrative Agent and to the Lenders pursuant to Section 8.3.2 [Annual Financial Statements] are required to be furnished (i) include a breakdown showing book values of all Gathering Systems of the Loan Parties and (ii) indicate that the Gathering Systems subject to a Mortgage constitute at least 90% of such book value of all Gathering Systems.
8.3.vNotice of Default.
Promptly after any Responsible Officer of the Borrower has learned of the occurrence of an Event of Default or Potential Default, a certificate signed by a Responsible Officer of the Borrower setting forth the details of such Event of Default or Potential Default and the action that the Borrower proposes to take with respect thereto.
8.3.viCertain Events.
Written notice to the Administrative Agent, for provision to the Lenders:
(137)promptly after any Responsible Officer of the Borrower has learned of the commencement thereof, notice of all actions, suits, proceedings or investigations before or by any Official Body or any other Person against the Borrower or any of its Subsidiaries (that would reasonably be expected to result in a liability against such Person) (i) relating to the Collateral involving a claim or series of claims in excess of the Threshold Amount or (ii) which if adversely determined would constitute a Material Adverse Change;
(138)promptly after any Responsible Officer of the Borrower has knowledge thereof, any event which could reasonably be expected to have a Material Adverse Change;
(139)promptly after any Loan Party incurs obligations or liabilities that are due and payable arising in connection with or as a result of the early or premature termination of Swap Agreements (whether or not occurring as a result of a default thereunder), which would exceed the Threshold Amount in the aggregate;
(140)within five (5) Business Days after any Responsible Officer of the Borrower has knowledge thereof, of the occurrence of any ERISA Event that would reasonably be expected to constitute a Material Adverse Change;
(141)promptly, but in any event within five (5) Business Days after receipt thereof by any Loan Party, a copy of any form of notice, summons, citation, proceeding or order received from the FERC or any State Pipeline Regulatory Agency concerning the regulation of any material portion of the Gathering Systems; and
(142)any change in the information provided in the Beneficial Ownership Certification that would result in a change to the list of beneficial owners identified in parts (c) or (d) of such certification.
8.3.viiBudgets, Forecasts, Other Reports and Information.
Deliver to the Administrative Agent, for provision to the Lenders:
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(143)Within seven (7) days after each delivery of financial statements referred to in Sections 8.3.1 [Quarterly Financial Statements] and 8.3.2 [Annual Financial Statements], the related consolidating financial statements reflecting the adjustments necessary to eliminate from such consolidated financial statements the accounts of Unrestricted Subsidiaries on a combined basis;
(144)Simultaneously with each delivery of financial statements referred to in Section 8.3.2 [Annual Financial Statements], a certificate of an Authorized Officer of the Borrower setting forth the information required pursuant to the Perfection Certificate Supplement or confirming that there has been no change in such information since the date of the Perfection Certificate or latest Perfection Certificate Supplement;
(145)Promptly upon their becoming available to the Borrower, a copy of any order in any proceeding to which the Borrower or any of its Subsidiaries is a party issued by any Official Body to the extent it could reasonably be expected to have a Material Adverse Change;
(146)Promptly upon request, such other reports and information as any of the Lenders or the Administrative Agent may from time to time reasonably request, including, without limitation, (i) annual budgets and five year projections of the Borrower, including the projected Capital Expenditures to be incurred by the Borrower and its Restricted Subsidiaries or (ii) information and documentation for purposes of compliance with applicable “know your customer” requirements under the USA PATRIOT Act or other applicable anti-money laundering laws; and
(147)Within 45 days after each fiscal quarter, a detailed report of Capital Expenditures, throughput volumes and other operational results for such fiscal quarter of the Borrower and the Restricted Subsidiaries, prepared on a monthly basis and otherwise in form and substance reasonably acceptable to the Administrative Agent.
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9.aEvents of Default.
An Event of Default shall mean the occurrence or existence of any one or more of the following events or conditions (whatever the reason therefor and whether voluntary, involuntary or effected by operation of Law):
9.1.iPayments Under Loan Documents.
(148)The Borrower shall fail to make (i) any payment of principal on any Loan when due or (ii) payment of any Reimbursement Obligation within one (1) Business Day after such amount becomes due;
(149)The Borrower shall fail to pay any interest on any Loan or any Reimbursement Obligation within three (3) Business Days after such interest becomes due in accordance with the terms hereof; or
(150)The Borrower shall fail to pay any other amount owing hereunder (specifically excluding amounts that are addressed in subparagraphs (a) and (b) above) or under the other Loan Documents within three (3) Business Days after the time period specified herein or therein and, if no time period is specified, then within ten (10) Business Days after a demand or notice has been provided to the Borrower requesting payment of such amount;
9.1.iiBreach of Warranty.
Any representation or warranty made at any time by any of the Loan Parties herein or by any of the Loan Parties in any other Loan Document, or in any certificate, other instrument or statement furnished pursuant to the provisions hereof or thereof, shall prove to have been false or incorrect in any material respect as of the time it was made or furnished;
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9.1.iiiBreach of Certain Covenants.
Any of the Loan Parties shall default in the observance or performance of any covenant contained in Section 8.1.1 [Preservation of Existence, Etc.] (with respect to the legal existence of the Borrower only), Section 8.1.6 [Visitation Rights], Section 8.1.11 [Use of Proceeds], Section 8.1.13 [Anti-Terrorism Laws; Anti-Corruption Laws], Section 8.2 [Negative Covenants] or Section 8.3.5 [Notice of Default];
9.1.ivBreach of Other Covenants.
Any of the Loan Parties shall default in the observance or performance of any covenant, condition or provision hereof or of any other Loan Document that is not covered by any other subsection of this Section 9.1 and such default shall continue unremedied for a period of 30 days after any Responsible Officer of any Loan Party becomes aware of the occurrence thereof;
9.1.vDefaults in Other Agreements or Indebtedness.
A breach, default or event of default shall occur at any time under the terms of (i) any of the Permitted Unsecured Notes Indentures or (ii) any other agreement (other than any Loan Document) involving borrowed money or the extension of credit or any other Indebtedness under which the Borrower or any Restricted Subsidiary for all such Indebtedness may be obligated as a borrower or guarantor in excess of the Threshold Amount in the aggregate for such Indebtedness, and, in the case of clauses (i) and (ii), such breach, default or event of default consists of the failure to pay (beyond any period of grace permitted with respect thereto) any Indebtedness when due (whether at stated maturity, by acceleration or otherwise) or such breach or default permits or causes the acceleration of any Indebtedness or the termination of any commitment to lend, in excess of the Threshold Amount in the aggregate for all such Indebtedness and commitments;
9.1.viFinal Judgments or Orders.
Any final judgments, awards or orders not covered by insurance for the payment of money in excess of the Threshold Amount in the aggregate shall be entered against the Borrower or any Restricted Subsidiary by a court having jurisdiction in the premises, which judgment is not discharged, vacated, bonded or stayed pending appeal within a period of sixty (60) days from the date of entry;
9.1.viiLoan Document Unenforceable.
(a) Any of the Loan Documents to which any Loan Party is a party (i) shall cease to be a legal, valid and binding agreement enforceable against such Person executing the same or such Person’s successors and assigns (as permitted under the Loan Documents) in accordance with the respective terms thereof or shall cease to be in full force and effect (in either case except by operation of its terms), or (ii) shall be contested or challenged by any Loan Party or any agent thereof or (iii) cease to give or provide the respective Liens, security interests, rights, titles, interests, remedies, powers or privileges intended to be created thereby on assets with an aggregate value (for all assets as to which an event described in this clause (iii) or clause (b) below has occurred and is continuing) in excess of the Threshold Amount (except by operation of its terms) or (b) any security interest and Lien purported to be created by any Security Document on assets with an aggregate value (for all assets as to which an event described in this clause (b) or clause (a)(iii) above has occurred and is continuing) in excess of the Threshold Amount shall cease to be in full force and effect, or shall cease to give the Collateral Agent, for the benefit of the Secured Parties, the Liens, rights, powers and privileges purported to be created and granted under such Security Document (except as otherwise expressly provided in such Security Document);
9.1.viiiInability to Pay Debts.
(i) The Borrower or any Restricted Subsidiary becomes unable or admits in writing its inability or fails generally to pay its debts as they become due or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any substantial part of the property of any such Person with an aggregate value (for all property described in this clause (ii)) in excess of the
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Threshold Amount and is not released, vacated, stayed, dismissed or fully bonded within 60 days after its issue or levy;
9.1.ixERISA.
The occurrence of any of the following events that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Change: (i) an ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan;
9.1.xChange of Control.
A Change of Control shall occur;
9.1.xi[Reserved].
9.1.xiiInvoluntary Proceedings.
A proceeding shall have been instituted in a court having jurisdiction in the premises seeking a decree or order for relief in respect of the Borrower or any Restricted Subsidiary in an involuntary case under any applicable bankruptcy, insolvency, reorganization or other similar law now or hereafter in effect, or for the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator (or similar official) of the Borrower or any Restricted Subsidiary for any substantial part of its property, or for the winding-up or liquidation of its affairs, and such proceeding shall remain undismissed or unstayed and in effect for a period of sixty (60) consecutive days or such court shall enter a decree or order granting any of the relief sought in such proceeding; or
9.1.xiiiVoluntary Proceedings.
The Borrower or any Restricted Subsidiary shall commence a voluntary case under any applicable bankruptcy, insolvency, reorganization or other similar law now or hereafter in effect, shall consent to the entry of an order for relief in an involuntary case under any such law, or shall consent to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator (or other similar official) of itself or for any substantial part of its property, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any action in furtherance of any of the foregoing.
9.bConsequences of Event of Default.
9.2.iEvents of Default Other Than Bankruptcy, Insolvency or Reorganization Proceedings.
If an Event of Default (other than under Section 9.1.12 [Involuntary Proceedings] or 9.1.13 [Voluntary Proceedings]) shall occur and be continuing, the Administrative Agent may, and upon the request of the Required Lenders, shall, (i) terminate all obligations on the part of the Lenders to make Loans or any Issuing Lender to issue Letters of Credit, as the case may be, (ii) by written notice to the Borrower, declare the unpaid principal amount of the Loans then outstanding and all interest accrued thereon, any unpaid fees and all other Obligations (other than Obligations under Specified Swap Agreements and Other Lender Provided Financial Service Products) to be forthwith due and payable, and the same shall thereupon become and be immediately due and payable to the Administrative Agent for the benefit of the Persons entitled thereto without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, and (iii) require the Borrower to, and the Borrower shall thereupon, Cash Collateralize all Letter of Credit Obligations comprised of the aggregate undrawn amount of Letters of Credit (to the extent not otherwise Cash Collateralized by the Borrower pursuant to this Agreement). Moneys in such account shall be applied by the Administrative Agent (x) first, to reimburse each of the Issuing Lenders for LC Disbursements for which it has not been reimbursed and (y)
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second, after the Letter of Credit Obligations have been paid in full and otherwise terminated or expired, to satisfy other outstanding Obligations. Upon the curing of all existing Events of Default to the satisfaction of the Required Lenders, the Administrative Agent shall return the cash collateral to the Borrower.
9.2.iiBankruptcy, Insolvency or Reorganization Proceedings.
If an Event of Default specified under Section 9.1.12 [Involuntary Proceedings] or Section 9.1.13 [Voluntary Proceedings] shall occur, no further obligation shall exist on the Lenders to make any Loans or any Issuing Lender to issue any Letters of Credit hereunder, and the unpaid principal amount of the Loans then outstanding and all interest accrued thereon, any unpaid fees and all other Obligations (other than Obligations under Specified Swap Agreements and Other Lender Provided Financial Service Products) shall be immediately due and payable, and the Borrower shall immediately Cash Collateralize all Letter of Credit Obligations comprised of the aggregate undrawn amount of Letters of Credit (to the extent not otherwise Cash Collateralized by the Borrower pursuant to this Agreement), in each case, without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived.
9.2.iiiSet-off.
If an Event of Default shall occur and be continuing, any Secured Party to whom any Obligation is owed by any Loan Party hereunder or under any other Loan Document or any participant of any Lender which has agreed in writing to be bound by the provisions of Section 5.3 [Sharing of Payments by Lenders] and any branch, Subsidiary or Affiliate of such Secured Party anywhere in the world shall have the right (to the extent permitted by applicable Law), in addition to all other rights and remedies available to it, without notice to such Loan Party, to set-off against and apply to the then unpaid balance of all the Loans and all other Obligations of the Borrower and the other Loan Parties hereunder or under any other Loan Document any debt owing to, and any other funds held in any manner for the account of, the Borrower or such other Loan Party by such Secured Party or participant or by such branch, Subsidiary or Affiliate, including all funds in all deposit accounts (whether time or demand, general or special, provisionally credited or finally credited, or otherwise) now or hereafter maintained by the Borrower or such other Loan Party for its own account (but not including funds held in custodian or trust accounts or funds not otherwise beneficially owned by the Borrower or such other Loan Party) with such Secured Party or participant or such branch, Subsidiary or Affiliate; provided, that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.13 [Defaulting Lenders] and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent and the Lenders, and (y) such Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. Such right shall exist whether or not any Secured Party shall have made any demand under this Agreement or any other Loan Document, whether or not such debt owing to or funds held for the account of the Borrower or such other Loan Party is or are matured or unmatured and regardless of the existence or adequacy of any Collateral, Guaranty or any other security, right or remedy available to any Secured Party.
9.2.iv[Reserved].
9.2.vApplication of Proceeds.
From and after the date on which the Administrative Agent has taken any action pursuant to this Section 9.2 [Consequences of Event of Default] and until all Obligations of the Loan Parties have been Paid in Full, any and all proceeds received by the Administrative Agent from any sale or other disposition of the Collateral, or any part thereof, or the exercise of any other remedy by the Collateral Agent or the Administrative Agent, shall be applied as follows:
(151)First, to payment of that portion of the Obligations constituting fees, indemnities, out-of-pocket expenses and other amounts (including reasonable fees, charges and disbursements
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of counsel to the Administrative Agent and the Collateral Agent) payable to the Administrative Agent or the Collateral Agent in their respective capacities as such;
(152)Second, to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal, interest and Letter of Credit Fees) payable to the Lenders and the Issuing Lenders (including fees, charges and disbursements of counsel to the respective Lenders and the Issuing Lenders) arising under the Loan Documents, ratably among them in proportion to the respective amounts described in this clause (b) payable to them;
(153)Third, to payment of that portion of the Obligations constituting accrued and unpaid Letter of Credit Fees and interest on the Loans, Reimbursement Obligations and other Obligations arising under the Loan Documents, ratably among the Lenders and the Issuing Lenders in proportion to the respective amounts described in this clause (c) payable to them;
(154)Fourth, to the Administrative Agent for the account of the Issuing Lenders, to Cash Collateralize that portion of Letter of Credit Obligations comprised of the aggregate undrawn amount of Letters of Credit to the extent not otherwise Cash Collateralized by the Borrower pursuant to this Agreement;
(155)Fifth, to payment of that portion of the Obligations constituting unpaid principal of the Loans, Reimbursement Obligations and Obligations then owing under Specified Swap Agreements and Other Lender Provided Financial Service Products, ratably among the Lenders, the Issuing Lenders and the providers of Specified Swap Agreements and Other Lender Provided Financial Service Products in proportion to the respective amounts described in this clause (e) held by them; and
(156)Last, the balance, if any, after all of the Obligations have been indefeasibly Paid in Full, to the Borrower or as otherwise required by Law.
