Back to top

Amended and Restated Credit Agreement

Loan Agreement

Amended and Restated Credit Agreement | Document Parties: McMoRan Exploration Co | McMoRan Oil  Gas LLC | JPMorgan Chase Bank, N.A | Merrill Lynch Business Financial Services, Inc You are currently viewing:
This Loan Agreement involves

McMoRan Exploration Co | McMoRan Oil Gas LLC | JPMorgan Chase Bank, N.A | Merrill Lynch Business Financial Services, Inc

. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here.
Title: Amended and Restated Credit Agreement
Governing Law: New York     Date: 11/1/2007
Industry: Oil and Gas Operations     Law Firm: Vinson Elkins;Jones Walker     Sector: Energy

50 of the Top 250 law firms use our Products every day

EXECUTION VERSION
 

 
Amended and Restated Credit Agreement

Dated as of
August 6, 2007

among

McMoRan Exploration Co.,
As Parent,
 
McMoRan Oil & Gas LLC,
as Borrower,

JPMorgan Chase Bank, N.A.,
as Administrative Agent,

Merrill Lynch Capital,
a division of Merrill Lynch Business Financial Services, Inc.
as SyndicationAgent,

BNP Paribas,
As Documentation Agent,

and

The Lenders Party Hereto

 

 
Joint Lead Arrangers and Joint Book Runners
 
J.P. Morgan Securities Inc.                                                                                                                                                                    Merrill Lynch Capital,
                                                                                                                                                                                   a division of Merrill Lynch Business Financial Services, Inc.
 

 

               




 
TABLE OF CONTENTS
 
Page

ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS
Section 1.01
Section 1.02
Section 1.03
Section 1.04
Section 1.05
Terms Defined Above
Certain Defined Terms
Types of Loans and Borrowings
Terms Generally; Rules of Construction
Accounting Terms and Determinations:  GAAP
1
1
19
19
20
ARTICLE II
THE CREDITS
Section 2.01
Section 2.02
Section 2.03
Section 2.04
Section 2.05
Section 2.06
Section 2.07
Section 2.08
Commitments
Loans and borrowings
Requests for Borrowings
Interest Elections
Funding of Borrowings
Termination and Reduction of Aggregate Maximum Credit Amounts
Borrowing Base
Letters of Credit
20
21
21
22
23
24
25
27
ARTICLE III
PAYMENTS OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES
Section 3.01
Section 3.02
Section 3.03
Section 3.04
Section 3.05
Repayment of Loans
Interest
Alternate Rate of Interest
Prepayments
Fees
31
32
32
33
34
ARTICLE IV
PAYMENTS; PRO RATA TREATMENT; SHARING OF SET-OFFS
Section 4.01
Section 4.02
Section 4.03
Section 4.04
Payments Generally; Pro Rata Treatment; Sharing of Set-offs
Presumption of Payment by the Borrower
Certain Deductions by the Administrative Agent
Disposition of Proceeds
35
36
36
37
ARTICLE V
INCREASED COSTS; BREAK FUNDING PAYMENTS; TAXES
Section 5.01
Section 5.02
Section 5.03
Section 5.04
Increased Costs
Break Funding Payments
Taxes
Designation of Different Lending Office
 
37
38
38
40
 
 
i

 
 
 
Section 5.05
 
Replacement of Lenders
 
40
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.01
Section 6.02
Effective Date
Each Credit Event
41
44
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Section 7.01
Section 7.02
Section 7.03
Section 7.04
Section 7.05
Section 7.06
Section 7.07
Section 7.08
Section 7.09
Section 7.10
Section 7.11
Section 7.12
Section 7.13
Section 7.14
Section 7.15
Section 7.16
Section 7.17
Section 7.18
Section 7.19
Section 7.20
Section 7.21
Section 7.22
Organization; Powers
Authority; Enforceability
Approvals; No Conflicts
Financial Condition; No Material Adverse Change
Litigation
Environmental Matters
Compliance with the Laws and Agreements; No Defaults
Investment Company Act
Taxes
ERISA
Disclosure; No Material Misstatements
Insurance
Restriction on Liens
Subsidiaries
Location of Business and Offices
Properties; Titles, Etc.
Maintenance of Properties
Gas Imbalances, Prepayments
Marketing of Production
Swap Agreements
Use of Loans and Letters of Credit
Solvency
45
45
45
45
46
46
47
47
48
48
49
49
49
50
50
50
51
51
51
52
52
52
ARTICLE VIII
AFFIRMATIVE COVENANTS

Section 8.01
Section 8.02
Section 8.03
Section 8.04
Section 8.05
Section 8.06
Section 8.07
Section 8.08
Section 8.09
Section 8.10
Section 8.11
Section 8.12
Section 8.13
Financial  Statements; Other Information
Notices of Material Events
Existence; Conduct of Business
Payment of Obligations
Performance of Obligations under Loan Documents
Operation and Maintenance of Properties
Insurance
Books and Records; Inspection Rights
Compliance with Laws
Environmental Matters
Further Assurances
Reserve Reports
Title Information
52
55
55
55
56
56
56
57
57
57
58
58
59
 
ii


Section 8.14
Section 8.15
Section 8.16
Section 8.17
Section 8.18
Additional Collateral; Additional Guarantors
ERISA Compliance
Unrestricted Subsidiaries
Marketing activities
Swap Agreements
60
61
61
62
62
 
ARTICLE IX
NEGATIVE COVENANTS
Section 9.01
Section 9.02
Section 9.03
Section 9.04
Section 9.05
Section 9.06
Section 9.07
Section 9.08
Section 9.09
Section 9.10
Section 9.11
Section 9.12
Section 9.13
Section 9.14
Section 9.15
Section 9.16
Section 9.17
Section 9.18
Section 9.19
Financial Covenants
Debt
Liens
Dividends, Distributions and Redemptions
Investments, Loans and Advances
Nature of Business; International Operations
Proceeds of Notes
ERISA Compliance
Sale or Discount of Receivables
Mergers, Etc.
Sale of Properties
Environmental Matters
Transactions with Affiliates
Subsidiaries
Negative Pledge Agreements; Dividend Restrictions
Gas Imbalances, take-or-Pay or Other Prepayments
Swap Agreements
Acquisition Documents
Unrestricted Subsidiaries
62
63
65
65
66
67
67
68
69
69
69
69
70
70
70
70
70
71
71
ARTICLE X
EVENTS OF DEFAULT; REMEDIES
Section 10.01
Section 10.02
Events of Default
Remedies
71
73
ARTICLE XI
THE ADMINISTRATIVE AGENT
Section 11.02
Section 11.03
Section 11.04
Section 11.05
Section 11.06
Section 11.07
Section 11.08
Section 11.09
Section 11.10
Section 11.11
 
Duties and Obligations of Administrative Agent
Action by Administrative Agent
Reliance by Administrative Agent
Subagents
Resignation of Administrative Agent
Agents as Lenders
No Reliance
Administrative Agent May File Proofs of Claim
Authority of Administrative Agent to Release collateral and Liens
The Arrangers and the Agents
74
75
76
76
76
76
76
77
78
78
 
iii

 
     