Notwithstanding the foregoing, (a) amounts received from the Borrower or any Guarantor that is not a Qualified ECP Loan Party shall not be applied to the Obligations that are Excluded Swap Obligations (it being understood, that in the event that any amount is applied to Obligations other than Excluded Swap Obligations as a result of this clause (a), the Administrative Agent shall make such adjustments as it determines are appropriate to distributions pursuant to clause Fifth above from amounts received from Qualified ECP Loan Party to ensure, as nearly as possible, that the proportional aggregate recoveries with respect to Obligations described in clause Fifth above by the holders of any Excluded Swap Obligations are the same as the proportional aggregate recoveries with respect to other Obligations pursuant to clause Fifth above) and (b) Obligations arising under Specified Swap Agreements and Other Lender Provided Financial Service Products shall be excluded from the application described above if the Administrative Agent has not received written notice thereof, together with such supporting documentation as the Administrative Agent may request, from the counterparty to such Specified Swap Agreement or Other Lender Provided Financial Service Product, as the case may be. Each counterparty to a Specified Swap Agreements and Other Lender Provided Financial Service Products not a party to this Agreement that has given the notice contemplated by the preceding sentence shall, by such notice, be deemed to have acknowledged and accepted the appointment of the Administrative Agent pursuant to the terms of Section 10 [The Agents] hereof for itself and its Affiliates as if a “Lender” party hereto.
9.2.viCollateral Agent.
All Liens granted as security for the Obligations under the Security Documents and any other Loan Document shall secure the Obligations on a pari passu basis in favor of the Collateral Agent for the benefit of the Secured Parties. No Lender-Related Person or provider of a Specified Swap Agreement or Other Lender Provided Financial Service Product (except in its capacity as a Lender hereunder (to the extent that this Agreement or any other Loan Document empowers the Lenders to direct the Administrative Agent)) shall be entitled or have the power to direct or instruct the Collateral Agent on any such matters or to control or direct in any manner the maintenance or disposition of the Collateral.
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9.2.viiOther Rights and Remedies.
In addition to all of the rights and remedies contained in this Agreement or in any of the other Loan Documents (including each Mortgage), the Administrative Agent and the Collateral Agent shall have all of the rights and remedies of a secured party under the Uniform Commercial Code or other applicable Law, all of which rights and remedies shall be cumulative and non-exclusive to the extent permitted by Law. The Administrative Agent and the Collateral Agent may, and upon the request of the Required Lenders shall, exercise all post-default rights granted to the Administrative Agent and the Lenders under the Loan Documents or applicable Law.
9.cNotice of Sale.
Any notice required to be given by the Collateral Agent of a sale, lease, or other disposition of the Collateral or any other intended action by the Collateral Agent, if given to the Borrower at least ten (10) days prior to such proposed action, shall constitute commercially reasonable and fair notice thereof to the Borrower.
- THE AGENTS
10.aAppointment and Authority.
Each Lender (including each in its capacity as a counterparty to a Specified Swap Agreement or Other Lender Provided Financial Service Product or an Affiliate of such counterparty on behalf of such Affiliate) and Issuing Lender hereby irrevocably designates, appoints and authorizes PNC to act as Administrative Agent and Collateral Agent for such Lender under the Loan Documents and to execute and deliver or accept on behalf of each of the Lenders the other Loan Documents. Each Lender hereby irrevocably authorizes, and each holder of any Note by the acceptance of a Note shall be deemed irrevocably to authorize, the Agents to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and any other instruments and agreements referred to herein, and to exercise such powers and to perform such duties hereunder as are specifically delegated to or required of the Agents or any of them by the terms hereof, together with such powers as are reasonably incidental thereto. PNC agrees to act as the Administrative Agent and the Collateral Agent on behalf of the Lenders to the extent provided in the Loan Documents. The provisions of this Section 10 are solely for the benefit of the Agents, the Lenders and the Issuing Lender, and neither the Borrower nor any other Loan Party shall have rights as a third party beneficiary of any such provisions, except as set forth in Section 10.10 [Authorization to Release Collateral and Guarantors].
10.bRights as a Lender.
Each Person serving as an Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not an Agent, and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Persons serving as an Agent hereunder in its individual capacity. Such Persons and their Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if such Persons were not an Agent hereunder and without any duty to account therefor to the Lenders.
10.cExculpatory Provisions.
The Agents shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents. Without limiting the generality of the foregoing, the Agents:
(1)shall not be subject to any fiduciary or other implied duties, regardless of whether a Potential Default or Event of Default has occurred and is continuing;
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(2)shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that such Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents); provided that no Agent shall be required to take any action that, in its opinion or the opinion of its counsel, may expose such Agent to liability or that is contrary to any Loan Document or applicable Law;
(3)shall be entitled to seek the direction or confirmation from the Required Lenders (or other applicable group of Lenders) before taking any action under the Loan Documents; and
(4)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 any Person serving as an Agent or any of its Affiliates in any capacity.
No Agent shall be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as such Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 11.1 [Modifications, Amendments or Waivers] and 9.2 [Consequences of Event of Default]) or (ii) in the absence of its own gross negligence or willful misconduct. No Agent shall be deemed to have knowledge of any Potential Default or Event of Default unless and until notice describing such Potential Default or Event of Default is given to such Agent by the Borrower, a Lender or the Issuing Lender.
No Agent shall be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Potential Default or Event of Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or the creation, perfection or priority of any Lien purported to be created by the Security Documents or that the Liens granted to the Collateral Agent pursuant to any Security Document have been properly or sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority, (v) the value or the sufficiency of the Collateral or (vi) the satisfaction of any condition set forth in Section 7 [Conditions of Lending and Issuance of Letters of Credit] or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to such Agent.
10.aReliance by Agents.
Each 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. Each Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the Issuing Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender or the Issuing Lender unless the Administrative Agent shall have received notice to the contrary from such Lender or the Issuing Lender prior to the making of such Loan or the issuance of such Letter of Credit. Each Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.
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10.bDelegation of Duties.
Each Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by such Agent. Each Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Section 10 shall apply to any such sub-agent and to the Related Parties of each Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Agent.
10.cResignation of Agents.
Each Agent may at any time give notice of its resignation to the Lenders, the Issuing Lenders, the other Agents and the Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, with approval from the Borrower (so long as no Event of Default has occurred and is continuing), to appoint a successor, such approval not to be unreasonably withheld or delayed. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after the retiring Agent gives notice of its resignation, then such retiring Agent may on behalf of the Lenders and the Issuing Lenders, appoint a successor Agent meeting the qualifications set forth above; provided that if such retiring Agent shall notify the Borrower and the Lenders that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (i) the retiring Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that, in the case of resignation by the Collateral Agent, in the case of any collateral security held by the Collateral Agent on behalf of the Lenders or the Issuing Lenders under any of the Loan Documents, the retiring Collateral Agent shall continue to hold such collateral security until such time as a successor Collateral Agent is appointed) and (ii) all payments, communications and determinations provided to be made by, to or through a retiring Administrative Agent shall instead be made by or to each Lender and the Issuing Lenders directly, until such time as the Required Lenders appoint a successor Administrative Agent as provided for above in this Section 10.6. Upon the acceptance of a successor’s appointment as Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Agent, and the retiring Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section 10.6). The fees payable by the Borrower to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring Agent’s resignation hereunder and under the other Loan Documents, the provisions of this Section 10.6 and Section 11.3 [Expenses; Indemnity; Damage Waiver] shall continue in effect for the benefit of such retiring Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Agent was acting as Agent.
If PNC resigns as Administrative Agent under this Section 10.6, PNC shall also resign as Swingline Lender and as an Issuing Lender. If PNC resigns as an Issuing Lender, it shall retain all the rights, powers, privileges and duties of an Issuing Lender with respect to all Letters of Credit issued by it that remain outstanding as of the effective date of its resignation as Issuing Lender and all Letter of Credit Obligations with respect thereto, including the right to require the Lenders to make Participation Advances pursuant to Section 2.10.3 [Participations, Disbursements, Reimbursement]. If PNC resigns as Swingline Lender, the Borrower shall repay any outstanding Swing Loans on or prior to the effective date of such resignation and, to the extent any Swing Loans remain outstanding as of the effective date of its resignation as Swingline Lender, PNC shall retain all the rights, powers, privileges and duties of a Swingline Lender with respect to such Swing Loans, including the right to require the Lenders to make Base Rate Loans pursuant to Section 2.11 [Borrowings to Repay Swing Loans]. Upon the appointment of a successor Administrative Agent hereunder, such successor shall (i) succeed to all of the rights, powers, privileges and duties of PNC as a retiring Swingline Lender and Issuing Lender, Administrative Agent and Collateral Agent and PNC shall be discharged from all of its respective duties and obligations as Swingline Lender and Issuing Lender, Administrative Agent and Collateral Agent under the Loan Documents, and (ii) issue letters of credit in substitution for the Letters of Credit issued by PNC, if any, outstanding at the time of such succession or make other arrangements satisfactory to PNC to effectively assume the obligations of PNC with respect to such Letters of Credit.
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If the Person serving as Administrative Agent is a Defaulting Lender pursuant to clause (d) of the definition thereof, the Required Lenders may, to the extent permitted by applicable law, by notice in writing to the Borrower and such Person remove such Person as Administrative Agent and, in consultation with the Borrower, appoint a successor. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days (or such earlier day as shall be agreed by the Required Lenders) (the “Removal Effective Date”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date.
10.dNon-Reliance on Agents and Other Lenders.
Each Lender and the Issuing Lender acknowledges that it has, independently and without reliance upon any Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender and the Issuing Lender also acknowledges that it will, independently and without reliance upon any Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.
10.eNo Other Duties, Etc.
Anything herein to the contrary notwithstanding, none of the “Joint Lead Arrangers,” “Joint Bookrunners,” or “Co-Syndication Agent” or Lenders listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent, the Collateral Agent, the Swingline Lender, a Lender or an Issuing Lender hereunder.
10.fAdministrative Agent’s Fee.
The Borrower shall pay to the Administrative Agent a nonrefundable fee (the “Administrative Agent’s Fee”) under the terms of a letter (the “Administrative Agent’s Letter”) between the Borrower and the Administrative Agent, as amended from time to time.
10.gAuthorization to Release Collateral and Guarantors.
Each Secured Party expressly authorizes the Agents to:
(5)in the case of the Agents, execute such documents as are reasonably requested to evidence the termination of this Agreement and release the Guaranty and the Liens created by the Security Documents upon Payment in Full as contemplated by Section 11.7 [Duration; Survival];
(6)in the case of the Administrative Agent, execute a release in a form reasonably satisfactory to it of any Person from the Guaranty Agreement (x) if such Person ceases to be a Subsidiary of the Borrower or (y) if such Person is or becomes an Excluded Subsidiary, in either case, pursuant to a transaction permitted by the Loan Documents; provided that no Person shall be released from the Guaranty Agreement unless such Person is not, or substantially concurrently with such release, shall cease to be, an obligor under any Permitted Unsecured Notes Indenture; and
(7)in the case of the Collateral Agent, (i) execute any document in a form reasonably satisfactory to it, evidencing the release of any asset from the Lien of any Security Document upon (x) the Disposition (other than any lease) of such asset permitted by the Loan Documents (other than a Disposition to a Loan Party), (y) a Person being released from the Guaranty Agreement (A) if pursuant to clause (b)(x) above, with respect to any Lien on the assets of such Person and the Equity Interests of such Person and (B) if pursuant to clause (b)(y) above, the assets of such Person, and to the extent constituting Excluded Assets, the Equity Interests of such Person or (z) such assets becoming Excluded Assets, and (ii) enter into any subordination agreement, non-disturbance agreement or grant of an option with respect to assets, in each case,
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in a form reasonably satisfactory to it, in connection with (x) any easements, permits, licenses, rights of way, options, surface leases or other surface rights or interests permitted by the Loan Documents to be granted or a Disposition permitted by the Loan Documents or (y) Liens permitted under clause (10) of the definition of Permitted Liens.
The Borrower shall deliver to the Administrative Agent or the Collateral Agent such certificates and other documentation as such Agent(s) may reasonably request to evidence compliance with the applicable provisions of the Loan Documents (including with respect to their authority hereunder), and the Administrative Agent and Collateral Agent may rely, without independent investigation, on such certificates and other documents.
10.dNo Reliance on Administrative Agent’s Customer Identification Program.
Each Lender acknowledges and agrees that neither such Lender, nor any of its Affiliates, participants or assignees, may rely on the Administrative Agent to carry out such Lender’s, Affiliate’s, participant’s or assignee’s customer identification program, or other obligations required or imposed under or pursuant to the USA PATRIOT Act or the regulations thereunder, including the regulations contained in 31 CFR 103.121 (as hereafter amended or replaced, the “CIP Regulations”), or any other Anti-Terrorism Law, including any programs involving any of the following items relating to or in connection with any of the Loan Parties, their Affiliates or their agents, the Loan Documents or the transactions hereunder or contemplated hereby: (i) any identity verification procedures, (ii) any recordkeeping, (iii) comparisons with government lists, (iv) customer notices or (v) other procedures required under the CIP Regulations or such other Laws.
10.eWithholding Tax.
To the extent required by any applicable Law (as determined in good faith by the Administrative Agent), the Administrative Agent may withhold from any payment to any Lender under any Loan Document an amount equivalent to any applicable withholding Tax. Without limiting or expanding the provisions of Section 5.8 [Taxes], each Lender shall indemnify and hold harmless the Administrative Agent against, and shall make payable in respect thereof within 10 days after demand therefor, all Taxes and all related losses, claims, liabilities and expenses (including fees, charges and disbursements of any counsel for the Administrative Agent) incurred by or asserted against the Administrative Agent by the IRS or any other Official Body as a result of the failure of the Administrative Agent to properly withhold Tax from amounts paid to or for the account of such Lender for any reason (including because the appropriate form was not delivered or not properly executed, or because such Lender failed to notify the Administrative Agent of a change in circumstance that rendered the exemption from, or reduction of withholding Tax ineffective). A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under this Agreement or any other Loan Document against any amount due the Administrative Agent under this Section 10.12 [Withholding Tax]. The agreements in this Section 10.12 [Withholding Tax] shall survive the resignation and/or replacement of the Administrative Agent, any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all other obligations. For the avoidance of doubt, the term “Lender” shall, for purposes of this Section 10.12 [Withholding Tax], include any Issuing Lender and any Swingline Lender.
10.fCertain ERISA Matters.
(8)Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that at least one of the following is and will be true:
(1)such Lender is not using “plan assets” (within the meaning of Section 3(42) of ERISA or otherwise) of one or more Benefit Plans with respect to such Lender’s
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entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments or this Agreement,
(2)the transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement,
(3)(A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform the Loans, the Letters of Credit, the Commitments and this Agreement, (C) the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement, or
(4)such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent, in its sole discretion, and such Lender.
(9)In addition, unless either (1) sub-clause (i) in the immediately preceding paragraph (a) is true with respect to a Lender or (2) a Lender has provided another representation, warranty and covenant in accordance with sub-clause (iv) in the immediately preceding paragraph (a), such Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that the Administrative Agent is not a fiduciary with respect to the assets of such Lender involved in such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement (including in connection with the reservation or exercise of any rights by the Administrative Agent under this Agreement, any Loan Document or any documents related hereto or thereto).
10.aErroneous Payments.
(10)If the Administrative Agent notifies a Lender, Issuing Lender or Secured Party, or any Person who has received funds on behalf of a Lender, Issuing Lender or Secured Party such Lender or Issuing Lender (any such Lender, Issuing Lender, Secured Party or other recipient, a “Payment Recipient”) that the Administrative Agent has determined in its sole discretion (whether or not after receipt of any notice under immediately succeeding clause (b)) that any funds received by such Payment Recipient from the Administrative Agent or any of its Affiliates were erroneously transmitted to, or otherwise erroneously or mistakenly received by such Payment Recipient (whether or not known to such Lender, Issuing Lender, Secured Party or other Payment Recipient on its behalf) (any such funds, whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise, individually and collectively, an “Erroneous Payment”) and demands the return of such Erroneous Payment (or a portion thereof), such Erroneous Payment shall at all times remain the property of the Administrative Agent and shall be segregated by the Payment Recipient and held in trust for the benefit of the Administrative Agent, and such Lender, Issuing Lender or Secured Party shall (or, with respect to any Payment Recipient who received such funds on its behalf, shall cause such Payment Recipient to)
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promptly, but in no event later than two Business Days thereafter, return to the Administrative Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was made, in same day funds (in the currency so received), together with interest thereon in respect of each day from and including the date such Erroneous Payment (or portion thereof) was received by such Payment Recipient to the date such amount is repaid to the Administrative Agent in same day funds at the greater of the [Overnight Rate/Federal Funds Rate] and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect. A notice of the Administrative Agent to any Payment Recipient under this clause (a) shall be conclusive, absent manifest error.