ARTICLE XII
MISCELLANEOUS
Section 12.01
Section 12.02
Section 12.03
Section 12.04
Section 12.05
Section 12.06
Section 12.07
Section 12.08
Section 12.09
Section 12.10
Section 12.11
Section 12.12
Section 12.13
Section 12.14
Section 12.15
Section 12.16
Notices
Waivers; Amendments
Expenses, Indemnity; Damage Waiver
Successors and Assigns
Survival; Revival; Reinstatement
Counterparts; Integration; Effectiveness
Severability
Right of Setoff
GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE  PROCESS
Headings
Confidentiality
Interest Rate Limitation
Collateral Matters; Swap Agreements
No Third Party Beneficiaries
Acknowledgements
USA Patriot Act Notice
78
78
80
82
84
85
85
85
86
87
87
87
88
88
88
88

     
iv


 
ANNEXES, EXHIBITS AND SCHEDULES
 
 

 
Annex I                                List of Maximum Credit Amounts

Exhibit A                                Form of Note
Exhibit B                                 Form of Borrowing Request
Exhibit C                                 Form of Interest Election Request
Exhibit D                                Form of Compliance Certificate
Exhibit E                                 Form of Legal Opinion of Jones Walker, special counsel to theBorrower
Exhibit F-1                              Security Instruments
Exhibit F-2                              Form of Guaranty and Collateral Agreement
Exhibit G                                 Form of Assignment and Assumption
Exhibit H                                Form of Exemption Certificate
Exhibit I                                  Form of Intercreditor Agreement

Schedule 1.02                        Approved Counterparties
Schedule 1.02(b)                   Preferential Purchase Right Properties
Schedule 7.05                        Litigation
Schedule 7.10(d)                   ERISA Plan
Schedule 7.10(f)                    Under-funded ERISA Plan
Schedule 7.12                        Insurance
Schedule 7.14                        Subsidiaries
Schedule 7.16                        Title Exceptions
Schedule 7.18                        Gas Imbalances
Schedule 7.19                        Marketing Contracts
Schedule 7.20                        Swap Agreements
Schedule 9.02                        Existing Debt
Schedule 9.03                        Existing Liens
Schedule 9.05                        Investments


     
v


THIS AMENDED AND RESTATED CREDIT AGREEMENT dated as of August 6, 2007, is among: McMoRan Exploration Co., a Delaware corporation (the “ Parent ”), McMoRan Oil & Gas LLC, a Delaware limited liability company (the “ Borrower ”); each of the Lenders from time to time party hereto; JPMorgan Chase Bank, N.A.   (in its individual capacity, “ JPMorgan ”), as administrative agent for the Lenders (in such capacity, together with its successors in such capacity, the “ Administrative Agent ”); Merrill Lynch Capital, a division of Merrill Lynch Business Financial Services, Inc., as syndication agent for the Lenders (in such capacity, together with its successors in such capacity, the “ Syndication Agent ”); and BNP Paribas, as documentation agent for the Lenders (in such capacity, together with its successors in such capacity, a “ Documentation Agent ”)
 
R E C I T A L S
 
A.           The Borrower, the Administrative Agent, the lenders and others party thereto entered into that certain Credit Agreement dated as of April 19, 2006 (as amended prior to the Effective Date, the “ Existing Credit Agreement ”) pursuant to which the lenders party thereto made certain loans to and extensions of credit available on behalf of the Borrower.
 
B.           The Parent and the Borrower have requested that the Administrative Agent, the Syndication Agent, the Documentation Agents and the Lenders, and each has agreed to, amend, restate, and increase the Existing Credit Agreement to make certain loans and extensions of credit to the Borrower subject to the terms and conditions of this Agreement.
 
C.           In consideration of the mutual covenants and agreements herein contained and of the loans, extensions of credit and commitments hereinafter referred to, the parties hereto agree as follows:
 
ARTICLE I
Definitions and Accounting Matters
 

Section 1.01    Terms Defined Above .  As used in this Agreement, each term defined above has the meaning indicated above.
 
Section 1.02    Certain Defined Terms .  As used in this Agreement, the following terms have the meanings specified below:
 
ABR ”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate.
 
Acquisition ” means the acquisition of certain oil, gas and mineral Properties pursuant to the terms and conditions of the Acquisition Documents.
 
Acquisition Agreement ” means the Purchase and Sale Agreement between Seller and Borrower, as Buyer, dated June 20, 2007, to be effective July 1, 2007.
 
Acquisition Documents ” means (a) the Acquisition Agreement, (b) the P&A Escrow Agreement, (c) the Transition Services Agreement, (d) the Title Indemnity Agreement and (e) all bills of sale, assignments, agreements, instruments and documents executed and delivered in connection therewith, in each case, as amended from time to time in accordance with Section 9.18.
 
1

 
Acquisition Properties ” means the Oil and Gas Properties and other properties acquired by the Borrower pursuant to the Acquisition Documents.
 
Adjusted LIBO Rate ” means, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.
 
Administrative Questionnaire ” means an Administrative Questionnaire in a form supplied by the Administrative Agent.
 
Affiliate ” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.
 
Agents ” means, collectively, the Administrative Agent, the Syndication Agent and the Documentation Agent; and “Agent” shall mean any of the Administrative Agent, the Syndication Agent or any Documentation Agent, as the context requires.
 
Aggregate Maximum Credit Amounts ” at any time shall equal the sum of the Maximum Credit Amounts, as the same may be reduced or terminated pursuant to Section 2.06 .
 
Aggregated Subsidiaries ” means any group of Subsidiaries which in the aggregate would constitute a Significant Subsidiary.
 
Agreement ” means this Amended and Restated Credit Agreement, dated as of August 6, 2007, as the same may from time to time be amended, modified, supplemented or restated.
 
Alternate Base Rate ” means, for any day, a rate per annum equal to the greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus ½ of 1%.  Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective from and including the effective date of such change in the Prime Rate or the Federal Funds Effective Rate, respectively.
 
Applicable Margin ” means, for any day, with respect to any Loan or the Commitment Fee Rate, the applicable rate per annum set forth below based upon the Borrowing Base Utilization Percentage then in effect:

 
Borrowing
Base Utilization Percentage
Eurodollar
Loans
ABR
Loans
Commitment
Fee Rate
> 115%
275 b.p.
125 b.p.
50 b.p.
> 100% and < 115%
250 b.p.
100 b.p.
50 b.p.
> 90% and < 100%
225 b.p.
75 b.p.
50 b.p.
> 75% and < 90%
200 b.p.
50 b.p.
50 b.p.
> 50% and < 75%
175 b.p.
25 b.p.
37.5 b.p.
< 50%
150 b.p.
0 b.p.
37.5 b.p.
 
2

 
Each change in the Applicable Margin and the Commitment Fee Rate shall apply during the period commencing on the effective date of a change in the Borrowing Base Utilization Percentage and ending on the date immediately preceding the effective date of the next such change, provided, however, that if at any time the Borrower fails to deliver a Reserve Report pursuant to Section 8.12(a) , then the “ Applicable Margin ” means the rate per annum set forth on the grid when the Borrowing Base Utilization Percentage is at its highest level.  Notwithstanding anything to the contrary herein contained, for the period from the Effective Date until November 1, 2007, the Applicable Margin shall be based upon the Borrowing Base Utilization Percentage grid and in no event shall the Applicable Margin be less than 250 b.p. for Eurodollar Loans, 100 b.p. for ABR Loans and 50 b.p. for the Commitment Fee Rate.
 
Applicable Percentage ” means, with respect to any Lender, the percentage of the Aggregate Maximum Credit Amounts represented by such Lender’s Maximum Credit Amount as such percentage is set forth on Annex I.
 
Approved Counterparty ” means (a) any Lender or any Affiliate of a Lender, (b) any other Person whose long term senior unsecured debt rating at the time a particular Swap Agreement transaction is entered into is A/A2 by S&P or Moody’s (or their equivalent) or higher, or (c) with regard to Swap Agreements in respect of commodities, and subject to the conditions set forth therein, any other Person listed on Schedule 1.02.
 
Approved Petroleum Engineers ” means (a) Netherland, Sewell & Associates, Inc., (b) Ryder Scott Company Petroleum Consultants, L.P. and (c) any other independent petroleum engineers reasonably acceptable to the Administrative Agent.
 
Arrangers ” means J.P. Morgan Securities Inc. and Merrill Lynch Capital, a division of Merrill Lynch Business Financial Services, Inc., in their capacities as the joint lead arrangers and joint book runners hereunder.
 
Assignee ” has the meaning set forth in Section 12.04(b).
 
Assignment and Assumption ” means an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 12.04(b) ), and accepted by the Administrative Agent, in the form of Exhibit G or any other form approved by the Administrative Agent.
 
Availability Period ” means the period from and including the Effective Date to but excluding the Termination Date.
 
Board ” means the Board of Governors of the Federal Reserve System of the United States of America or any successor Governmental Authority.
 
Borrowing ” means Loans of the same Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect.
 
Borrowing Base ” means at any time an amount equal to the amount determined in accordance with Section 2.07, as the same may be adjusted from time to time pursuant to Section 2.08(k), Section 8.13(c), Section 8.13(d) or Section 9.11(d). Prior to April 1, 2009, the Borrowing Base and Conforming Borrowing Base (defined below) shall be two separate and distinct determinations under Section 2.07; provided, that, on and after April 1, 2009, there shall only be a single determination under Section 2.07 of the Borrowing Base.
 
3

 
Borrowing Base Deficiency ” occurs if at any time the total Revolving Credit Exposures exceeds the Borrowing Base then in effect.
 
Borrowing Base Utilization Percentage ” means, as of any day, the fraction expressed as a percentage, the numerator of which is the sum of the Revolving Credit Exposures of the Lenders on such day, and the denominator of which is (i) prior to April 1, 2009, the Conforming Borrowing Base in effect on such day and (ii) on and after April 1, 2009, the Borrowing Base in effect on such day.
 
Borrowing Request ” means a request by the Borrower for a Borrowing in accordance with Section 2.03 .
 
Bridge Credit Agreement ” means the Credit Agreement, dated as of Effective Date, among the Parent, as borrower, the lenders party thereto from time to time, JPMorgan Chase Bank, N.A., as administrative agent, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as syndication agent, as the same may be amended from time to time in accordance with Section 9.04(b).
 
Bridge Loans ” means the senior term loans in favor of the Parent under the Bridge Credit Agreement in an aggregate principal amount not to exceed $800,000,000.
 
Business Day ” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City or Houston, Texas are authorized or required by law to remain closed; and if such day relates to a Borrowing or continuation of, a payment or prepayment of principal of or interest on, or a conversion of or into, or the Interest Period for, a Eurodollar Loan or a notice by the Borrower with respect to any such Borrowing or continuation, payment, prepayment, conversion or Interest Period, any day which is also a day on which dealings in dollar deposits are carried out in the London interbank market.
 
Capital Leases ” means, in respect of any Person, all leases which shall have been, or should have been, in accordance with GAAP, recorded as capital leases on the balance sheet of the Person liable (whether contingent or otherwise) for the payment of rent thereunder.
 
Casualty Event ” means any loss, casualty or other insured damage to, or any nationalization, taking under power of eminent domain or by condemnation or similar proceeding of, any Property of any Loan Party having a fair market value in excess of $1,000,000.
 
Change in Control ” means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the SEC thereunder as in effect on the date hereof), of Equity Interests representing more than 35% of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of the Parent, (b) occupation of a majority of the seats (other than vacant seats) on the board of directors of the Parent by Persons who were neither (i) nominated by the board of directors of the Parent nor (ii) appointed by directors so nominated, or (c) the failure of the Parent to at any time own, directly or indirectly, beneficially or of record, 100% of all of the issued and outstanding Equity Interests of the Borrower.
 
Change in Law ” means (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender or the Issuing Bank (or, for purposes of Section 5.01(b) ), by any lending office of such Lender or by such Lender’s or the Issuing Bank’s holding company, if any) with any request, guideline or directive (whether
 
4

 
or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement.
 
Code ” means the Internal Revenue Code of 1986, as amended from time to time, and any successor statute.
 
Commitment ” means, with respect to each Lender, the commitment of such Lender to make Loans and to acquire participations in Letters of Credit hereunder, expressed as an amount representing the maximum aggregate amount of such Lender’s Revolving Credit Exposure hereunder, as such commitment may be (a) reduced or terminated from time to time pursuant to Section 2.06 and (b) modified from time to time pursuant to assignments by or to such Lender pursuant to Section 12.04(b) ; and “ Commitments ” means the aggregate amount of the Commitments of all the Lenders.  The amount representing each Lender’s Commitment shall at any time be the lesser of such Lender’s Maximum Credit Amount and such Lender’s Applicable Percentage of the then effective Borrowing Base.  As of the Effective Date, the aggregate Commitments of the Lenders are $700,000,000.
 
Commitment Fee Rate ” is set forth in the definition of Applicable Margin.
 
Conduit Lender ” means any special purpose corporation organized and administered by any Lender for the purpose of making Loans otherwise required to be made by such Lender and designated by such Lender in a written instrument delivered to the Administrative Agent and the Borrower; provided , that the designation by any Lender of a Conduit Lender shall not relieve the designating Lender of any of its obligations under this Agreement if, for any reason, its Conduit Lender fails to meet any such obligations, and the designating Lender (and not the Conduit Lender) shall have the sole right and responsibility to deliver all consents and waivers required or requested under this Agreement with respect to its Conduit Lender, and provided , further , that no Conduit Lender shall (a) be entitled to receive any greater amount pursuant to Section 5.01, 5.02, 5.03 or 12.03 than the designating Lender would have been entitled to receive in respect of the extensions of credit made by such Conduit Lender or (b) be deemed to have any Commitment.
 
Conforming Borrowing Base ” means at any time an amount equal to the amount determined in accordance with Section 2.07, as the same may be adjusted from time to time pursuant to Section 2.08(k), Section 8.13(c), Section 8.13(d) or Section 9.11(d).
 