(11)Without limiting immediately preceding clause (a), each Lender, Issuing Lender or Secured Party, or any Person who has received funds on behalf of a Lender, Issuing Lender or Secured Party such Lender or Issuing Lender, hereby further agrees that if it receives a payment, prepayment or repayment (whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise) from the Administrative Agent (or any of its Affiliates) (x) that is in a different amount than, or on a different date from, that specified in a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates) with respect to such payment, prepayment or repayment, (y) that was not preceded or accompanied by a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates), or (z) that such Lender, Issuing Lender or Secured Party, or other such recipient, otherwise becomes aware was transmitted, or received, in error or by mistake (in whole or in part) in each case:
(5)(A) in the case of immediately preceding clauses (x) or (y), an error shall be presumed to have been made (absent written confirmation from the Administrative Agent to the contrary) or (B) an error has been made (in the case of immediately preceding clause (z)), in each case, with respect to such payment, prepayment or repayment; and
(6)such Lender, Issuing Lender or Secured Party shall (and shall cause any other recipient that receives funds on its respective behalf to) promptly (and, in all events, within one Business Day of its knowledge of such error) notify the Administrative Agent of its receipt of such payment, prepayment or repayment, the details thereof (in reasonable detail) and that it is so notifying the Administrative Agent pursuant to this Section 10.14(b).
(12)Each Lender, Issuing Lender or Secured Party hereby authorizes the Administrative Agent to set off, net and apply any and all amounts at any time owing to such Lender, Issuing Lender or Secured Party under any Loan Document, or otherwise payable or distributable by the Administrative Agent to such Lender, Issuing Lender or Secured Party from any source, against any amount due to the Administrative Agent under immediately preceding clause (a) or under the indemnification provisions of this Agreement.
(13)In the event that an Erroneous Payment (or portion thereof) is not recovered by the Administrative Agent for any reason, after demand therefor by the Administrative Agent in accordance with immediately preceding clause (a), from any Lender or Issuing Lender that has received such Erroneous Payment (or portion thereof) (and/or from any Payment Recipient who received such Erroneous Payment (or portion thereof) on its respective behalf) (such unrecovered amount, an “Erroneous Payment Return Deficiency”), upon the Administrative Agent’s notice to such Lender or Issuing Lender at any time, (i) such Lender or Issuing Lender shall be deemed to have assigned its Loans (but not its Commitments) of the relevant Class with respect to which such Erroneous Payment was made (the “Erroneous Payment Impacted Class”) in an amount equal to the Erroneous Payment Return Deficiency (or such lesser amount as the Administrative Agent may specify) (such assignment of the Loans (but not Commitments) of the Erroneous Payment Impacted Class, the “Erroneous Payment Deficiency Assignment”) at par plus any accrued and unpaid interest (with the assignment fee to be waived by the Administrative Agent in such instance), and is hereby (together with the Borrower) deemed to execute and deliver an Assignment and Assumption with respect to such Erroneous Payment Deficiency Assignment, and such Lender or Issuing Lender shall deliver any Notes evidencing such Loans to the Borrower or the Administrative Agent, (ii) the Administrative Agent as the assignee Lender
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shall be deemed to acquire the Erroneous Payment Deficiency Assignment, (iii) upon such deemed acquisition, the Administrative Agent as the assignee Lender shall become a Lender or Issuing Lender, as applicable, hereunder with respect to such Erroneous Payment Deficiency Assignment and the assigning Lender or assigning Issuing Lender shall cease to be a Lender or Issuing Lender, as applicable, hereunder with respect to such Erroneous Payment Deficiency Assignment, excluding, for the avoidance of doubt, its obligations under the indemnification provisions of this Agreement and its applicable Commitments which shall survive as to such assigning Lender or assigning Issuing Lender and (iv) the Administrative Agent may reflect in the Register its ownership interest in the Loans subject to the Erroneous Payment Deficiency Assignment. The Administrative Agent may, in its discretion, sell any Loans acquired pursuant to an Erroneous Payment Deficiency Assignment and upon receipt of the proceeds of such sale, the Erroneous Payment Return Deficiency owing by the applicable Lender or Issuing Lender shall be reduced by the net proceeds of the sale of such Loan (or portion thereof), and the Administrative Agent shall retain all other rights, remedies and claims against such Lender or Issuing Lender (and/or against any recipient that receives funds on its respective behalf). For the avoidance of doubt, no Erroneous Payment Deficiency Assignment will reduce the Commitments of any Lender or Issuing Lender and such Commitments shall remain available in accordance with the terms of this Agreement. In addition, each party hereto agrees that, except to the extent that the Administrative Agent has sold a Loan (or portion thereof) acquired pursuant to an Erroneous Payment Deficiency Assignment, and irrespective of whether the Administrative Agent may be equitably subrogated, the Administrative Agent shall be contractually subrogated to all the rights and interests of the applicable Lender, Issuing Lender or Secured Party under the Loan Documents with respect to each Erroneous Payment Return Deficiency (the “Erroneous Payment Subrogation Rights”).
(14)The parties hereto agree that an Erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Obligations owed by the Borrower or any other Loan Party, except, in each case, to the extent such Erroneous Payment is, and solely with respect to the amount of such Erroneous Payment that is, comprised of funds received by the Administrative Agent from the Borrower or any other Loan Party for the purpose of making such Erroneous Payment.
(15)To the extent permitted by applicable Law, no Payment Recipient shall assert any right or claim to an Erroneous Payment, and hereby waives, and is deemed to waive, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Erroneous Payment received, including without limitation waiver of any defense based on “discharge for value” or any similar doctrine.
(16)Each party’s obligations, agreements and waivers under this Section 10.14 shall survive the resignation or replacement of the Administrative Agent, the termination of the Commitments and/or the repayment, satisfaction or discharge of all Obligations (or any portion thereof) under any Loan Document.
- MISCELLANEOUS
11.aModifications, Amendments or Waivers.
11.1.iRequired Consents.
Subject to Section 4.1.4 [Conforming Changes Related to Term SOFR Rate], Section 4.6 [Benchmark Replacement Setting], Section 10.10 [Authorization to Release Collateral and Guarantors], Section 11.1.2 [Certain Amendments] and Section 11.1.3 [Amendments Affecting the Administrative Agent, Etc.], the Administrative Agent, with the written consent of the Required Lenders, and the Borrower, on behalf of the Loan Parties, may from time to time enter into written agreements amending or changing any provision of this Agreement or any other Loan Document or the rights of the Lenders or the Loan Parties hereunder or thereunder, or may grant written waivers or consents hereunder or thereunder. Any such agreement, waiver or consent made with such written consent shall be effective to bind all the Lenders and the Loan Parties; provided that no such agreement, waiver or consent may be made which will:
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(17)increase the amount of the Revolving Credit Commitment of any Lender hereunder without the consent of such Lender;
(18)whether or not any Loans are outstanding, extend the Expiration Date or the time for payment of principal or interest of any Loan, the Commitment Fee or any other fee payable to any Lender, or reduce the principal amount of, or the rate of interest borne by any Loan or reduce the Commitment Fee or any other fee payable to any Lender, without the consent of each Lender directly affected thereby (it being understood that the waiver of (or amendment to the terms of) any mandatory prepayment of the Loans, changes to Section 8.2.14 [Financial Covenants] or definitions used therein or the application (or waiver of application) of any rate increase described in Section 4.3 [Interest After Default] shall not constitute a postponement of any date scheduled for the payment of principal or interest or a reduction of principal, interest or fees);
(19)except as otherwise provided in this Agreement, without the written consent of all the Lenders (other than Defaulting Lenders), release all or substantially all of the Guarantors (as measured by fair market value of their assets) from their Obligations under the Guaranty Agreement;
(20)except as otherwise provided in this Agreement, without the written consent of all the Lenders (other than Defaulting Lenders), release all or substantially all of the Collateral; provided that in the event that the Borrower provides any applicable Issuing Lender with Cash Collateral to secure any Letters of Credit with an expiry date beyond the Expiration Date pursuant to Section 2.10.10 [Cash Collateral Prior to the Expiration Date] such Issuing Lender is permitted to release such Cash Collateral without the consent of any Lender once such Letter of Credit has terminated, expired or has otherwise been returned to such Issuing Lender undrawn; or
(21)amend Section 5.2 [Pro Rata Treatment of Lenders], Section 5.3 [Sharing of Payments by Lenders] or alter any provision regarding pro rata treatment of Lenders or requiring all Lenders to authorize the taking of any action or reduce the percentage specified in the definition of “Required Lenders” without the consent of all affected Lenders;
(22)(x) subordinate any of the Obligations in right of payment to any Indebtedness or (y) subordinate the Lien on a material portion of the Collateral securing any of the Obligations to any Lien securing any other obligation, in each case without the consent of all affected Lenders; or
(23)amend this Section 11.1 [Modifications, Amendments or Waivers] in a manner that would reduce the voting rights of any Lender without consent of such affected Lender.
11.1.iiCertain Amendments.
Notwithstanding Section 11.1.1(a) [Required Consents] or any other provision in any Loan Document to the contrary, the Borrower and the Administrative Agent (or to the extent relating to Collateral, the Collateral Agent), on behalf of the Lenders and without any consent or action by any Lender, may amend, modify, supplement or restate in whole or in part any of the Loan Documents from time to time or consent to such action by the Collateral Agent to (i) cure any defect or error, (ii) comply with any provision hereunder or under any other Loan Document, (iii) add Guarantors of the Obligations, (iv) add property or other assets as Collateral, (v) add covenants of the Borrower or the other Loan Parties for the benefit of the Lenders or to surrender any right or power herein conferred upon the Borrower or any of the other Loan Parties, (vi) approve of any correction or update to any Schedule hereto or to any other Loan Document to the extent such Schedule is being corrected in any manner that is not material or is being updated to reflect the consummation of any transaction or exercise of any rights of the Loan Parties permitted hereunder for which no consent is required or for which the required consent has been received or (vii) take any action authorized by Section 10.10 [Authorization to Release Collateral and Guarantors]. Notwithstanding Section 11.1.1(a) [Required Consents], (x) only the consent of the respective parties thereto shall be required for any amendments or waivers of the Administrative Agent’s Letter and (y) only the consent of the applicable Lender, the Borrower and the Administrative Agent shall
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be required for any amendments or waivers of the notice referenced in the definition of “Issuing Lenders.”
11.1.iiiAmendments Affecting the Administrative Agent, Etc.
No agreement, waiver or consent which would modify the interests, rights or obligations of an Agent, the Swingline Lender or any Issuing Lender may be made without the written consent of such Agent, the Swingline Lender or such Issuing Lender, as applicable.
11.1.ivNon-Consenting Lenders.
If in connection with any proposed waiver, amendment or modification referred to in any of the clauses (a) through (f) of Section 11.1.1 [Required Consents], the consent of the Required Lenders is obtained but the consent of one or more other Lenders whose consent is required is not obtained (each a “Non-Consenting Lender”), then the Borrower shall have the right to replace any such Non-Consenting Lender with one or more replacement Lenders pursuant to Section 5.6.2 [Replacement of a Lender].
11.1.vDefaulting Lenders.
Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that (i) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Lender and (ii) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender disproportionately adversely relative to other affected Lenders shall require the consent of such Defaulting Lender.
11.bNo Implied Waivers; Cumulative Remedies.
No course of dealing and no delay or failure of the Administrative Agent or any Lender in exercising any right, power, remedy or privilege under this Agreement or any other Loan Document shall affect any other or future exercise thereof or operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any further exercise thereof or of any other right, power, remedy or privilege. The rights and remedies of the Administrative Agent and the Lenders under this Agreement and any other Loan Documents are cumulative and not exclusive of any rights or remedies which they would otherwise have.
11.cExpenses; Indemnity; Damage Waiver.
11.3.iCosts and Expenses.
The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the Lead Arrangers, the Administrative Agent, the Collateral Agent and their respective Affiliates (including the reasonable fees, charges and disbursements of outside counsel for the Administrative Agent and the Collateral Agent), and shall pay all reasonable fees in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by any Issuing Lender in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder, (iii) all reasonable out-of-pocket expenses incurred by the Administrative Agent, the Collateral Agent, any Lender or any Issuing Lender (including the reasonable fees, charges and disbursements of any counsel for the Administrative Agent, the Collateral Agent, any Lender or any Issuing Lender), in connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section 11.3 [Expenses; Indemnity; Damage Waiver], or (B) in connection with the Loans made or Letters of Credit issued hereunder, including all such reasonable out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or
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Letters of Credit, and (iv) all reasonable out-of-pocket expenses of an Agent’s regular employees and agents engaged periodically to perform audits of the Loan Parties’ books, records and business properties.
11.3.iiIndemnification by the Borrower.
The Borrower shall indemnify the Lead Arrangers, each Agent (and any sub-agent thereof), each Lender and each Issuing Lender, and each Related Party of any of the foregoing Persons (each such Person being called a “Lender-Related Person”) against, and hold each Lender-Related Person harmless from, any and all losses, claims, damages, liabilities and reasonable out-of-pocket related expenses (including the fees, charges and disbursements of any outside counsel for any Lender-Related Person), incurred by any Lender-Related Person or asserted against any Lender-Related Person by any third party or by the Borrower or any other Loan Party or any Subsidiary of Borrower arising out of, in connection with, or as a result of (i) the execution, enforcement or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance or nonperformance by the Loan Parties of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the Issuing Lender to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) breach of representations, warranties or covenants of any Loan Party under the Loan Documents or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, including any such items or losses relating to or arising under Environmental Laws or pertaining to environmental matters, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrower or any of its Subsidiaries, and regardless of whether any Lender-Related Person is a party thereto; provided that the Borrower shall not be liable for any portion of any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements with respect to a Lender-Related Person (A) if the same is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Lender-Related Person’s gross negligence or willful misconduct, (B) if the Borrower was not given notice of the subject claim and the opportunity to participate in the defense thereof, at its expense (except that the Borrower shall remain liable to the extent such failure to give notice does not result in a material loss to the Borrower), (C) if the same results from a compromise or settlement agreement entered into without notice to or the consent of the Borrower, which consent shall not be unreasonably withheld, conditioned or delayed or (D) results from a dispute solely among Lender-Related Persons (other than any claims against an Lender-Related Person in its capacity or in fulfilling its role as an Agent or arranger, bookrunner or any similar role under this Agreement and other than any claims arising out of any act or omission of the Borrower or any of its Affiliates). The Lender-Related Persons will attempt to minimize the fees and expenses of legal counsel for the Lender-Related Persons which are subject to reimbursement by the Borrower hereunder by considering the usage of one law firm to represent the Lender-Related Persons if appropriate under the circumstances. This Section 11.3.2 [Indemnification by the Borrower] shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.
11.3.iiiReimbursement by Lenders.
To the extent that the Borrower for any reason fails to indefeasibly pay any amount required under Section 2.10.8 [Indemnity], Section 11.3.1 [Costs and Expenses] or Section 11.3.2 [Indemnification by the Borrower] to be paid by it to any Agent (or any sub-agent thereof), the Issuing Lenders or any Related Party of any of the foregoing, each Lender severally agrees to pay to such Agent (or any such sub-agent), the Issuing Lenders or such Related Party, as the case may be, such Lender’s Ratable Share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount, provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against an Agent (or any such sub-agent) or an Issuing Lender in its capacity as such, or against any Related Party of any of the foregoing acting for such Agent (or any such sub-agent), or such Issuing Lender in connection with such capacity.
11.3.ivWaiver of Consequential Damages, Etc.