Consolidated Net Income ” means with respect to the Parent and the Consolidated Subsidiaries, for any period, the aggregate of the net income (or loss) of the Parent and the Consolidated Subsidiaries after allowances for taxes for such period determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded from such net income (to the extent otherwise included therein) the following: (a) the net income of any Person in which the Parent or any Consolidated Subsidiary has an interest (which interest does not cause the net income of such other Person to be consolidated with the net income of the Parent and the Consolidated Subsidiaries in accordance with GAAP), except to the extent of the amount of dividends or distributions actually paid in cash during such period by such other Person to the Parent or to a Consolidated Subsidiary, as the case may be; (b) the net income (but not loss) during such period of any Consolidated Subsidiary to the extent that the declaration or payment of dividends or similar distributions or transfers or loans by that Consolidated Subsidiary is not at the time permitted by operation of the terms of its charter or any agreement, instrument or Governmental Requirement applicable to such Consolidated Subsidiary or is otherwise restricted or prohibited, in each case determined in accordance with GAAP; (c) any extraordinary non-cash gains or losses during such period; (d) non-cash gains or losses under FAS 133 resulting from the net change in Parent’s mark to market portfolio of commodity price risk management activities during that period; (e) any gains or losses attributable to writeups or writedowns of assets, including ceiling test writedowns; (f) any non-cash gains or losses attributable to any non-cash impairment charges resulting from the application of Statement of
 
5

 
Financial Accounting Standards No. 142 and No. 144 and any amortization of intangibles pursuant to Statement of Financial Accounting Standards No. 141; (g) any net after-tax income or loss from discontinued operations and any net after-tax gain or loss on disposal of discontinued operations; (h) the cumulative effect of a change in accounting principles; (i) fees, premiums and expenses incurred in connection with the Transactions, this Agreement, the Loan Documents, the Bridge Loans, the Senior Notes, the Acquisition and the repayment of Debt under the Second Lien Term Loan Agreement up to $25,000,000 in the aggregate and (j) any non-cash compensation expense under FAS 142R recognized from grants of stock appreciation or similar rights, stock options, restricted stock, restricted stock units or other rights to officers, directors and employees of such Person or any of its Restricted Subsidiaries, provided that if such non-cash expense subsequently becomes a cash expense, it will be included in the period during which it became a cash expense; provided that for the purposes of calculating Consolidated Net Income for any period of four consecutive fiscal quarters (each, a “ Reference Period” "), if during such Reference Period (or, in the case of pro forma calculations, during the period from the last day of such Reference Period to and including the date as of which such calculation is made) the Borrower or any Restricted Subsidiary shall have made a Material Disposition or Material Acquisition, Consolidated Net Income for such Reference Period shall be calculated after giving pro forma effect thereto as if such Material Disposition or Material Acquisition occurred on the first day of such Reference Period (with the Reference Period for the purposes of pro forma calculations being the most recent period of  four consecutive fiscal quarters for which the relevant financial information is available). As used in this definition, “Material Acquisition” means any acquisition of property or series of related acquisitions of property that involves consideration in excess of $10,000,000; and “Material Disposition” means any sale, transfer or other disposition of property or series of related sales, transfers or other dispositions of property that yields gross proceeds to the Borrower or any Restricted Subsidiary in excess of $10,000,000.

Consolidated Subsidiaries ” means each Restricted Subsidiary of the Parent (whether now existing or hereafter created or acquired) the financial statements of which shall be (or should have been) consolidated with the financial statements of the Parent in accordance with GAAP.
 
Control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.  “ Controlling ” and “ Controlled ” have meanings correlative thereto.
 
Debt ” means, for any Person, the sum of the following (without duplication): (a) all obligations of such Person for borrowed money or evidenced by bonds, bankers’ acceptances, debentures, notes or other similar instruments; (b) all obligations of such Person (whether contingent or otherwise) in respect of letters of credit, surety or other bonds and similar instruments; (c) all accounts payable and all accrued expenses, liabilities or other obligations of such Person to pay the deferred purchase price of Property or services; (d) all obligations under Capital Leases; (e) all obligations under Synthetic Leases; (f) all Debt (as defined in the other clauses of this definition) of others secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) a Lien on any Property of such Person, whether or not such Debt is assumed by such Person; (g) all Debt (as defined in the other clauses of this definition) of others guaranteed by such Person or in which such Person otherwise assures a creditor against loss of the Debt (howsoever such assurance shall be made) but only to the extent of the lesser of the amount of such Debt and the maximum stated amount of such guarantee or assurance against loss; (h) all obligations or undertakings of such Person to maintain or cause to be maintained the financial position or covenants of others or to purchase the Debt or Property of others; (i) obligations to deliver commodities, goods or services, including, without limitation, Hydrocarbons, in consideration of one or more advance payments, other than gas balancing arrangements in the ordinary course of business; (j) obligations to pay for goods or services even if such goods or services are not actually received or utilized by such Person; (k) any Debt of a partnership for which such Person is liable either by agreement, by
 
6

 
operation of law or by a Governmental Requirement but only to the extent of such liability; (l) Disqualified Capital Stock; and (m) the undischarged balance of any production payment created by such Person or for the creation of which such Person directly or indirectly received payment.  The Debt of any Person shall include all obligations of such Person of the character described above to the extent such Person remains legally liable in respect thereof notwithstanding that any such obligation is not included as a liability of such Person under GAAP.
 
Default ” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.
 
Disqualified Capital Stock ” means any Equity Interest that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable) or upon the happening of any event, requires the payment of dividends (other than dividends payable solely in Equity Interests which do not otherwise constitute Disqualified Capital Stock) or matures or is mandatorily redeemable for any consideration other than other Equity Interests (which would not constitute Disqualified Capital Stock), pursuant to a sinking fund obligation or otherwise, or is convertible or exchangeable for Debt or redeemable for any consideration other than other Equity Interests (which would not constitute Disqualified Capital Stock) at the option of the holder thereof, in whole or in part, on or prior to the date that is one year after the earlier of (a) the Maturity Date and (b) the date on which there are no Loans, LC Exposure or other obligations hereunder outstanding and all of the Commitments are terminated; provided, however, preferred Equity Interests which would be Disqualified Capital Stock solely by virtue of a requirement to pay dividends in cash shall not be Disqualified Capital Stock to the extent the cash proceeds thereof are used to repay or redeem Bridge Loans or Exchange Notes; and provided further, however, preferred Equity Interests which would be Disqualified Capital Stock solely by virtue of a requirement to pay dividends in cash shall not be Disqualified Capital Stock to the extent the cash proceeds thereof are used to make an Investment in an Unrestricted Subsidiary under Section 9.05(l).  Notwithstanding the preceding sentence, any Equity Interest that would constitute Disqualified Capital Stock solely because the holders thereof have the right to require the Person to repurchase such Equity Interests upon the occurrence of a change of control or an asset sale, shall not constitute Disqualified Capital Stock.
 
dollars ” or “$” refers to lawful money of the United States of America.
 
Domestic Subsidiary ” means any Restricted Subsidiary of the Parent that is organized under the laws of the United States of America or any state thereof or the District of Columbia.
 
EBITDAX ” means, for any period, the sum of Consolidated Net Income for such period plus the following expenses or charges to the extent deducted from Consolidated Net Income in such period: interest, income taxes, depreciation, depletion, amortization, exploration expenses and other similar noncash charges, minus all noncash income added to Consolidated Net Income.
 
Effective Date ” means the date on which the conditions specified in Section 6.01 are satisfied (or waived in accordance with Section 12.02 ).
 
Engineering Reports ” has the meaning assigned such term in Section 2.07(c)(i).
 
Environmental Laws ” means any and all Governmental Requirements pertaining in any way to health, safety the environment or the preservation or reclamation of natural resources, in effect in any and all jurisdictions in which the Borrower or any Restricted Subsidiary is conducting or at any time has conducted business, or where any Property of the Borrower or any Restricted Subsidiary is located, including without limitation, the Oil Pollution Act of 1990 (“ OPA ”), as amended, the Clean Air Act, as
 
7

 
amended, the Comprehensive Environmental, Response, Compensation, and Liability Act of 1980 (“ CERCLA ”), as amended, the Federal Water Pollution Control Act, as amended, the Occupational Safety and Health Act of 1970, as amended, the Resource Conservation and Recovery Act of 1976 (“ RCRA ”), as amended, the Safe Drinking Water Act, as amended, the Toxic Substances Control Act, as amended, the Superfund Amendments and Reauthorization Act of 1986, as amended, the Hazardous Materials Transportation Act, as amended, and other environmental conservation or protection Governmental Requirements.  The term “oil” shall have the meaning specified in OPA, the terms “ hazardous substance ” and “ release ” (or “ threatened release ”) have the meanings specified in CERCLA, the terms “ solid waste ” and “ disposal ” (or “ disposed ”) have the meanings specified in RCRA and the term “ oil and gas waste ” shall have the meaning specified in Section 91.1011 of the Texas Natural Resources Code (“ Section 91.1011 ”); provided, however, that (a) in the event either OPA, CERCLA, RCRA or Section 91.1011 is amended so as to broaden the meaning of any term defined thereby, such broader meaning shall apply subsequent to the effective date of such amendment and (b) to the extent the laws of the state or other jurisdiction in which any Property of the Borrower or any Restricted Subsidiary is located establish a meaning for “ oil ,” “ hazardous substance ,” “ release ,” “ solid waste ,” “ disposal ” or “ oil and gas waste ” which is broader than that specified in either OPA, CERCLA, RCRA or Section 91.1011, such broader meaning shall apply.
 
Equity Interests ” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such Equity Interest.
 
Equity Issuance ” means the issuance, sale or other disposition after the Effective Date by the Parent of its Equity Interests.
 
ERISA ” means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute.
 
ERISA Affiliate ” means each trade or business (whether or not incorporated) which together with the Parent or any Subsidiary of the Parent would be deemed to be a “single employer” within the meaning of section 4001(b)(1) of ERISA or subsections (b), (c), (m) or (o) of section 414 of the Code.
 
ERISA Event ” means (a) a “Reportable Event” described in section 4043 of ERISA and the regulations issued thereunder, (b) the withdrawal of the Parent, any Loan Party or any ERISA Affiliate from a Plan during a plan year in which it was a “substantial employer” as defined in section 4001(a)(2) of ERISA, (c) the filing of a notice of intent to terminate a Plan or the treatment of a Plan amendment as a termination under section 4041 of ERISA, (d) the institution of proceedings to terminate a Plan by the PBGC, (e) receipt of a notice of withdrawal liability pursuant to Section 4202 of ERISA, (f) any other event or condition which might constitute grounds under section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan or (g) on and after the effectiveness of the Pension Act, a determination that a Plan is, or is expected to be, in “at risk” status (as defined n 303(i)(4) of ERISA or 430(i)(4) of the Code).
 
Eurodollar ”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted LIBO Rate.
 
Event of Default ” has the meaning assigned such term in Section 10.01.
 
8

 
Excepted Liens ” means:  (a) Liens for taxes, assessments or other governmental charges or levies 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; (b) Liens in connection with workers’ compensation, unemployment insurance or other social security, old age pension or public liability obligations 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; (c) statutory landlord’s liens, operators’, vendors’, carriers’, warehousemen’s, repairmen’s, mechanics’, suppliers’, workers’, materialmen’s, construction or other like Liens arising by operation of law in the ordinary course of business or incident to the exploration, development, operation and maintenance of Oil and Gas Properties each of which is in respect of obligations that 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; (d) contractual Liens which arise in the ordinary course of business under operating agreements, joint venture agreements, oil and gas partnership agreements, oil and gas leases, farm-out agreements, division orders, contracts for the sale, transportation or exchange of oil and natural gas, unitization and pooling declarations and agreements, area of mutual interest agreements, overriding royalty agreements, marketing agreements, processing agreements, net profits agreements, development agreements, gas balancing or deferred production agreements, injection, repressuring and recycling agreements, salt water or other disposal agreements, seismic or other geophysical permits or agreements, and other agreements which are usual and customary in the oil and gas business 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 the 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 such Property subject thereto; (e) Liens arising solely by virtue of any statutory or common law provision relating to banker’s liens, rights of set-off or similar rights and remedies and burdening only deposit accounts or other funds maintained with a depository or financial institution; (f) easements, restrictions, servitudes, permits, conditions, covenants, exceptions or reservations in any Property of the Borrower or any Restricted Subsidiary for the purpose of roads, pipelines, transmission lines, transportation lines, distribution lines for the removal of gas, oil, coal or other minerals or timber, and other like purposes, or for the joint or common use of real estate, rights of way, facilities and equipment, that do not secure any monetary obligations and which in the aggregate do not materially impair the use of such Property for the purposes of which such Property is held by the Borrower or any or materially impair the value of such Property subject thereto; (g) Liens on cash or securities pledged or subject to an escrow agreement to secure plugging and abandoning obligations under the P&A Escrow Agreement, performance of tenders, surety and appeal bonds, government contracts, performance and return of money bonds, bids, trade contracts, leases, statutory obligations, regulatory obligations and other obligations of a like nature incurred in the ordinary course of business and (h) judgment and attachment Liens not giving rise to an Event of Default, provided that any appropriate legal proceedings which may have been duly initiated for the review of such judgment shall not have been finally terminated or the period within which such proceeding may be initiated shall not have expired and no action to enforce such Lien has been commenced; provided, further that Liens described in clause (e) shall remain “Excepted Liens” only for so long as no action to enforce such Lien has been commenced, and no intention to subordinate the first priority Lien granted in favor of the Administrative Agent and the Lenders is to be hereby implied or expressed by the permitted existence of such Excepted Liens.
 
Exchange Notes ” means any securities issued in exchange for the Bridge Loans having terms and conditions substantially as set forth in Exhibit H to the Bridge Credit Agreement.
 
Existing Convertible Notes ” means approximately $215,870,000 of outstanding convertible notes of the Parent consisting of (i) its $100,870,000 6% senior convertible notes due 2008 and (ii) its $115,000,000 5 ½ % senior convertible notes due 2011.
 
9

 
Federal Funds Effective Rate ” means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.
 
Financial Officer ” means, for any Person, any vice president, the chief financial officer, principal accounting officer, treasurer or controller of such Person.  Unless otherwise specified, all references herein to a Financial Officer means a Financial Officer of the Parent.
 