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No Lender-Related Person shall be liable for any damages arising from the use by others of any information or other materials obtained through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby, except to the extent such damages are found in a final, non-appealable judgment of a court of competent jurisdiction to arise from the gross negligence or willful misconduct of such Lender-Related Person, nor shall any Lender-Related Person, Loan Party or any Subsidiary have any liability for any special, punitive, indirect or consequential damages (as opposed to direct or actual damages) relating to this Agreement or any other Loan Document or arising out of its activities in connection herewith or therewith (whether before or after the Closing Date); it being agreed that this sentence shall not limit the indemnification obligations of the Loan Parties pursuant to Section 11.3.2 [Indemnification by the Borrower].
11.3.vPayments.
All amounts due under this Section 11.3 [Expenses; Indemnity; Damage Waiver] shall be payable not later than ten (10) days after demand therefor.
11.dHolidays.
Whenever payment of a Loan to be made or taken hereunder shall be due on a day which is not a Business Day such payment shall be due on the next Business Day (except as provided in Section 4.2 [Interest Periods]) and such extension of time shall be included in computing interest and fees, except that the Loans shall be due on the Business Day preceding the Expiration Date if the Expiration Date is not a Business Day. Unless otherwise specified, whenever any payment or action to be made or taken hereunder (other than payment of the Loans) shall be stated to be due on a day which is not a Business Day, such payment or action shall be made or taken on the next following Business Day, and such extension of time shall not be included in computing interest or fees, if any, in connection with such payment or action.
11.eNotices; Effectiveness; Electronic Communication.
11.5.iNotices Generally.
Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in Section 11.5.2 [Electronic Communications]), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier (i) if to a Lender, to it at its address set forth in its administrative questionnaire, or (ii) if to the Administrative Agent or any Loan Party, to it at its address set forth on Schedule 11.5.1.
Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by telecopier shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient). Notices delivered through electronic communications to the extent provided in Section 11.5.2 [Electronic Communications] shall be effective as provided in such Section.
11.5.iiElectronic Communications.
Notices and other communications to the Lenders and the Issuing Lenders hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices to any Lender or any Issuing Lender if such Lender or Issuing Lender, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication and the Administrative Agent shall have notified the Borrower of the same. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.
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Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement); provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.
11.5.iiiChange of Address, Etc.
Any party hereto may change its address, e-mail address or telecopier number for notices and other communications hereunder by notice to the other parties hereto.
11.fSeverability.
The provisions of this Agreement are intended to be severable. If any provision of this Agreement shall be held invalid or unenforceable in whole or in part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without in any manner affecting the validity or enforceability thereof in any other jurisdiction or the remaining provisions hereof in any jurisdiction.
11.gDuration; Survival.
All representations and warranties of the Loan Parties contained herein or made in connection herewith shall survive the execution and delivery of this Agreement, the completion of the transactions hereunder and Payment In Full. All covenants and agreements of the Loan Parties contained herein relating to the payment of principal, interest, premiums, additional compensation or expenses and indemnification, including those set forth in the Notes, Section 2.10.8 [Indemnity], Section 2.10.10 [Cash Collateral Prior to the Expiration Date], Section 5 [Payments] and Section 11.3 [Expenses; Indemnity; Damage Waiver], shall survive payment in full of all principal and interest under the Notes, the termination of the Commitments and the expiration or termination or cash collateralization of all Letters of Credit. All other covenants and agreements of the Loan Parties shall continue in full force and effect from and after the date hereof and until Payment In Full.
11.hSuccessors and Assigns.
11.8.iSuccessors and Assigns Generally.
The provisions of this Agreement shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of Section 11.8.2 [Assignments by Lenders], (ii) by way of participation in accordance with the provisions of Section 11.8.4 [Participations], or (iii) by way of pledge or assignment of a security interest subject to the restrictions of Section 11.8.5 [Certain Pledges; Successors and Assigns Generally] (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in Section 11.8.4 [Participations], the Lead Arrangers, and, to the extent expressly contemplated hereby, the Related Parties of each of the Agents, the Issuing Lenders and the Lenders, and as set forth in Section 11.12 [Certain Collateral Matters]) any legal or equitable right, remedy or claim under or by reason of this Agreement or any other Loan Document.
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11.8.iiAssignments by Lenders.
Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided that any such assignment shall be subject to the following conditions:
(a) Minimum Amounts.
(1)in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and the Loans at the time owing to it or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and
(2)in any case not described in clause (a)(i) of this Section 11.8.2, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the applicable Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption Agreement with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption Agreement, as of the Trade Date) shall not be less than $5,000,000, in the case of any assignment in respect of the Revolving Credit Commitment or Revolving Credit Loans of the assigning Lender, unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed).
(b) Proportionate Amounts. Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loan or the Commitment assigned.
(c) Required Consents. Each assignment shall be subject to the consent of the following Persons (which shall not be unreasonably withheld or delayed):
(i) the Borrower, unless (x) an Event of Default has occurred and is continuing at the time of such assignment or (y) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund; provided that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within five (5) Business Days after having received notice thereof;
(ii) the Administrative Agent and the Swingline Lender; and
(iii) each Issuing Lender, unless the assignment is to a Lender; provided that no consent of any Issuing Lender shall be required for any assignment between Goldman Sachs Bank USA and Goldman Sachs Lending Partners LLC.
(d) Assignment and Assumption Agreement. The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption Agreement, together with a processing and recordation fee of $3,500 from the assignor or the assignee, and the assignee, if it is not a Lender, shall deliver to the Administrative Agent an administrative questionnaire provided by the Administrative Agent.
(e) Prohibited Assignments. No such assignment or participation shall be made to (i) the Borrower or any of the Borrower’s Affiliates or Subsidiaries, (ii) any natural person, or (iii) any Defaulting Lender.
Subject to acceptance and recording thereof by the Administrative Agent pursuant to Section 11.8.3 [Register], from and after the effective date specified in each Assignment and Assumption
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Agreement, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption Agreement, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption Agreement, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption Agreement 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 4.4 [Term SOFR Rate Unascertainable; Illegality; Increased Costs], Section 5.7 [Increased Costs], and Section 11.3 [Expenses; Indemnity; Damage Waiver] 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 Section 11.8.2 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 Section 11.8.4 [Participations].
11.8.iiiRegister.
The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain a record of the names and addresses of the Lenders, and the Commitments of, and principal amounts (and related interest amounts) of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The Register shall be conclusive (absent manifest error), and the Borrower, the Agents, the Issuing Lenders and the Lenders shall treat each Person whose name is in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.
11.8.ivParticipations.
Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than any Person specified in Section 11.8.2(e)) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent, the Lenders and the Issuing Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement.
Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver with respect to any of clause (a)(i) or (b) of Section 11.1.1 [Required Consents]. The Borrower agrees that each Participant shall be entitled to the benefits of Section 4.4 [Term SOFR Rate Unascertainable; Illegality; Increased Costs], Section 5.7 [Increased Costs] and Section 5.8 [Taxes] (subject to the requirements and limitations of such Sections and Sections 5.6.3 [Designation of a Different Lending Office] and 5.6.2 [Replacement of a Lender], and it being understood that the documentation required under Section 5.8.5 [Status of Lenders] shall be delivered solely to the participating Lender) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 11.8.2 [Assignments by Lenders]; provided that such Participant (A) shall be subject to the provisions of Section 5.6.2 [Replacement of a Lender] and Section 5.6.3 [Designation of a Different Lending Office] as if it were an assignee under Section 11.8.2 [Assignments by Lenders]; and (B) shall not be entitled to receive any greater payment under Section 5.7 [Increased Costs], 5.8 [Taxes] or Section 11.3 [Expenses; Indemnity; Damage Waiver], with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation. Each Lender that sells a participation agrees, at the Borrower’s request and expense, to use reasonable efforts to cooperate with the Borrower to effectuate the provisions of Section 5.6.2 [Replacement of a Lender] and Section 5.6.3 [Designation of a Different Lending Office] with respect to any Participant. To the extent permitted by Law, each Participant also shall be entitled to the benefits of
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Section 9.2.3 [Set-off] as though it were a Lender; provided such Participant agrees to be subject to Section 5.3 [Sharing of Payments by Lenders] as though it were a Lender.
Each Lender that sells participations to a Participant, acting solely for this purpose as a non-fiduciary agent of the Borrower, shall maintain a register of all such Participants on which it enters the name and address of each Participant and the principal amounts (and related interest amounts) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant Register”). The entries in the Participant Register shall be conclusive (absent manifest error), and the Borrower and the Lenders shall treat each Person whose name is recorded in the Participant Register pursuant to the terms hereof as a Participant for all purposes of this Agreement, notwithstanding notice to the contrary; provided that no Lender shall have the obligation to disclose all or a portion of the Participant Register (including the identity of the Participant or any information relating to a Participant’s interest in any Loans or other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary in connection with a Tax audit or other proceeding to establish that any loans are in registered form for U.S. federal income tax purposes. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.
11.8.vCertain Pledges; Successors and Assigns Generally.
Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or any central bank having jurisdiction; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.
11.8.viResignation as Issuing Lender or Swingline Lender after Assignment.
Notwithstanding anything to the contrary contained herein, if at any time any Issuing Lender or the Swingline Lender assigns all of its Revolving Credit Commitment and Revolving Credit Loans pursuant to Section 11.8.1, such Issuing Lender or the Swingline Lender may, (i) at the time of such assignment, upon written notice to the Administrative Agent, the Borrower and the Lenders, resign as an Issuing Lender and/or (ii) at the time of such assignment, upon written notice to the Borrower, resign as the Swingline Lender. In the event of any such resignation as an Issuing Lender or the Swingline Lender, the Borrower shall be entitled to appoint (with notice to and subject to consent (not to be unreasonably withheld or delayed) from the Administrative Agent) from the assignee Lender or among the rest of the Lenders a successor Issuing Lender or Swingline Lender hereunder; provided that no failure by the Borrower to appoint any such successor shall affect the resignation of the applicable Issuing Lender or Swingline Lender as an Issuing Lender or the Swingline Lender, as the case may be. If the applicable Issuing Lender resigns as an Issuing Lender, it shall retain all the rights, powers, privileges and duties of an Issuing Lender hereunder with respect to all Letters of Credit issued by it and outstanding as of the effective date of its resignation as an Issuing Lender and all Letter of Credit Obligations with respect thereto (including the right to require the Lenders to make Participation Advances pursuant to Section 2.10.3 [Participations, Disbursements, Reimbursement], and such Letters of Credit shall continue to constitute Letters of Credit hereunder until such Letters of Credit expire or terminate in accordance with their respective terms. If the Swingline Lender resigns as Swingline Lender, the Borrower shall repay any outstanding Swing Loans on or prior to the effective date of such resignation and, to the extent any Swing Loans remain outstanding as of the effective date of its resignation as Swingline Lender, the resiedn Swingline Lender shall retain all the rights, powers, privileges and duties of a Swingline Lender with respect to such Swing Loans, including the right to require the Lenders to make Base Rate Loans pursuant to Section 2.11 [Borrowings to Repay Swing Loans]. Upon the appointment of a successor Issuing Lender and/or Swingline Lender, (x) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Issuing Lender or Swingline Lender, as the case may be, and (y) the successor Issuing Lender shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to the applicable retiring Issuing Lender to effectively assume the obligations of the applicable retiring Issuing Lender with respect to such Letters of Credit.
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11.iConfidentiality.
11.9.iGeneral.
Each of the Agents, the Lenders and the Issuing Lenders agrees to maintain the confidentiality of the Information, except that Information may be disclosed (i) to its Affiliates and to its and its Affiliates’ respective partners, directors, officers, employees, agents, advisors and other representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (ii) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (iii) to the extent required by applicable Laws or regulations or by any subpoena or similar legal process, (iv) to any other party hereto, (v) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (vi) subject to an agreement containing provisions substantially the same as those of this Section 11.9, to (a) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (b) any actual or prospective counterparty (or its advisors) to any Swap Agreement or derivative transaction or similar transaction relating to the Borrower and its obligations, (vii) with the consent of the Borrower, (viii) to the extent such Information (a) becomes publicly available other than as a result of a breach of this Section 11.9 or (b) becomes available to any Agent, any Lender, any Issuing Lender or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrower, the other Loan Parties or any other Person that has obtained such confidential information pursuant to this Section 11.9 or (ix) on a confidential basis to (a) any rating agency in connection with rating the Borrower or its Subsidiaries or the credit facilities provided hereunder, (b) information regarding the credit facilities provided hereunder to (x) the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers or other market identifiers with respect to the credit facilities provided hereunder or (y) market data collectors and service providers to the Administrative Agent and the Lenders in connection with the administration, settlement and management of this Agreement and the credit facilities provided hereunder. Any Person required to maintain the confidentiality of Information as provided in this Section 11.9 shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.
11.9.iiSharing Information With Affiliates of the Lenders.
Each Loan Party acknowledges that from time to time financial advisory, investment banking and other services may be offered or provided to the Borrower or one or more of its Affiliates (in connection with this Agreement or otherwise) by any Lender or by one or more Subsidiaries or Affiliates of such Lender, and each of the Loan Parties hereby authorizes each Lender to share any information delivered to such Lender by such Loan Party and its Subsidiaries pursuant to this Agreement to any such Subsidiary or Affiliate subject to the provisions of Section 11.9.1 [General].
11.jCounterparts; Integration; Effectiveness.
This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Loan Documents, and any separate letter agreements with respect to fees payable to a Lender or any Affiliate of a Lender, constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof including any prior confidentiality agreements and commitments; provided that, for the avoidance of doubt, Existing Commitment Fees, Existing Letter of Credit Fees and Existing Interest shall be payable hereunder in accordance with the second paragraph of Section 2.1.1. [Revolving Credit Loans]. Except as provided in Section 7 [Conditions of Lending and Issuance of Letters of Credit], this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the
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other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by telecopy or e-mail shall be effective as delivery of a manually executed counterpart of this Agreement.
The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to any document to be signed in connection with this Agreement, any Assignment and Assumption Agreement or any other Loan Document and the transactions contemplated hereby or thereby shall be deemed to include an electronic symbol or process attached to a contract or other record and adopted by a Person with the intent to sign, authenticate or accept such contract or record (each an “Electronic Signature”), deliveries 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, physical delivery thereof 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; provided that nothing in any Loan Document shall require the Administrative Agent to accept Electronic Signatures in any form or format without its prior written consent. Without limiting the generality of the foregoing, each Loan Party (i) agrees that, for all purposes, including without limitation, in connection with any workout, restructuring, enforcement of remedies, bankruptcy proceedings or litigation among the Administrative Agent, the Lenders and the Loan Parties, electronic images of this Agreement or any other Loan Documents (in each case, including with respect to any signature pages thereto) shall have the same legal effect, validity and enforceability as any paper original, and (ii) waives any argument, defense or right to contest the validity or enforceability of the Loan Documents based solely on the lack of paper original copies of any Loan Documents, including with respect to any signature pages thereto.
11.kGoverning Law, Etc.
11.11.iGoverning Law.
This Agreement and the other Loan Documents and any claims, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement or any other Loan Document (except, as to any other Loan Document, as expressly specified therein) and the transactions contemplated hereby and thereby shall be governed by, and construed in accordance with, the Law of the State of New York. Each Standby Letter of Credit issued under this Agreement shall be subject either to the rules of the Uniform Customs and Practice for Documentary Credits, as most recently published by the International Chamber of Commerce at the time of issuance (“UCP”) or the rules of the International Standby Practices (ICC Publication Number 590), as determined by the Issuing Lender, and each Commercial Letter of Credit shall be subject to UCP, and in each case to the extent not inconsistent therewith, the Laws of the State of New York.
11.11.iiSUBMISSION TO JURISDICTION.
THE BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT ANY AGENT, ANY LENDER OR ANY ISSUING LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
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DOCUMENT AGAINST THE BORROWER OR ANY OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
11.11.iiiWAIVER OF VENUE.
THE BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN SECTION 11.11.2 [SUBMISSION TO JURISDICTION]. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT AND AGREES NOT TO ASSERT ANY SUCH DEFENSE.
11.11.ivSERVICE OF PROCESS.
EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 11.5 [NOTICES; EFFECTIVENESS; ELECTRONIC COMMUNICATION]. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.