Financial Statements ” means the financial statement or statements of the Parent and its Consolidated Subsidiaries referred to in Section 7.04, including all footnotes attached thereto.
 
First Lien Debt ” means the aggregate Revolving Credit Exposures of the Lenders under this Agreement.
 
Foreign Subsidiary ” means any Restricted Subsidiary that is not a Domestic Subsidiary.
 
GAAP ” means generally accepted accounting principles in the United States of America as in effect from time to time subject to the terms and conditions set forth in Section 1.05 .
 
Governmental Authority ” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, 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 over any Loan Party, any of their Properties, any Agent, the Issuing Bank or any Lender.
 
Governmental Requirement ” means any law, statute, code, ordinance, order, determination, rule, regulation, judgment, decree, injunction, franchise, permit, certificate, license, authorization or other directive or requirement, whether now or hereinafter in effect, including, without limitation, Environmental Laws, energy regulations and occupational, safety and health standards or controls, of any Governmental Authority.
 
Guarantors ” means:
 
 
(a)
the Parent;
 
 
(b)
K-Mc Venture I LLC, a Delaware limited liability company;
 
 
(c)
Freeport Canadian Exploration Company, a Delaware corporation;
 
 
(d)
McMoRan International Inc., a Delaware corporation; and
 
 
(e)
each other Domestic Subsidiary which is a Wholly-Owned Subsidiary that guarantees the Indebtedness pursuant to Section 8.14(b).

Guaranty Agreement ” means an agreement executed by the Guarantors in substantially the form of Exhibit F-2 unconditionally guarantying on a joint and several basis, payment of the Indebtedness, as the same may be amended, modified or supplemented from time to time.
 
10

 
Hydrocarbon Interests ” means all rights, titles, interests and estates now or hereafter acquired in and to oil and gas leases, oil, gas and mineral leases, or other liquid or gaseous hydrocarbon leases, mineral fee interests, overriding royalty and royalty interests, net profit interests and production payment interests, including any reserved or residual interests of whatever nature.
 
Hydrocarbons ” means oil, gas, casinghead gas, drip gasoline, natural gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and all products refined or separated therefrom.
 
Indebtedness ” means any and all amounts owing or to be owing by any Loan Party (whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising): (a) to the Administrative Agent, the Issuing Bank or any Lender under any Loan Document; (b) to any Lender or any Affiliate of a Lender under any Swap Agreement between any Loan Party and such Lender or Affiliate of a Lender while such Person (or in the case of its Affiliate, the Person affiliated therewith) is a Lender hereunder and (c) all renewals, extensions and/or rearrangements of any of the above.
 
Information Memorandum ” means the Confidential Information Memorandum dated June 2007 relating to the Parent, the Borrower and the Transactions.
 
Initial Reserve Report ” means the engineering information provided by the Borrower and delivered to the Administrative Agent, with respect to the value of the Oil and Gas Properties of the Borrower and its Restricted Subsidiaries as of December 31, 2006 and with respect to the Acquisition Properties the merged report of Ryder Scott Petroleum Company, L.P. and the Seller dated as of June 30, 2007.
 
Intercreditor Agreement ” means that certain Intercreditor Agreement in substantially the form of Exhibit I among the Administrative Agent, the Borrower and Guarantors and the agent on behalf of the lenders under the Bridge Loans and/or the holders of the Exchange Notes, as the same may from time to time be amended, modified, supplemented or restated in accordance with the provisions thereof.
 
Interest Election Request ” means a request by the Borrower to convert or continue a Borrowing in accordance with Section 2.04 .
 
Interest Payment Date ” means (a) with respect to any ABR Loan, the last day of each March, June, September and December and (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period.
 
Interest Period ” means with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six months (or, if available to each Lender, periods of less than one month and periods of nine or twelve months) thereafter, as the Borrower may elect; provided, that (a) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, (b) no Interest Period may have a term which would extend beyond the Maturity Date, (c) no Interest Period shall extend beyond the date of scheduled Aggregate Maximum Credit Amount reductions if repayments of any Loans are required on such dates, and (d) any Interest Period pertaining to a Eurodollar Borrowing that commences on the last Business Day of a calendar month (or on a day for which there is no numerically
 
11

 
corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period.  For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.
 
Interim Assignment Properties ” means those certain Acquisition Properties listed on Schedule 7.16 for which the Seller has beneficial title but not obtained all conveyance documents necessary to vest record legal title in itself and as a result which the Borrower will not have record legal title vested in it as of the Effective Date.
 
Interim Redetermination ” has the meaning assigned such term in Section 2.07(b) .
 
Interim Redetermination Date ” means the date on which a Borrowing Base that has been redetermined pursuant to an Interim Redetermination becomes effective as provided in Section 2.07(d) .
 
Investment ” means, for any Person: (a) the acquisition (whether for cash, Property, services or securities or otherwise) of Equity Interests of any other Person or any agreement to make any such acquisition (including, without limitation, any “short sale” or any sale of any securities at a time when such securities are not owned by the Person entering into such short sale); (b) the making of any advance, loan or capital contribution to, the assumption of Debt of, the purchase or other acquisition of any other Debt of or equity participation or interest in, or other extension of credit to, any other Person (including the purchase of Property from another Person subject to an understanding or agreement, contingent or otherwise, to resell such Property to such Person for any value other than the then fair market value of such Property, but excluding any such advance, loan or extension of credit having a term not exceeding ninety (90) days representing the purchase price of inventory, material, equipment or supplies sold by such Person in the ordinary course of business); (c) the purchase or acquisition (in one or a series of transactions) of Property of another Person that constitutes a business unit or (d) the entering into of any guarantee of, or other contingent obligation (including the deposit of any Equity Interests to be sold) with respect to, Debt or other liability of any other Person and (without duplication) any amount committed to be advanced, lent or extended to such Person.
 
Issuing Bank ” means JPMorgan, in its capacity as the issuer of Letters of Credit hereunder, and its successors in such capacity as provided in Section 2.08(i) .  The Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of the Issuing Bank, in which case the term “ Issuing Bank ” shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate.
 
LC Commitment ” at any time means Two Hundred Million Dollars ($200,000,000.00).
 
LC Disbursement ” means a payment made by the Issuing Bank pursuant to a Letter of Credit.
 
LC Exposure ” means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time.  The LC Exposure of any Lender at any time shall be its Applicable Percentage of the total LC Exposure at such time.
 
Lenders ” means the Persons listed on Annex I and any Person that shall have become a party hereto pursuant to an Assignment and Assumption, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption; provided , that unless the context otherwise requires, each reference herein to the Lenders shall be deemed to include any Conduit Lender.
 
12

 
Letter of Credit ” means any letter of credit issued pursuant to this Agreement, including without limitation the PPR Letter of Credit.
 
Letter of Credit Agreements ” means all letter of credit applications and other agreements (including any amendments, modifications or supplements thereto) submitted by the Borrower, or entered into by the Borrower, with the Issuing Bank relating to any Letter of Credit.
 