11.11.vWAIVER OF JURY TRIAL.
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.11.5.
11.lCertain Collateral Matters.
The benefit of the Loan Documents and of the provisions of this Agreement relating to any Collateral securing the Obligations shall extend to and be available to the Secured Parties. No Lender or any Affiliate of a Lender shall have any voting rights under any Loan Document as a result of the existence of obligations owed to it under any Specified Swap Agreement or any Other Lender Provided Financial Service Product, and no Person shall have any voting rights under any Loan Document solely because of such Person’s status as a Lender-Related Person.
11.mUSA PATRIOT Act Notice.
Each Lender that is subject to the USA PATRIOT Act and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Loan Parties that pursuant to the requirements of the USA PATRIOT Act, it is required to obtain, verify and record information that identifies the Loan Parties, which information includes the name and address of the Loan Parties and other information that will allow such Lender or Administrative Agent, as applicable, to identify the Loan Parties in accordance with the USA PATRIOT Act.
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11.nNo Fiduciary Duty.
Each Loan Party agrees and acknowledges that: (i) each Secured Party is acting solely as a principal and is not a financial advisor, agent or fiduciary, for the Loan Parties or any of their respective Affiliates, stockholders, creditors or employees or any other party; (ii) no Secured Party has assumed or will assume an advisory, agency or fiduciary responsibility in any Loan Party’s or their respective Affiliates’ favor with respect to any of the transactions contemplated hereby (irrespective of whether any Secured Party has advised or is currently advising any Loan Party or its Affiliates on other matters) and no Secured Party has any obligation to the Loan Parties or their respective Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein; (iii) the Secured Parties and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from the Loan Parties or their respective Affiliates and the Secured Parties have no obligation to disclose any of such interests by virtue of any advisory, agency or fiduciary relationship; and (iv) the Lenders have not provided any legal, accounting, regulatory or tax advice in any jurisdiction with respect to any of the transactions contemplated hereby and the Loan Parties have consulted their own legal, accounting, regulatory and tax advisors to the extent they have deemed appropriate. Each Loan Party acknowledges and agrees that it will consult with its own advisors concerning such matters and shall be responsible for making its own independent investigation and appraisal of the transactions contemplated hereby, and neither any Secured Party nor its Affiliates shall have any responsibility or liability to any Loan Party with respect thereto. Each Loan Party hereby waives and releases, to the fullest extent permitted by law, any claims that such Loan Party may have against the Secured Parties or their respective Affiliates with respect to any breach or alleged breach of agency or fiduciary duty.
11.oAmendment and Restatement.
Effective as of the Closing Date, the Existing Credit Agreement shall be amended and restated in its entirety by this Agreement and the Existing Credit Agreement shall thereafter be of no further force and effect except to evidence the incurrence by the Borrower of the “Obligations” under and as defined in the Existing Credit Agreement (whether or not such “Obligations” are contingent as of the Closing Date). The terms and conditions of this Agreement and the rights and remedies of the Administrative Agent and the Lenders under this Agreement and the other Loan Documents shall apply to all of the Obligations incurred under the Existing Credit Agreement; provided that, for the avoidance of doubt, Existing Commitment Fees, Existing Letter of Credit Fees and Existing Interest shall be payable hereunder in accordance with the second paragraph of Section 2.1.1. [Revolving Credit Loans]. On and after the Closing Date, (i) all references to the Credit Agreement in the Loan Documents (other than this Agreement) shall be deemed to refer to this Agreement and (ii) all references to any section (or subsection) of the Existing Credit Agreement in any Loan Document (but not herein) shall be amended to become, mutatis mutandis, references to the corresponding provisions of this Agreement. The parties hereto acknowledge and agree that the Liens securing payment of the “Obligations” as defined in the Existing Loan Agreement, shall from and after the Closing Date secure the payment and performance of all Obligations for the benefit of the Collateral Agent and the Secured Parties, and all such Liens shall continue in full force and effect after giving effect to this Agreement and are hereby confirmed and reaffirmed by each of the Loan Parties. The parties hereto further acknowledge and agree that all “Security Documents” as defined in the Existing Credit Agreement (including all Mortgages and Control Agreements) shall remain in full force and effect after the Closing Date in favor of and for the benefit of the Collateral Agent and the Secured Parties (with each reference therein to the collateral agent, the credit agreement or a loan document being a reference to the Collateral Agent, this Agreement or the other Loan Documents, as applicable), and each Loan Party hereby confirms and ratifies its obligations thereunder. In furtherance of the foregoing, Collateral Agent is hereby appointed as Collateral Agent in connection with the foregoing, and shall be entitled to all of the benefits, rights, privileges and immunities hereunder and under the other Loan Documents with respect to the foregoing. This amendment and restatement is limited as written and is not a consent to any other amendment, restatement or waiver or other modification, whether or not similar and, except as expressly provided herein or in any other Loan Document, all terms and conditions of the Loan Documents remain in full force and effect unless otherwise specifically amended hereby or by any other Loan Document. This Agreement shall not constitute a novation of the Existing Credit Agreement or of any other Loan Document (as defined in the Existing Credit Agreement).
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11.pAcknowledgment and Consent to Bail-In of Affected Financial Institutions.
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 Lender that is an Affected 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 the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
(24)the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any Lender that is an Affected Financial Institution; and
(25)the effects of any Bail-In Action on any such liability, including, if applicable:
(7)a reduction in full or in part or cancellation of any such liability;
(8)a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected 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
(9)the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of any the applicable Resolution Authority.
11.aAcknowledgement Regarding Any Supported QFCs.
To the extent that the Loan Documents provide support, through a guarantee or otherwise, for Hedging Obligations or any other agreement or instrument that is a QFC (such support, “QFC Credit Support” and each such QFC, a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States):
(26)In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.
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(27)As used in this Section 11.17, the following terms have the following meanings:
“BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.
“Covered Entity” shall mean any of the following:
(10)a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b);
(11)a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or
(12)a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
“QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).
[SIGNATURE PAGES INTENTIONALLY OMITTED]
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SCHEDULE 1.1(A)
PRICING GRID
| Level | Total<br><br>Leverage <br>Ratio | Term SOFR <br>Margin | Base Rate Margin | Commitment Fee | Letter of <br>Credit Fee |
|---|---|---|---|---|---|
| I | < 3.00 to 1.00 | 2.00% | 1.00% | 0.375% | 1.00% |
| II | ≥ 3.00 to 1.00 but<br>< 3.50 to 1.00 | 2.25% | 1.25% | 0.375% | 1.25% |
| III | ≥ 3.50 to 1.00 but<br>< 4.00 to 1.00 | 2.50% | 1.50% | 0.500% | 1.50% |
| IV | ≥ 4.00 to 1.00 but<br>< 4.50 to 1.00 | 2.75% | 1.75% | 0.500% | 1.75% |
| V | ≥ 4.50 to 1.00 | 3.00% | 2.00% | 0.500% | 2.00% |
For purposes of determining the Applicable Margin, the Applicable Letter of Credit Fee Rate, and the Applicable Commitment Fee Rate:
(a) From the Closing Date through the date on which the Compliance Certificate is required to be delivered hereunder at the end of the first full fiscal quarter ending after the Closing Date (the “Initial Period”), the Applicable Margin, Applicable Letter of Credit Fee Rate, and the Applicable Commitment Fee Rate shall be the respective amounts set forth under Level I of this Schedule 1.1(A) set forth above.
(b) It is expressly agreed that after the Initial Period, the Applicable Margin, the Applicable Letter of Credit Fee Rate, and the Applicable Commitment Fee Rate shall be determined based upon Schedule 1.1(A) above and change on each date on which a Compliance Certificate is required to be delivered hereunder.
EXHIBIT 2.5.1 FORM OF
LOAN REQUEST; RATE REQUEST
TO: PNC Bank, National Association, as Administrative Agent The Tower at PNC Plaza 300 Fifth Avenue Pittsburgh, PA 15222
Attention: Meghan Krawchyk
Email: meghan.krawchyk@pnc.com
Agency Services
PNC Firstside Center, 4th Floor
500 First Avenue
Pittsburgh, Pennsylvania 15219
Attention: David Spisak
Fax: (412) 762-8672
Email: david.spisak@pnc.com
FROM: CNX Midstream Partners LP, a Delaware limited partnership (the “Borrower”)
RE: Amended and Restated Credit Agreement (as it may be amended, restated, modified or supplemented, the “Credit Agreement”), dated as of October 6, 2021, by and among CNX Midstream Partners LP, a Delaware limited partnership, the Guarantors from time to time party thereto, the Lenders from time to time party thereto and PNC Bank, National Association as Administrative Agent (the “Administrative Agent”) and Collateral Agent.
Capitalized terms not otherwise defined herein shall have the respective meanings ascribed to them by the Credit Agreement.
A. Pursuant to Section [2.5.1] [4.2] of the Credit Agreement, the undersigned Borrower irrevocably requests [check one box under 1(a) below and fill in blank space next to the box as appropriate]:
1.(a) A new Revolving Credit Loan. OR
Renewal of the Term SOFR Rate Option applicable to an outstanding Revolving Credit Loan originally made on __________ __, 20____. OR
Conversion of the Base Rate Option applicable to an outstanding Revolving Credit Loan originally made on _____________, 20____ to a Revolving Credit Loan to which the Term SOFR Rate Option applies. OR
Conversion of the Term SOFR Rate Option applicable to an outstanding Revolving Credit Loan on __________ __, 20___ to a Revolving Credit Loan to which the Base Rate Option applies.
SUCH NEW, RENEWED OR CONVERTED REVOLVING CREDIT LOAN SHALL BEAR INTEREST:
[Check one box under 1(b) below and fill in blank spaces in line next to box]:
1.(b)(i) Under the Base Rate Option. Such Loan shall have a Borrowing Date or interest conversion date, as applicable, of __________, 20___ (which date shall be (i) the same Business Day as the Business Day of receipt by the Administrative Agent by 11:00 a.m. of this Loan Request for making a new Revolving Credit Loan to which the Base Rate Option applies, or (ii) the last day of the preceding Interest Period if a Revolving Credit Loan to which the Term SOFR Rate Option applies is being converted to a Revolving Credit Loan to which the Base Rate Option applies).
OR
(ii) Under the Term SOFR Rate Option. Such Loan shall have a Borrowing Date or interest conversion date, as applicable, of _________, 20___ (which date shall be no earlier than three (3) Business Days subsequent to the Business Day of receipt by the Administrative Agent by 11:00 a.m. of this Loan Request for (i) making a new Revolving Credit Loan to which the Term SOFR Rate Option applies or renewing a Revolving Credit Loan to which the Term SOFR Rate Option applies, or (ii) converting a Loan to which the Base Rate Option applies to a Revolving Credit Loan to which the Term SOFR Rate Option applies).
2. Such Loan is in the principal amount of U.S. $_________ or the principal amount to be renewed or converted is U.S. $_____________. [to be in increments of $1,000,000 and not to be less than $5,000,000 for each Borrowing Tranche under the Term SOFR Rate Option and to be in increments of $50,000 and not to be less than the lesser of $500,000 and the maximum amount available for Borrowing Tranches to which the Base Rate Option applies]
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3. [Complete blank below if the Borrower is selecting the Term SOFR Rate Option]: Such Loan shall have an Interest Period of one, three, or six Months. ___________________________.
B. As of the date hereof and the date of making of the above-requested Revolving Credit Loan (and after giving effect thereto): the representations and warranties of the Loan Parties contained in Section 6 of the Credit Agreement and in the other Loan Documents are true and correct in all material respects on and as of the date hereof with the same effect as though such representations and warranties had been made on and as of the date hereof (except that (i) any representation and warranty that is already qualified as to materiality is true and correct in all respects as so qualified and (ii) representations and warranties which expressly relate solely to an earlier date or time were true and correct on and as of the specific dates or times referred to therein); and no Event of Default or Potential Default has occurred and is continuing.
C. The undersigned hereby certifies that, after giving effect to the borrowing contemplated hereby, the aggregate amount of Indebtedness (and, notwithstanding the definition of “Indebtedness,” all letters of credit (including Letters of Credit) being deemed to have an outstanding principal amount of Indebtedness equal to the maximum potential liability of the Borrower and its Restricted Subsidiaries thereunder) under the Credit Agreement shall not exceed the Applicable Notes Indenture Cap.
D. The undersigned hereby irrevocably requests [check one line under 1.(a) below and fill in blank space next to the line as appropriate]:
1.(a) ___ Funds to be deposited into PNC Bank account per our current standing instructions. Complete amount of deposit if not full loan advance amount: $_______________.
OR
___ Funds to be wired per the following wire instructions: $_________________ Amount of Wire Transfer Bank Name: _____________________ ABA: __________________________ Account Number: _________________ Account Name: ___________________ Reference: _______________________
OR
___ Funds to be wired per the attached Funds Flow (multiple wire transfers).
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
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[SIGNATURE PAGE TO LOAN REQUEST]
The undersigned certifies to the Administrative Agent as to the accuracy of the foregoing.
CNX MIDSTREAM PARTNERS LP
By: CNX Midstream GP LLC
its general partner
Date: ____________, 20___ By: Name: Title:
Document
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS CHANGE IN CONTROL SEVERANCE AGREEMENT (this "Agreement"), dated as of February 4, 2021 (the "Effective Date"), is made between CNX Resources Corporation, CNX Center, 1000 CONSOL Energy Drive, Canonsburg, Pennsylvania 15317, a Delaware corporation (the "Company"), and Alan K. Shepard (the "Executive").
WITNESSETH:
WHEREAS, the Executive is a senior executive of the Company and has made and is expected to continue to make major contributions to the short- and long-term profitability, growth and financial strength of the Company;
WHEREAS, the Board of Directors of the Company (the "Board") recognizes that, as is the case with many publicly held corporations, the possibility of a Change in Control (as defined below) exists and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of key management personnel to the detriment of the Company and its stockholders;
WHEREAS, the Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company's management, including the Executive, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a Change in Control;
WHEREAS, in consideration of the Executive's continued employment with the Company and the Executive's agreement to waive certain rights he may have to receive severance compensation and benefits under any applicable Company severance plan or policy, as set forth below, the Company desires to provide the Executive with certain compensation and benefits set forth in this Agreement in order to ameliorate the financial and career impact on the Executive in the event the Executive's employment with the Company is terminated for a reason related to a Change in Control; and
WHEREAS, the Executive agrees to waive any rights he may have under any Company severance plan, policy or other agreement with respect to severance compensation and benefits in the event the Executive's employment with the Company is terminated as the result of an Involuntary Termination Associated With a Change in Control (as defined below).
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements hereinafter set forth and intending to be legally bound hereby, the Company and the Executive agree as follows:
1.Certain Defined Terms. In addition to terms defined elsewhere herein, the following terms have the following meanings when used in this Agreement with initial capital letters:
(a)"Base Pay" means the greater of (i) the Executive's annual base salary rate, exclusive of bonuses, commissions and other Incentive Pay, as in effect immediately preceding the Executive's Termination Date, or (ii) the Executive's annual base salary rate, exclusive of bonuses, commissions and other Incentive Pay, as in effect immediately prior to the Change in Control.
(b)"Board" means the Board of Directors of the Company. If the Executive is also a member of the Board, then in the case of any provision hereof that requires action by, or a determination of, the Board in connection with this Agreement, it is understood that such provision refers to the members of the Board other than the Executive.
(c)"Cause" means a determination by the Board that the Executive has committed any of the following acts:
(i)the Executive has been convicted of, or the Executive has pleaded guilty or nolo contendere to, (A) any felony, or (B) any misdemeanor involving fraud, embezzlement or theft; or
(ii)the Executive has wrongfully disclosed material confidential information of the Company or any Subsidiary, has intentionally violated any material express provision of the Company's code of conduct for executives and management employees (as in effect on the date of the Change in Control), or has intentionally failed or refused to perform any of his material assigned duties for the Company; and any such failure or refusal has been demonstrably and materially harmful to the Company.
Notwithstanding the foregoing, the Executive will not be deemed to have been terminated for "Cause" under this subsection (ii) unless and until there has been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than the majority of the members of the Board plus one member, finding that, in the good faith opinion of the Board, the Executive has committed an act constituting "Cause," as herein defined, and specifying the particulars thereof in detail. Prior to any such determination, the Executive shall be provided with reasonable notice of such pending determination and the Executive, together with his counsel (if the Executive chooses to have counsel present at such meeting), shall be provided with the opportunity to be heard before the Board makes any such determination. Nothing herein will limit the right of the Executive or his beneficiaries to contest the validity or propriety of any such determination.
(d)"Change in Control" means the occurrence of any of the following events:
(iii)the acquisition after the date hereof by any individual, entity or group (within the meaning of section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than 25% of the combined voting power of the then outstanding Voting Stock of the Company; provided, however, that for purposes of this Section 1(d)(i), the following acquisitions will not constitute a Change in Control: (A) any issuance of Voting Stock of the Company directly from the Company that is approved by the Incumbent Board (as defined in Section 1(d)(ii), below), (B) any acquisition by the Company of Voting Stock of the Company, (C) any acquisition of Voting Stock of the Company by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary, (D) any acquisition of Voting Stock of the Company by an underwriter holding securities of the Company in connection with a public offering thereof, or (E) any acquisition of Voting Stock of the Company by any Person pursuant to a Business Combination that complies with clauses (A), (B) and (C) of Section 1(d)(iii), below; or
(iv)individuals who constitute the Board as of the Effective Date (the "Incumbent Board," as modified by this Section 1(d)(ii)), cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a Director subsequent to such date whose election, or nomination for election by the Company's stockholders, was approved by a vote of at least two-thirds of the Directors then comprising the Incumbent Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without objection to such nomination) will be deemed to have then been a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of Directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or
(v)consummation of a reorganization, merger or consolidation of the Company or a direct or indirect wholly owned subsidiary thereof, a sale or other disposition (whether by sale, taxable or nontaxable exchange, formation of a joint venture or otherwise) of all
or substantially all of the assets of the Company, or other transaction involving the Company (each, a "Business Combination"), unless, in each case, immediately following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners of Voting Stock of the Company immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the combined voting power of the then outstanding shares of Voting Stock of the entity resulting from such Business Combination or any direct or indirect parent corporation thereof (including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries), (B) no Person other than the Company beneficially owns 25% or more of the combined voting power of the then outstanding shares of Voting Stock of the entity resulting from such Business Combination or any direct or indirect parent corporation thereof (disregarding all "acquisitions" described in subsections (A) - (C) of Section 1 (d)(i)), and (C) at least a majority of the members of the Board of Directors of the entity resulting from such Business Combination or any direct or indirect parent corporation thereof were members of the Incumbent Board at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or
(vi)approval by the stockholders of the Company of a complete liquidation or dissolution of the Company, except pursuant to a Business Combination that complies with clauses (A), (B) and (C) of Section 1(d)(iii).
(e)"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended.
(f)"Code" means the Internal Revenue Code of 1986, as amended.
(g)"Consultancy Period" and "Consultancy Position" shall have the respective meanings assigned to those terms in Section 2(d) hereof.
(h)"Constructive Termination Associated With a Change in Control" means the termination of the Executive's employment with the Company by the Executive as a result of the occurrence without the Executive's written consent of one of the following events:
(i)a material adverse change in the Executive's position with the Company and/or a Subsidiary (or any successor thereto by operation of law or otherwise) (but excluding any loss of any position with a Subsidiary with respect to which the Executive is not separately compensated) as compared to the Executive's position with the Company (and/or a Subsidiary) immediately prior to the Change in Control;
(ii)(A) a material reduction in the Executive's annual base salary rate, exclusive of bonuses, commissions and other Incentive Pay, as in effect immediately prior to the Change in Control; (B) a material reduction in the Executive's Target Bonus opportunity in effect immediately prior to the Change in Control; or (C) a material reduction in the level of Employee Benefits provided to the Executive immediately prior to the Change in Control (excluding any reduction that is generally applicable to all or substantially all salaried Company employees);
(iii) a material adverse change in circumstances has occurred following a Change in Control, including, without limitation, a material change in the scope of the business or other activities for which the Executive was responsible immediately prior to the Change in Control, which has rendered the Executive unable to carry out, has materially hindered the Executive's performance of, or has caused the Executive to suffer a material reduction in, any of the authorities, powers, functions, responsibilities or duties attached to the position held by the Executive immediately prior to the Change in Control; a good faith determination by the
Executive (that a material adverse change has occurred) will be conclusive and binding upon the parties hereto unless otherwise shown by the Company to be not in good faith);
(iv)in connection with the liquidation, dissolution, merger, consolidation or reorganization of the Company or transfer of all or substantially all of its business and/or assets, the Company breached this Agreement by not requiring the successor or successors (by liquidation, merger, consolidation, reorganization, transfer or otherwise) to which all or substantially all of its business and/or assets have been transferred (by operation of law or otherwise) to assume all duties and obligations of the Company under this Agreement pursuant to Section 14(a); or
(v)the relocation of the Executive's principal work location (other than in connection with a relocation contemplated by the Company as of the date hereof or pursuant to organizational changes in accordance with past practice) to a location that increases the Executive's normal work commute by fifty (50) miles or more as compared to the Executive's normal work commute immediately prior to the Change in Control, or that the Executive's required travel away from his office in the course of discharging his responsibilities or duties of his job is materially increased as compared to that which was required of the Executive in any of the three (3) full years immediately prior to the Change in Control.
Without limiting the generality or effect of the foregoing, the Executive shall have no right to terminate employment in a Constructive Termination Associated With a Change in Control in connection with an event described above unless (A) the Executive provides written notice to the Company within one month of the occurrence of such event that identifies such event with particularity, and (B) the Company fails to correct such event within thirty (30) days after receipt of such notice from the Executive, and (C) such termination must occur within sixty (60) days after the expiration of the failure of the Company to correct the event.
In no event shall the termination of the Executive's employment with the Company on account of the Executive's death or Disability or because the Executive engaged in conduct constituting Cause be deemed to be a Constructive Termination Associated With a Change in Control.
(i)"Disability" means the Executive becomes permanently disabled within the meaning of, and begins actually to receive disability benefits pursuant to, the long-term disability plan in effect for, or applicable to, the Executive.
(j)"Employee Benefits" means the perquisites, benefits and service credit for benefits as provided under any and all employee retirement income and welfare benefit policies, plans, programs or arrangements in which the Executive is entitled to participate, including, without limitation, any stock option, performance share, performance unit, stock purchase, stock appreciation, savings, pension, supplemental executive retirement, or other retirement income or welfare benefit, deferred compensation, incentive compensation, group or other life, health, medical/hospital or other insurance (whether funded by actual insurance or self-insured by the Company or a Subsidiary), disability, salary continuation, expense reimbursement and other employee benefit policies that may exist as of a Change in Control or any successor policies, plans or arrangements that provide substantially similar perquisites or benefits.
(k)"Exchange Act" means the Securities Exchange Act of 1934, as amended.
(l)"Incentive Pay" means the greater of: (i) the Executive's Target Bonus for which the Executive was eligible during the period that includes the Termination Date, or (ii) the average of the annual bonuses paid by the Company to the Executive for the three years prior to the year that includes the Termination Date. For purposes of this definition, "Target Bonus" means 100% of the amount established under the CNX Resources Corporation Executive Annual Incentive Plan, and any other annual
bonus, applicable incentive, commission or other sales incentive compensation, or comparable incentive payment opportunity which, in the sole discretion of the Company, is deemed to constitute a Target Bonus, in addition to Base Pay, for which the Executive was eligible to receive, but did not receive prior to his Termination Date, in regard to services rendered in the year covered by the Executive's Termination Date and which is to be made pursuant to any bonus, incentive, profit-sharing, performance, discretionary pay or similar agreement, policy, plan, program or arrangement (whether or not funded) of the Company or a Subsidiary, or any successor thereto. For purposes of this definition, "Incentive Pay" does not include any stock option, stock appreciation, stock purchase, restricted stock, the CNX Resources Corporation Long-Term Incentive Programs or similar plan, program, arrangement or grant, one time bonus or payment (including, but not limited to, any sign-on bonus), any amounts contributed by the Company for the benefit of the Executive to any qualified or nonqualified deferred compensation plan, whether or not provided under an arrangement described in the prior sentence, or any amounts designated by the parties as amounts other than Incentive Pay.
(m)"Involuntary Termination Associated With a Change in Control" means the termination of the Executive's employment related to a Change in Control: (i) involuntarily by the Company for any reason other than Cause, the Executive's death or the Executive's Disability, or (ii) on account of a Constructive Termination Associated With a Change in Control.
(n)"Restricted Business" means any business function with a direct competitor of the Company that is substantially similar to the business function performed by the Executive with the Company immediately prior to his Termination Date.
(o)"Restricted Territory" means the counties, towns, cities or states of any country in which the Company operates or does business.
(p)"Subsidiary" means any Company controlled affiliate.
(q)"Termination Date" means the last day of the Executive's employment with the Company.
(r)"Termination of Employment" means, except as provided in the following sentence and subject to the provisions of Section 19(b), the termination of the Executive's active employment relationship with the Company on account of an Involuntary Termination Associated With a Change in Control. For purposes of the non-solicitation provision of Section 10 of this Agreement, the term "Termination of Employment" shall mean the termination of the Executive's employment relationship with the Company for any reason.
(s)"Voting Stock" means securities entitled to vote generally in the election of directors.
2.Termination Associated With a Change in Control.
(t)Involuntary Termination Associated With a Change in Control. In the event the Executive's employment is terminated after, or in connection with, a Change in Control, on account of (i) an Involuntary Termination Associated With a Change in Control within the two year period after the Change in Control, or (ii) an involuntary termination by the Company (other than for Cause or due to the Executive's death or Disability) that (A) occurs not more than three (3) months prior to the date on which a Change in Control occurs, or (B) is requested by a third party who initiates a Change in Control, the Executive shall be entitled to the benefits provided in subsection (b) of this Section 2. For purposes of subsection 2(a)(ii)(B) above, to be eligible to receive amounts described in Section 2(b) below, a Change in Control must be consummated within the twelve (12) month period following the Executive's Termination Date, except in circumstances pursuant to which the consummation of the Change in Control is delayed, through no failure of the Company or the third person, by a governmental or regulatory
authority or agency with jurisdiction over the matter, or as a result of other similar circumstances where a third party approval is necessary and is delayed. In such a circumstance, the remainder of the twelve (12) month period shall be tolled and shall recommence upon termination of the delaying event.
(u)Compensation and Benefits Upon Involuntary Termination Associated With a Change in Control. In the event a termination described in subsection (a) of this Section 2 occurs, and subject to the Executive’s compliance with the provisions of Section 4 hereof, the Company shall pay and provide to the Executive after his Termination Date:
(vi)A lump sum cash payment equal to (A) one and one-half (1.5) times Base Pay, plus (B) one and one-half (1.5) times Incentive Pay.
(vii)The Executive shall receive a pro rated payment of his Incentive Pay for the year in which his Termination of Employment occurs. The pro rated payment shall be based on the Executive's Incentive Pay as of the Executive's Termination Date, multiplied by a fraction, the numerator of which is the number of days during which the Executive was employed by the Company in the year of his termination and the denominator of which is 365.
(viii)For the 18 month period immediately following the Date of Termination or, if later, the closing dates for the Change in Control:
(A) If the Executive elects COBRA Continuation Coverage, the Executive shall continue to participate in all medical, dental and vision insurance plans he was participating in on the Termination Date, and the Company shall pay the applicable premium. During the applicable period of coverage described in the foregoing sentences, the Executive shall be entitled to benefits on substantially the same basis and cost as would have otherwise been provided had the Executive not separated from service. To the extent that such benefits are available under the above-referenced benefit plans and the Executive had such coverage immediately prior to termination of employment, such continuation of benefits for the Executive shall also cover the Executive's dependents for so long as the Executive is receiving benefits under this paragraph (iii). The COBRA Continuation Period for medical and dental insurance under this paragraph (iii) shall be deemed to run concurrent with the continuation period federally mandated by COBRA (generally 18 months), or any other legally mandated and applicable federal, state, or local coverage period for benefits provided to terminated employees under the health care plan. For purposes of this Agreement, "COBRA" means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended; and "COBRA Continuation Period" shall mean the continuation period for medical and dental insurance to be provided under the terms of this Agreement which shall commence on the first day of the calendar month following the month in which the date of termination falls and generally shall continue for an 18 month period.
(ix)If the Executive would have been eligible for post-retirement medical and dental coverage had he retired from employment during the period of 18 months following his Termination Date, but is not so eligible as the result of his termination, then, at the conclusion of the benefit continuation period described in (iii) above, the Company shall take all commercially reasonable efforts to provide the Executive with additional continued group medical and dental coverage comparable to that which would have been available to him from time to time under the Company's post-retirement medical and dental benefit program, for as long as such coverage would have been available under such program. It is specifically acknowledged by the Executive that if such coverage is provided under a Company sponsored self insured plan, it will be provided on an after-tax basis and the Executive will have income imputed to him annually equal to the fair market value of the premium. If this coverage cannot be provided by the Company, (or where such continuation would adversely affect the tax status of the plan pursuant to which the coverage is provided), then as an alternative, the Company will reimburse
the Executive in lieu of such coverage an amount equal to the Executive's actual and reasonable after-tax cost of continuing comparable coverage.
Reimbursement to the Executive pursuant to subsections (iii) or (iv) above will be available only to the extent that (1) such expense is actually incurred for any particular calendar year and reasonably substantiated; (2) reimbursement shall be made no later than the end of the calendar year following the year in which such expense is incurred by the Executive; (3) no reimbursement provided for any expense incurred in one taxable year will affect the amount available in another taxable year; and (4) the right to this reimbursement is not subject to liquidation or exchange for another benefit. Notwithstanding the foregoing, under subsection (iii), no reimbursement will be provided for any expense incurred following the 18 months or for any expense which relates to coverage after such date.
(x)A lump sum cash payment equal to the total amount that the Executive would have received under the Company's 401(k) plan as a Company match if the Executive was eligible to participate in the Company's 401(k) plan for the 18 month period after his Termination Date and he contributed the maximum amount to the plan for the match. Such amount shall be determined based on the assumption that the Executive would have received annual Base Pay plus Incentive Pay during such period in the amounts set forth in Sections 2(b)(i) and (ii) above.
(xi)A lump sum cash payment equal to the difference between the present value of the Executive's accrued pension benefits at his Termination Date under the Company's qualified defined benefit plan and (if eligible) any plan or plans sponsored by the Company providing nonqualified retirement benefits (which currently includes the CNX Resources Corporation Defined Contribution Restoration Plan) (the qualified and nonqualified plans together being referred to as the "pension plans") and the present value of the accrued pension benefits to which the Executive would have been entitled under the pension plans if the Executive had continued participation in those plans for the 18 month period after his Termination Date. Such amount shall be determined based on the assumption that the Executive would have received annual Base Pay plus Incentive Pay during such period in the amounts set forth in Sections 2(b)(i) and (ii) above.
(xii)A lump sum cash payment of $25,000 in order to cover the cost of outplacement assistance services for the Executive and other expenses associated with seeking another employment position.
(xiii)The Executive shall receive any amounts earned, accrued or owing but not yet paid to the Executive as of his Termination Date, payable in a lump sum, and any benefits accrued or earned in accordance with the terms of any applicable benefit plans and programs of the Company.
(xiv)All payments under this subsection 2(b) will be made in a lump sum no later than 60 days after the date of termination (or, if later, the closing date of the Change in Control, as applicable); provided, however, that the benefits due under subsections (iii) and (iv) shall be provided as specified thereunder.
(v)Vesting of Equity Rights. Notwithstanding any provision to the contrary in any applicable plan, program or agreement, upon the occurrence of a Change in Control, all stock options, stock appreciation rights, restricted stock, restricted stock units and other equity rights held by the Executive will become fully vested and/or exercisable, as the case may be, on the date on which the Change in Control occurs, and all stock options or stock appreciation rights held by the Executive shall remain exercisable for the period set forth in the award agreement covering the options or rights.