LIBO Rate ” means, with respect to each day during each Interest Period pertaining to a Eurodollar Loan, the rate per annum determined on the basis of the rate for deposits in dollars for a period equal to such Interest Period commencing on the first day of such Interest Period appearing on the Reuters Screen LIBOR01 Page as of 11:00 A.M., London time, two Business Days prior to the beginning of such Interest Period.  In the event that such rate does not appear on such page (or otherwise on such screen), the “ LIBO Rate ” shall be determined by reference to such other comparable publicly available service for displaying eurodollar rates as may be selected by the Administrative Agent or, in the absence of such availability, by reference to the rate at which the Administrative Agent is offered dollar deposits at or about 11:00 A.M., London time, two Business Days prior to the beginning of such Interest Period in the interbank eurodollar market where its eurodollar and foreign currency and exchange operations are then being conducted for delivery on the first day of such Interest Period for the number of days comprised therein.
 
Lien ” means  any interest in Property securing an obligation owed to, or a claim by, a Person other than the owner of the Property, whether such interest is based on the common law, statute or contract, and whether such obligation or claim is fixed or contingent, and including but not limited to (a) the lien or security interest arising from a mortgage, encumbrance, pledge, security agreement, conditional sale or trust receipt or a lease, consignment or bailment for security purposes or (b) production payments and the like payable out of Oil and Gas Properties.  The term “ Lien ” shall include easements, restrictions, servitudes, permits, conditions, covenants, exceptions or reservations. For the purposes of this Agreement, the Parent and its Restricted Subsidiaries shall be deemed to be the owner of any Property which it has acquired or holds subject to a conditional sale agreement, or leases under a financing lease or other arrangement pursuant to which title to the Property has been retained by or vested in some other Person in a transaction intended to create a financing.
 
Loan Documents ” means this Agreement, the Notes, the Letter of Credit Agreements, the Letters of Credit and the Security Instruments.
 
Loan Party ” means the Parent, the Borrower and any other Guarantor.
 
Loans ” means the loans made by the Lenders to the Borrower pursuant to this Agreement.
 
Majority Lenders ” means, at any time while no Loans or LC Exposure is outstanding, Lenders having greater than fifty percent (50%) of the Aggregate Maximum Credit Amounts; and at any time while any Loans or LC Exposure is outstanding, Lenders holding greater than fifty percent (50%) of the outstanding aggregate principal amount of the Loans or participation interests in Letters of Credit (without regard to any sale by a Lender of a participation in any Loan under Section 12.04(c) ).
 
Material Adverse Effect ” means a material adverse change in, or material adverse effect on (a) the business, operations or financial condition of the Parent and the Loan Parties taken as a whole, (b) the ability of any Loan Party to perform any of its obligations under any Loan Document to which it is a party, (c) the validity or enforceability of any Loan Document or (d) the rights and remedies of or benefits available to the Administrative Agent, any other Agent, the Issuing Bank or any Lender under the Loan Documents.
 
13

 
Material Indebtedness ” means Debt (other than the Loans and Letters of Credit), or obligations in respect of one or more Swap Agreements, of any one or more of any Loan Party in an aggregate principal amount exceeding $25,000,000.  For purposes of determining Material Indebtedness, the “principal amount” of the obligations of any Loan Party in respect of any Swap Agreement at any time shall be the Swap Termination Value.
 
Maturity Date ” means August 6, 2012.
 
Maximum Credit Amount ” means, as to each Lender, the amount set forth opposite such Lender’s name on Annex I under the caption “Maximum Credit Amounts”, as the same may be (a) reduced or terminated from time to time in connection with a reduction or termination of the Aggregate Maximum Credit Amounts pursuant to Section 2.06, or (b) modified from time to time pursuant to any assignment permitted by Section 12.04(b) . As of the Effective Date, the aggregate Maximum Credit Amounts of the Lenders are $700,000,000.
 
Moody’s ” means Moody’s Investors Service, Inc. and any successor thereto that is a nationally recognized rating agency.
 
Mortgaged Property ” means any Property owned by the Borrower or any Guarantor which is subject to the Liens existing and to exist under the terms of the Security Instruments.
 
Multiemployer Plan ” means a Plan which is a multiemployer plan as defined in section 3(37) or 4001 (a)(3) of ERISA.
 
New Borrowing Base Notice ” has the meaning assigned such term in Section 2.07(d) .
 
Non-Recourse Debt ” means any Debt of any Unrestricted Subsidiary, in each case in respect of which: (a) the holder or holders thereof (i) shall have recourse only to, and shall have the right to require the obligations of such Unrestricted Subsidiary to be performed, satisfied, and paid only out of, the Property of such Unrestricted Subsidiary and/or one or more of its Subsidiaries (but only to the extent that such Subsidiaries are Unrestricted Subsidiaries) and/or any other Person (other than the Parent, the Borrower and/or any Restricted Subsidiary) and (ii) shall have no direct or indirect recourse (including by way of guaranty, support or indemnity) to the Parent, the Borrower or any Restricted Subsidiary or to any of the Property of the Parent, the Borrower or any Restricted Subsidiary, whether for principal, interest, fees, expenses or otherwise; and (b) the terms and conditions relating to the non-recourse nature of such Debt are in form and substance reasonably acceptable to the Administrative Agent.
 
Non-US Lender ” has the meaning set forth in Section 1.01(d) .
 
Notes ” means the promissory notes, if any, of the Borrower described in Section 2.02(d) and being substantially in the form of Exhibit A, together with all amendments, modifications, replacements, extensions and rearrangements thereof.
 
Oil and Gas Properties ” means (a) Hydrocarbon Interests; (b) the Properties now or hereafter pooled or unitized with Hydrocarbon Interests; (c) all presently existing or future unitization, pooling agreements and declarations of pooled units and the units created thereby (including without limitation all units created under orders, regulations and rules of any Governmental Authority) which may affect all or any portion of the Hydrocarbon Interests; (d) all operating agreements, contracts and other agreements, including production sharing contracts and agreements, which relate to any of the Hydrocarbon Interests or the production, sale, purchase, exchange or processing of Hydrocarbons from or attributable to such Hydrocarbon Interests; (e) all Hydrocarbons in and under and which may be produced and saved or attributable to the Hydrocarbon Interests, including all oil in tanks, and all rents, issues, profits, proceeds,
 
14

 
products, revenues and other incomes from or attributable to the Hydrocarbon Interests; (f) all tenements, hereditaments, appurtenances and Properties in any manner appertaining, belonging, affixed or incidental to the Hydrocarbon Interests and (g) all Properties, rights, titles, interests and estates described or referred to above, including any and all Property, real or personal, now owned or hereinafter acquired and situated upon, used, held for use or useful in connection with the operating, working or development of any of such Hydrocarbon Interests or Property (excluding drilling rigs, automotive equipment, rental equipment or other personal Property which may be on such premises for the purpose of drilling a well or for other similar temporary uses) and including any and all oil wells, gas wells, injection wells or other wells, buildings, structures, fuel separators, liquid extraction plants, plant compressors, pumps, pumping units, field gathering systems, tanks and tank batteries, fixtures, valves, fittings, machinery and parts, engines, boilers, meters, apparatus, equipment, appliances, tools, implements, cables, wires, towers, casing, tubing and rods, surface leases, rights-of-way, easements and servitudes together with all additions, substitutions, replacements, accessions and attachments to any and all of the foregoing.
 