(w)Consultancy Period Option. In the case of any Involuntary Termination Associated With a Change in Control, the Company may, in its sole discretion, elect to require reasonable cooperation from the Executive following the Executive's Termination Date for a period (the "Consultancy Period") not to exceed 18 months. In the event that the Company so elects, the Executive shall, during the pendency of the Consultancy Period, be available from time to time, at the request of the Company's Chairman of the Board or Chief Executive Officer, to provide advice and assistance concerning (i) the transition of the Executive's duties and responsibilities to any successor to his position, and (ii) any other matters concerning the Company's corporate, business and financial affairs which are consistent with the Executive's expertise and experience. Such advice and assistance may, at the Executive's option, be provided either in person or by telephone or videoconference. In no event shall the Company request, nor shall the Executive be required to provide more than five (5) hours of consulting services per work week, nor to provide such services other than during normal Company business hours. The Executive shall be reimbursed by the Company for any reasonable expenses incurred in connection with the performance of such services, subject to compliance with the Company's standard policies and procedures regarding reimbursement of expenses. The Executive shall be permitted, during the Consultancy Period, to engage in other business and personal activities; provided, that such activities are not inconsistent with the Executive's duties under Sections 9 and 10 hereof.
3.Termination of Employment on Account of Disability, Cause or Death. Notwithstanding anything in this Agreement to the contrary, if the Executive's employment terminates on account of Disability, the Executive shall be entitled to receive disability benefits under any disability program maintained by the Company that covers the Executive, and the Executive shall not be considered to have terminated employment under this Agreement and shall not receive benefits pursuant to Section 2 hereof. If the Executive's employment terminates on account of Cause or because of his death, the Executive shall not be considered to have terminated employment under this Agreement and shall not receive benefits pursuant to Section 2 hereof.
4.Release. To receive the consideration described in Sections 2(b) of this Agreement, the Executive must sign a Separation of Employment and General Release Agreement, substantially in the form attached hereto as Annex A (the "Release"), deliver the signed Release to the Company’s General Counsel within thirty (30) days after the Termination Date (unless a longer period is required by law), and not revoke the Release within the seven-day revocation period provided for in the Release.
5.Enforcement. Without limiting the rights of the Executive at law or in equity, if the Company fails to make any payment or provide any benefit required to be made or provided hereunder on a timely basis, the Company will pay interest on the amount or value thereof at an annualized rate of interest equal to the so-called composite "prime rate" as quoted from time to time during the relevant period in the Eastern Edition of The Wall Street Journal. Such interest will be payable as it accrues on demand. Any change in such prime rate will be effective on and as of the date of such change.
6.Limit on Payments by the Company.
(x)The provisions of this Section 6 shall apply notwithstanding anything in this Agreement or any other agreement to the contrary. In the event that it shall be determined that any payment or distribution by the Company to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a "Payment"), would constitute an "excess parachute payment" within the meaning of Section 280G of the Code, Company will apply a limitation on the Payment amount as set forth below (a "Parachute Cap") as follows: The aggregate present value of the Payments under Section 2(b) of this Agreement ("Agreement Payments") shall be reduced (but not below zero) to the Reduced Amount; provided, however, that any such reduction shall be applied to Agreement Payments that do not constitute deferred compensation and are exempt or otherwise excepted from coverage under Section 409A (but excluding stock options or other stock rights). The "Reduced Amount" shall be an amount expressed in present value which maximizes the aggregate present value of Agreement Payments without causing any Payment to be subject to the limitation of
deduction under Section 280G of the Code. For purposes of this Section 6, "present value" shall be determined in accordance with Section 280G(d)(4) of the Code.
(y)Except as set forth in the next sentence, all determinations to be made under this Section 6 shall be made by the nationally recognized independent public accounting firm used by the Company immediately prior to the Change in Control ("Accounting Firm"), which Accounting Firm shall provide its determinations and any supporting calculations to the Company and the Executive within ten (10) days of the Executive's Termination Date. The value of the Executive's non-competition covenant under Section 10(a) of this Agreement shall be determined by independent appraisal by a nationally-recognized business valuation firm acceptable to both the Executive and the Company, and a portion of the Agreement Payments shall, to the extent of that appraised value, be specifically allocated as reasonable compensation for such non-competition covenant and shall not be treated as a parachute payment. Any such determination by the Accounting Firm shall be binding upon the Company and the Executive.
(z)All of the fees and expenses of the Accounting Firm in performing the determinations referred to in this Section 6 shall be borne solely by the Company.
7.No Mitigation Obligation. The Company hereby acknowledges that it will be difficult and may be impossible for the Executive to find reasonably comparable employment following the Termination Date. Accordingly, the payment of the severance compensation by the Company to the Executive in accordance with the terms of this Agreement is hereby acknowledged by the Company to be reasonable, and the Executive will not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise, nor will any profits, income, earnings or other benefits from any source whatsoever create any mitigation, offset, reduction or any other obligation on the part of the Executive hereunder or otherwise. Notwithstanding anything to the contrary contained herein, as a condition to accepting benefits provided hereunder, the Executive will be required to waive, and will be deemed to have waived, any other right or entitlement to severance or termination benefits from the Company or its Subsidiaries.
8.Legal Fees and Expenses. In the event of a Change in Control, it is the intent of the Company that the Executive not be required to incur legal fees and the related expenses associated with the interpretation, enforcement or defense of the Executive's rights under this Agreement by litigation or otherwise because the cost and expense thereof would detract from the benefits intended to be extended to the Executive hereunder. Accordingly, if a Change in Control occurs and it should appear to the Executive that the Company has failed to comply with any of its obligations under this Agreement or in the event that the Company or any other person takes or threatens to take any action to declare this Agreement void or unenforceable, or institutes any litigation or other action or proceeding designed to deny, or to recover from, the Executive the benefits provided or intended to be provided to the Executive under Section 2 of this Agreement, the Company irrevocably authorizes the Executive from time to time to retain counsel of the Executive's choice, at the expense of the Company as hereafter provided, to advise and represent the Executive in connection with any such interpretation, enforcement or defense, including without limitation the initiation or defense of any litigation or other legal action, whether by or against the Company or any Director, officer or employee of the Company, in any jurisdiction. Notwithstanding any existing or prior attorney-client relationship between the Company and such counsel, the Company irrevocably consents to the Executive's entering into an attorney-client relationship with such counsel, and in that connection, the Company and the Executive agree that a confidential relationship will exist between the Executive and such counsel. Without respect to whether the Executive prevails, in whole or in part, in connection with any of the foregoing, the Company will pay and be solely financially responsible for any and all reasonable attorneys' and related fees and expenses incurred by the Executive in connection with any of the foregoing; provided that, in regard to such matters, the Executive has not acted frivolously, in bad faith or with no colorable claim of success. Such fees and expenses will be paid by the Company as they are incurred by the Executive, but in no event later than the end of the Executive's taxable year following the Executive's taxable year in which the Executive incurs the fees and
expenses. In addition, no reimbursement provided for any expense incurred in one taxable year will affect the amount available in another taxable year, and the right to this reimbursement is not subject to liquidation or exchange for another benefit.
9.Confidentiality. The Executive hereby covenants and agrees that, except as specifically requested or directed by the Company, he will not disclose to any person not employed by the Company, or use in connection with engaging in competition with the Company, any confidential or proprietary information (as defined below) of the Company. For purposes of this Agreement, the term "confidential or proprietary information" will include all information of any nature and in any form that is owned by the Company and that is not publicly available (other than by the Executive's breach of this Section 9) or generally known to persons engaged in businesses similar or related to those of the Company. Confidential or proprietary information will include, without limitation, the Company's financial matters, customers, employees, industry contracts, strategic business plans, product development (or other proprietary product data), marketing plans, consulting solutions and processes, and all other secrets and all other information of a confidential or proprietary nature which is protected by the Uniform Trade Secrets Act. For purposes of the preceding two sentences, the term "Company" will also include any Subsidiary (collectively, the "Restricted Group"). The foregoing obligations imposed by this Section 9 will not apply (i) in the course of the business of and for the benefit of the Company, (ii) if such confidential or proprietary information has become, through no fault of the Executive, generally known to the public, or (iii) if the Executive is required by law to make disclosure (after giving the Company notice and an opportunity to contest such requirement).
Notwithstanding the foregoing, nothing in this Agreement restricts or prohibits the Executive from reporting possible violations of law or regulation to any governmental agency or entity, including but not limited to the Department of Justice, the Securities and Exchange Commission, the Congress, and any agency Inspector General, or from making other disclosures that are protected under state or federal law or regulation. The Executive does not need the prior authorization of the Company to make such reports or disclosures. The Executive is not required to notify the Company that the Executive has made any such reports or disclosures.
10.Covenants Not to Compete and Not to Solicit. In the event of the Executive's Termination of Employment, the Company's obligations to provide the payments and benefits set forth in Section 2 shall be expressly conditioned upon the Executive's compliance with the covenants not to compete and not to solicit as provided herein. In the event the Executive breaches his obligations to the Company as provided herein, the Company's obligations to provide the payments and benefits set forth in Section 2 shall cease, without prejudice to any other remedies that may be available to the Company.
(aa)Covenant Not to Compete. If the Executive is receiving payments and benefits under Section 2 above (or subsequently becomes entitled thereto because of a termination described in Section 2(a)(ii)), then, for a period of one (1) year following the Executive's Termination Date, the Executive shall not directly or indirectly engage in (whether as an employee, consultant, proprietor, partner, director or otherwise), or have any ownership interest in, or participate in a financing, operation, management or control of, any person, firm, corporation or business that is a Restricted Business in a Restricted Territory without the prior written consent of the Board. For this purpose, ownership of no more than 5% of the outstanding Voting Stock of a publicly traded corporation shall not constitute a violation of this provision.
(ab)Covenant Not to Solicit. If the Executive is receiving payments and benefits under Section 2 above (or subsequently becomes entitled thereto because of a termination described in Section 2(a)(ii)), then, for a period of two (2) years following the Executive's Termination Date, the Executive shall not: (i) solicit, encourage or take any other action which is intended to induce any other employee of the Company to terminate his employment with the Company; or (ii) interfere in any manner with the contractual or employment relationship between the Company and any such employee of the Company. The foregoing shall not prohibit the Executive or any entity with which the Executive may be
affiliated from hiring a former employee of the Company; provided, that such hiring results exclusively from such former employee's affirmative response to a general recruitment effort.
(ac)Interpretation. The covenants contained herein are intended to be construed as a series of separate covenants, one for each county, town, city and state or other political subdivision of a Restricted Territory. Except for geographic coverage, each such separate covenant shall be deemed identical in terms to the covenant contained in the preceding subsections. If, in any judicial proceeding, the court shall refuse to enforce any of the separate covenants (or any part thereof) deemed included in such subsections, then such unenforceable covenant (or such part) shall be deemed to be eliminated from this Agreement for the purpose of those proceedings to the extent necessary to permit the remaining separate covenants (or portions thereof) to be enforced.
(ad)Reasonableness. In the event that the provisions of this Section 10 shall ever be deemed to exceed the time, scope or geographic limitations permitted by applicable laws, then such provisions shall be reformed to the maximum time, scope or geographic limitations, as the case may be, permitted by applicable laws.
11.Employment Rights. Nothing expressed or implied in this Agreement will create any right or duty on the part of the Company or the Executive to have the Executive remain in the employment of the Company or any Subsidiary prior to or following any Change in Control.
12.Withholding of Taxes. The Company may withhold from any amounts payable under this Agreement all federal, state, city or other taxes as the Company is required to withhold pursuant to any applicable law, regulation or ruling.
13.Term of Agreement. The term of this Agreement shall commence on the Effective Date hereof and shall continue until December 31, 2022; provided, however, that commencing on January 1, 2023, and each January 1 thereafter, the term of this Agreement shall automatically be extended until the following December 31, unless the Company gives notice not later than October 31 of the preceding year that it does not wish to extend this Agreement; and provided, further, that regardless of any such notice by the Company, this Agreement shall continue in effect for a period of 18 months beyond the term provided herein if a Change in Control occurs during the period that this Agreement is in effect.
14.Successors and Binding Agreement.
(ae)The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise) to all or substantially all of the business or assets of the Company, by agreement in form and substance reasonably satisfactory to the Executive, expressly to assume and agree to perform this Agreement in the same manner and to the same extent the Company would be required to perform if no such succession had taken place. This Agreement will be binding upon and inure to the benefit of the Company and any successor to the Company, including without limitation any persons acquiring directly or indirectly all or substantially all of the business or assets of the Company whether by purchase, merger, consolidation, reorganization or otherwise (and such successor will thereafter be deemed the "Company" for the purposes of this Agreement), but will not otherwise be assignable, transferable or delegable by the Company.
(af)This Agreement will inure to the benefit of and be enforceable by the Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees and legatees. This Agreement will supersede the provisions of any employment or other agreement between the Executive and the Company that relate to any matter that is also the subject of this Agreement, and such provisions in such other agreements will be null and void.
(ag)This Agreement is personal in nature and neither of the parties hereto will, without the consent of the other, assign, transfer or delegate this Agreement or any rights or obligations
hereunder except as expressly provided in Sections 14(a) and (b). Without limiting the generality or effect of the foregoing, the Executive's right to receive payments hereunder will not be assignable, transferable or delegable, whether by pledge, creation of a security interest, or otherwise, other than by a transfer by the Executive's will or by the laws of descent and distribution and, in the event of any attempted assignment or transfer contrary to this Section 14(c), the Company will have no liability to pay any amount so attempted to be assigned, transferred or delegated.
15.Notices. For all purposes of this Agreement, all communications, including without limitation, notices, consents, requests or approvals, required or permitted to be given hereunder will be in writing and will be deemed to have been duly given when hand delivered or dispatched by electronic facsimile transmission (with receipt thereof orally confirmed by the recipient), or five (5) business days after having been mailed by United States registered or certified mail, return receipt requested, postage prepaid, or three (3) business days after having been sent by a nationally recognized courier service for overnight/next-day delivery, such as FedEx, UPS, or the United States Postal Service, addressed to the Company (to the attention of the Secretary of the Company) at its principal executive office and to the Executive at his principal residence, or to such other address as any party may have furnished to the other in writing and in accordance herewith, except that notices of changes of address will be effective only upon receipt.
16.Governing Law. The validity, interpretation, construction and performance of this Agreement will be governed by and construed in accordance with the substantive laws of the Commonwealth of Pennsylvania, without giving effect to the principles of conflict of laws of such Commonwealth.
17.Validity. If any provision of this Agreement or the application of any provision hereof to any person or circumstances is held invalid, unenforceable or otherwise illegal, the remainder of this Agreement and the application of such provision to any other person or circumstances will not be affected, and the provision so held to be invalid, unenforceable or otherwise illegal will be reformed to the extent (and only to the extent) necessary to make it enforceable, valid or legal.
18.Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in a writing signed by the Executive and the Company. No waiver by either party hereto at any time of any breach by the other party hereto or compliance with any condition or provision of this Agreement to be performed by such other party will be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, expressed or implied with respect to the subject matter hereof have been made by either party that are not set forth expressly in this Agreement. References to Sections are to references to Sections of this Agreement. Any reference in this Agreement to a provision of a statute, rule or regulation will also include any successor provision thereto. Whenever used herein, the masculine includes the feminine.
19.Code Section 409A.
(a) If any benefit provided under this Agreement is subject to the provisions of Section 409A of the Code and the regulations issued thereunder, the provisions of the Agreement shall be administered, interpreted and construed in a manner necessary to comply with Section 409A and the regulations issued thereunder (or disregarded to the extent such provision cannot be so administered, interpreted, or construed).
(b) Severance benefits are payable only if the Executive is involuntarily terminated by the Company as provided under this Agreement. For purposes of the Agreement, the Executive shall be considered to have experienced a termination of employment only if the Executive has terminated employment with the Company and all of its controlled group members within the meaning of Section 409A of the Code. For purposes hereof, the determination of controlled group members shall be made pursuant to the provisions of Section 414(b) and 414(c) of the Code; provided that the language "at
least 50 percent" shall be used instead of "at least 80 percent" in each place it appears in Section 1563(a)(1), (2) and (3) of the Code and Treas. Reg. § 1.414(c)-2. Whether the Executive has terminated employment will be determined based on all of the facts and circumstances and in accordance with the guidance issued under Section 409A of the Code.
(c) For purposes of Section 409A, each severance benefit payment shall be treated as a separate payment. Each payment under this Agreement is intended to be excepted from Section 409A to the maximum extent provided under Section 409A as follows: (i) each payment that is scheduled to be made on or before March 15th of the calendar year following the calendar year containing the Executive's termination date (or, if later, the closing date of the Change in Control) is intended to be excepted under the short-term deferral exception as specified in Treas. Reg. § 1.409A-1(b)(4); (ii) post-termination medical benefits are intended to be excepted under the medical benefits exceptions as specified in Treas. Reg. § 1.409A-1(b)(9)(v)(B); and (iii) each payment that is not otherwise excepted under the short-term deferral exception or medical benefits exception is intended to be excepted under the involuntary pay exception as specified in Treas. Reg. § 1.409A-1(b)(9)(iii). The Executive shall have no right to designate the date of any payment under this Agreement.
(d) With respect to payments subject to Section 409A of the Code (and not excepted therefrom), if any, it is intended that each payment is paid on permissible distribution event and at a specified time consistent with Section 409A of the Code. The Company reserves the right to accelerate and/or defer any payment to the extent permitted and consistent with Section 409A. Notwithstanding any provision of this Agreement to the contrary, to the extent that a payment hereunder is subject to Section 409A of the Code (and not excepted therefrom) and payable on account or a termination of employment, such payment shall be delayed for a period of six months after the date of termination (or, if earlier, the death of the Executive) if the Executive is a "specified employee" (as defined in Section 409A of the Code and determined in accordance with the procedures established by the Company). Any payment that would otherwise have been due or owing during such six-month period will be paid immediately following the end of the six-month period in the month following the month containing the six (6)-month anniversary of the date of termination.
20.Survival. Notwithstanding any provision of this Agreement to the contrary, the parties' respective rights and obligations under Sections 2, 6, 8, 9, and 10 will survive any termination or expiration of this Agreement or the termination of the Executive's employment for any reason whatsoever.
21.Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original but all of which together will constitute one and the same agreement.
[Remainder of Page Intentionally Left Blank]
[Signature Page for Change In Control Agreement]
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered February 4, 2021 (date), but effective as of the date first above written.
CNX Resources Corporation
By:
/s/ Nicholas J. DeIuliis
Name: Nicholas J. DeIuliis
Title: President and Chief Executive Officer
Executive
/s/ Alan K. Shepard
Alan K. Shepard
Annex A
SEPARATION OF EMPLOYMENT AND GENERAL RELEASE AGREEMENT
THIS SEPARATION OF EMPLOYMENT AGREEMENT AND GENERAL RELEASE (the “Agreement”) is made as of this _____ day of __________, _____, by and between CNX Resources Corporation (the “Company”) and _________________________ (the “Executive”).
WHEREAS, the Executive formerly was employed by the Company as ________; and
WHEREAS, the Executive and Company entered into a Change in Control Severance Agreement, dated __________ ___, 20__, (the “Severance Agreement”) which provides for certain payments and benefits in the event that the Executive’s employment is terminated on account of a reason set forth in the Severance Agreement; and
WHEREAS, the Executive’s employment with the Company was terminated for reasons that qualify the Executive to receive certain payments and benefits, as set forth in Section 2(b) of the Severance Agreement, subject to, among other things, the Executive’s execution of this Agreement.
NOW, THEREFORE, for and in consideration of the Company’s commitments in Section 2(b) of the Severance Agreement, the Executive and the Company hereby agree as follows:
1.(a) The Executive does hereby REMISE, RELEASE AND FOREVER DISCHARGE the Company, its affiliates, subsidiaries and parents, and its and their respective officers, directors, employees, and agents, and its and their respective successors and assigns, heirs, executors, and administrators, as well as the current and former fiduciaries of any pension, welfare, or other benefit plans applicable to the employees or former employees of the Company, and the current and former welfare and other benefit plans sponsored by the Company (collectively, “Releasees”) from all causes of action, suits, debts, claims and demands whatsoever in law or in equity, which the Executive ever had, now has, or hereafter may have, whether known or unknown, or which the Executive’s heirs, executors, or administrators may have, by reason of any matter, cause or thing whatsoever, from the beginning of time to the date the Executive signs this Agreement, and particularly, but without limitation of the foregoing general terms, any claims arising from or relating in any way to the Executive’s employment relationship with the Company, the terms and conditions of that employment relationship, and the termination of that employment relationship, including, but not limited to, any claims arising under the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Worker Readjustment and Retraining Notification Act, the Consolidated Omnibus Budget Reconciliation Act, the Employee Retirement Income Security Act of 1974, the Pennsylvania Human Relations Act, and any other claims under any federal, state or local common law, statutory, or regulatory provision, now or hereafter recognized, and any claims for attorneys’ fees and costs. This Agreement is effective without regard to the legal nature of the claims raised and without regard to whether any such claims are based upon tort, equity, implied or express contract or discrimination of any sort.
(a)Although Paragraph 1(a) is intended to be a general release, it is understood and agreed that Paragraph 1(a) excludes claims related to the Executive’s right to receive the payments and benefits described in Section 2(b) of the Severance Agreement, as well as claims under any statute or common law that the Executive is legally barred from releasing, such as the Executive’s entitlement to vested pension benefits.
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(b)Nothing herein is intended to or shall preclude the Executive from filing a charge with the Equal Employment Opportunity Commission (“EEOC”), or similar state or local fair employment practices agency and/or cooperating with said agency in its investigation. The Executive, however, explicitly waives any right to file a personal lawsuit or receive monetary damages that the agency may recover against the Releasees resulting from such charge, without regard as to who brought any said complaint or charge. Employee further agrees that to the extent any relief, including monetary relief, is awarded against the Releasees in favor of Executive in any such proceeding, all amounts paid as consideration under Section 2(b) of the Separation Agreement shall be a setoff and credit against any such award to the fullest extent permitted by law.
(c)The Executive represents and agrees by signing below that the Executive has not been denied any leave or benefit requested, has received the appropriate pay for all hours worked for the Company, and has no known workplace injuries or occupational diseases.
(d)To the fullest extent permitted by law, the Executive represents and affirms that [other than _________________________,] the Executive has not filed or caused to be filed on the Executive’s behalf any claim for relief covered by the general release in Paragraph 1(a) against any Releasee and, to the best of the Executive’s knowledge and belief, no outstanding claims for relief covered by the general release in Paragraph 1(a) have been filed or asserted against the Company or any Releasee on the Executive’s behalf.
2.The Company, for and in consideration of the commitments of the Executive as set forth in this Agreement, and intending to be legally bound, does hereby REMISE, RELEASE AND FOREVER DISCHARGE the Executive from all claims, demands or causes of action arising out of facts or occurrences prior to the date of this Agreement, but only to the extent the Company knows or reasonably should know of such facts or occurrence and only to the extent such claim, demand or cause of action relates to a violation of applicable law or the performance of the Executive’s duties with the Company; provided, however, that this release of claims shall not in any case be effective with respect to any claim by the Company alleging a breach of the Executive’s obligations under this Agreement. [Note: The Company and the Executive may, but shall not be required to mutually agree on a case-by-case basis at the time of the signing of this release to include the foregoing provision, or a substantially similar provision, to this Agreement.
3.The Executive further agrees and recognizes that the Executive’s employment relationship with the Company has been permanently severed, that the Executive shall not seek employment with the Company or any affiliated entity at any time in the future, and that the Company has no obligation to employ the Executive in the future.
4.Subject to the provisions of Paragraph 9, the Executive further agrees that the Executive will not disparage or subvert the Company, or make any statement reflecting negatively on the Releasees including, but not limited to, statements relating to the operation or management of the Company, the Executive’s employment and the termination of the Executive’s employment, irrespective of the truthfulness or falsity of such statement.
5.The Executive acknowledges that if the Executive had not executed this Agreement containing a release of all claims, the Executive would not have been entitled to the payments and benefits set forth in Section 2(b) of the Severance Agreement.
6.This Agreement contains the entire agreement between the Company and the Executive relating to the subject matter hereof. No prior or contemporaneous oral or written agreements or representations may be offered to alter the terms of this Agreement. To the extent Employee has entered into other agreements with the Company that are not in conflict with this Agreement,
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including, but not limited to the Severance Agreement, the terms of this Agreement shall not supersede, but shall be in addition to such other agreements.
7.Subject to the provisions of Paragraph 9, the Executive agrees not to disclose the terms of this Agreement or the Severance Agreement to anyone, except the Executive’s spouse, attorney and, as necessary, tax/financial advisor, or the Internal Revenue Service or other taxing authority. Likewise, the Company agrees that the terms of this Agreement will not be disclosed except as may be necessary to obtain approval or authorization to fulfill its obligations hereunder or as required by law. It is expressly understood that any violation of the confidentiality obligation imposed hereunder constitutes a material breach of this Agreement.
8.The Executive represents that the Executive has returned to the Company and does not presently have in the Executive’s possession or control any records and business documents, whether on computer or hard copy, and other materials (including but not limited to computer disks and tapes, computer programs and software, office keys, correspondence, files, customer lists, technical information, customer information, pricing information, business strategies and plans, sales records and all copies thereof) (collectively, the “Corporate Records”) provided by the Company and/or its predecessors, subsidiaries or affiliates or obtained as a result of the Executive’s prior employment with the Company and/or its predecessors, subsidiaries or affiliates, or created by the Executive while employed by or rendering services to the Company and/or its predecessors, subsidiaries or affiliates. In addition, the Executive has or will promptly return in good condition any other Company owned equipment or property, including, but not limited to, automobiles, personal data assistants, facsimile machines, copy machines, pagers, credit cards, cellular telephone equipment, business cards, laptops and computers. At the Executive’s request, the Company will make reasonable arrangements to transfer cellular phone numbers and personal fax numbers to the Executive.
9.Nothing in this Agreement shall prohibit or restrict the Executive from: (i) making any disclosure of information required or protected by law; or (ii) initiating communications directly with, cooperating with, providing information to, testifying, participating in, responding to any inquiry from, or otherwise assisting in any investigation or proceeding brought by any federal regulatory or law enforcement agency or legislative body, including but not limited to the Securities and Exchange Commission (SEC), any self-regulatory organization, or the Company’s designated legal, compliance or human resources officers, relating to a possible violation of any applicable law, rule or regulation. Further, nothing in this Agreement requires Executive to notify the Company of any activity protected by this paragraph, and nothing in this Agreement is intended to or shall prevent, impede or interfere with Executive’s non-waivable right to receive and fully retain a monetary award from a government-administered whistleblower award program for providing information directly to a government agency.
10.The parties agree and acknowledge that the agreement by the Company described herein, and the release of any asserted or unasserted claims against the Releasees, are not and shall not be construed to be an admission of any violation of any federal, state or local statute or regulation, or of any duty owed by any of the Releasees to the Executive.
11.The Executive agrees and recognizes that should the Executive breach any of the obligations or covenants set forth in Sections 9 and 10 of the Severance Agreement, the Company will have no further obligation to provide the Executive with the consideration set in Section 2(b) of the Severance Agreement, and will have the right to seek repayment of all consideration paid up to the time of any such breach. Notwithstanding the foregoing, the Executive acknowledges that if the Executive breaches Section 10 of the Severance Agreement, and if the Company’s terminates or recovers any of the payments or benefits provided under Section 2(b) of the Severance Agreement (as provided for in Section 10 of the Severance
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Agreement), the release provided by Section 1 of this Agreement shall remain valid and enforceable.
12.The Executive further agrees that the Company shall be entitled to preliminary and permanent injunctive relief, without the necessity of proving actual damages, as well as to an equitable accounting of all earnings, profits and other benefits arising from any violations of this Agreement, which rights shall be cumulative and in addition to any other rights or remedies to which the Company may be entitled.
13.This Agreement and the obligations of the parties hereunder shall be construed, interpreted and enforced in accordance with the laws of the Commonwealth of Pennsylvania.
14.The Executive certifies and acknowledges as follows:
(a)That the Executive has read the terms of this Agreement, and that the Executive understands its terms and effects, including the fact that the Executive has agreed to RELEASE AND FOREVER DISCHARGE the Releasees from any legal action arising out of the Executive’s employment relationship with the Company and the termination of that employment relationship; and
(b)That the Executive has signed this Agreement voluntarily and knowingly in exchange for the consideration described herein, which the Executive acknowledges is adequate and satisfactory to him and which the Executive acknowledges is in addition to any other benefits to which the Executive is otherwise entitled; and
(c)That the Executive has been and is hereby advised in writing to consult with an attorney prior to signing this Agreement; and
(d)That the Executive does not waive rights or claims that may arise after the date this Agreement is executed; and
(e)That the Company has provided the Executive with a period of [twenty-one (21)] or [forty-five (45)] days within which to consider this Agreement, and that the Executive has signed on the date indicated below after concluding that this Separation of Employment Agreement and General Release is satisfactory; and
(f)The Executive acknowledges that this Agreement may be revoked by within seven (7) days after execution, and it shall not become effective until the expiration of such seven (7) day revocation period. In the event of a timely revocation by the Executive, this Agreement will be deemed null and void and the Company will have no obligations hereunder or under Section 2(b) of the Separation Agreement.
[SIGNATURE PAGE FOLLOWS]
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Intending to be legally bound hereby, the Executive and the Company executed the foregoing Separation of Employment Agreement and General Release this _____ day of __________, _____.
| Executive | Witness: |
|---|---|
| By: | |
| Name:<br> Title: | |
| CNX Resources Corporation | |
| By: | Witness: |
| Name:<br> Title: |
A-1
Document
Exhibit 31.1
CERTIFICATIONS
I, Nicholas J. DeIuliis, certify that:
1.I have reviewed this report on Form 10-Q of CNX Resources Corporation;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
| Date: | July 28, 2022 |
|---|---|
| /s/ Nicholas J. DeIuliis | |
| Nicholas J. DeIuliis | |
| Chief Executive Officer and President and Director <br>(Duly Authorized Officer and Principal Executive Officer) |
Document
Exhibit 31.2
CERTIFICATIONS
I, Alan K. Shepard, certify that:
1.I have reviewed this report on Form 10-Q of CNX Resources Corporation;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information;
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
| Date: | July 28, 2022 |
|---|---|
| /s/ Alan K. Shepard | |
| Alan K. Shepard | |
| Chief Financial Officer<br><br>(Principal Financial and Accounting Officer) |
Document
Exhibit 32.1
CERTIFICATION
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
18 U.S.C. Section 1350
I, Nicholas J. DeIuliis, President and Chief Executive Officer (principal executive officer) of CNX Resources Corporation (the “Registrant”), certify that to my knowledge, based upon a review of the Quarterly Report on Form 10-Q for the period ended June 30, 2022, of the Registrant (the “Report”):
(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
| Date: | July 28, 2022 |
|---|---|
| /s/ Nicholas J. DeIuliis | |
| Nicholas J. DeIuliis | |
| Chief Executive Officer and President and Director <br>(Duly Authorized Officer and Principal Executive Officer) |
Document
Exhibit 32.2
CERTIFICATION
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
18 U.S.C. Section 1350
I, Alan K. Shepard, Chief Financial Officer (principal financial officer) of CNX Resources Corporation (the “Registrant”), certify that to my knowledge, based upon a review of the Quarterly Report on Form 10-Q for the period ended June 30, 2022, of the Registrant (the “Report”):
(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
| Date: | July 28, 2022 |
|---|---|
| /s/ Alan K. Shepard | |
| Alan K. Shepard | |
| Chief Financial Officer | |
| (Principal Financial and Accounting Officer) |