P&A Escrow Agreement ” means that certain P&A Escrow Agreement dated as of August 6, 2007 among the Borrower and the Seller.
 
Parent Loan ” means the intercompany loan agreement by and between the Borrower, as borrower, and the Parent, as lender, dated as of April 17, 2006.
 
Participant ” has the meaning set forth in Section 12.04(c) (i).
 
PBGC ” means the Pension Benefit Guaranty Corporation, or any successor thereto.
 
Pension Act ”: means the Pension Protection Act of 2006, as it presently exists or as it may be amended from time to time.
 
Permitted Refinancing Debt ” means Debt (for purposes of this definition, “ new Debt ”) incurred in exchange for, or proceeds of which are used to refinance, all of any other Debt (the “ Refinanced Debt ”); provided that (a) such new Debt is in an aggregate principal amount not in excess of the sum of (i) the aggregate principal amount then outstanding of the Refinanced Debt (or, if the Refinanced Debt is exchanged or acquired for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration thereof, such lesser amount) and (ii) an amount necessary to pay any fees and expenses, including premiums, related to such exchange or refinancing; (b) such new Debt has a stated maturity no earlier than the stated maturity of the Refinanced Debt and an average life no shorter than the average life of the Refinanced Debt; (c) such new Debt (and any guarantees thereof) is secured by no more collateral than the collateral which secured, or is permitted by the terms of this Agreement to secure, the Refinanced Debt; (d) the obligor(s) in respect of such new Debt shall be the same as the obligor(s) in respect of such Refinanced Debt and if such Refinanced Debt is not guarantied by any Loan Party, then such new Debt shall also not be guarantied by any Loan Party; and (e) the Liens, if any, securing such new Debt are subordinated to the Liens securing the Indebtedness (or, if applicable, the Guaranty Agreement) to at least the same extent as the Liens securing the Refinanced Debt.
 
Person ” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.
 
Plan ” means any employee pension benefit plan, as defined in section 3(2) of ERISA, which (a) is currently or hereafter sponsored, maintained or contributed to by a Loan Party or an ERISA Affiliate or (b) was at any time during the six calendar years preceding the date hereof, sponsored, maintained or contributed to by a Loan Party or an ERISA Affiliate.
 
15

 
PPR Letter of Credit ” means the Letter of Credit issued pursuant to Section 2.08(k).
 
Preferential Purchase Right Properties ” means each of the Oil and Gas Properties listed in Schedule 1.02(b).
 
Prime Rate ” means the rate of interest per annum publicly announced from time to time by JPMorgan as its prime rate in effect at its principal office in New York City; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective.  Such rate is set by the Administrative Agent as a general reference rate of interest, taking into account such factors as the Administrative Agent may deem appropriate; it being understood that many of the Administrative Agent’s commercial or other loans are priced in relation to such rate, that it is not necessarily the lowest or best rate actually charged to any customer and that the Administrative Agent may make various commercial or other loans at rates of interest having no relationship to such rate.
 
Property ” means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, including, without limitation, cash, securities, accounts and contract rights.
 
Proposed Borrowing Base ” has the meaning assigned to such term in Section 2.07(c)(i) .
 
Proposed Borrowing Base Notice ” has the meaning assigned to such term in Section 2.07(c)(ii) .
 
Redemption ” means with respect to any Debt, the repurchase, redemption, prepayment, repayment, defeasance or any other acquisition or retirement for value (or the segregation of funds with respect to any of the foregoing) of such Debt.  “ Redeem ” has the correlative meaning thereto.
 
Redetermination Date ” means, with respect to any Scheduled Redetermination or any Interim Redetermination, the date that the redetermined Borrowing Base related thereto becomes effective pursuant to Section 2.07(d) .
 
Register ” has the meaning assigned such term in Section 12.04(b)(iv) .
 
Regulation D ” means Regulation D of the Board, as the same may be amended, supplemented or replaced from time to time.
 
Related Parties ” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors (including attorneys, accountants and experts) of such Person and such Person’s Affiliates.
 
Remedial Work ” has the meaning assigned such term in Section 8.10(a) .
 
Required Lenders ” means, at any time while no Loans or LC Exposure is outstanding, Lenders having at least sixty-six and two thirds percent (66-2/3%) of the Aggregate Maximum Credit Amounts; and at any time while any Loans or LC Exposure is outstanding, Lenders holding at least sixty-six and two thirds percent (66-2/3%) of the outstanding aggregate principal amount of the Loans or participation interests in Letters of Credit (without regard to any sale by a Lender of a participation in any Loan under Section 12.04(c)).
 
Reserve Report ” means the Initial Reserve Report and each other report setting forth, as of each January 1 st or July 1 st (or such other date in the event of an Interim Redetermination), the oil and gas reserves attributable to the Oil and Gas Properties of the Borrower and the Restricted Subsidiaries, together with a projection of the rate of production and future net income, taxes, operating expenses and
 
16

 
capital expenditures with respect thereto as of such date based upon the economic assumptions consistent with the Administrative Agent’s lending requirements at the time.
 
Responsible Officer ” means, as to any Person, the Chief Executive Officer, the President, any Financial Officer or any Vice President of such Person.  Unless otherwise specified, all references to a Responsible Officer herein shall mean a Responsible Officer of the Parent.
 
Restricted Payment ” means any dividend or other distribution (whether in cash, securities or other Property) with respect to any Equity Interests in any Person, or any payment (whether in cash, securities or other Property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Equity Interests or any option, warrant or other right to acquire any such Equity Interests.
 
Restricted Subsidiary ” means any direct or indirect Subsidiary of the Parent that is not an Unrestricted Subsidiary.
 
Revolving Credit Exposure ” means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender’s Loans and its LC Exposure at such time.
 
Scheduled Redetermination ” has the meaning assigned such term in Section 2.07(b) .
 
Scheduled Redetermination Date ” means the date on which a Borrowing Base that has been redetermined pursuant to a Scheduled Redetermination becomes effective as provided in Section 2.07(d) .
 
SEC ” means the Securities and Exchange Commission or any successor Governmental Authority.
 
Second Lien Notes ” means the $100,000,000 Second Lien Term Notes issued pursuant to the Second Lien Term Loan Agreement.
 
Second Lien Term Loan Agreement ” means that certain Second Lien Term Loan Agreement dated as of January 19, 2007 among the Borrower, JPMorgan Chase Bank, N.A., as administrative agent and the lenders party thereto.
 
Securities Act ” means the Securities Act of 1933, as amended from time to time.
 
Security Instruments ” means the Guaranty Agreement, the Intercreditor Agreement (if and when executed), mortgages, deeds of trust and other agreements, instruments or certificates described or referred to in Exhibit F-1, and any and all other agreements, instruments, consents or certificates now or hereafter executed and delivered by the Parent, the Borrower or any other Person (other than Swap Agreements with the Lenders or any Affiliate of a Lender or participation or similar agreements between any Lender and any other lender or creditor with respect to any Indebtedness pursuant to this Agreement) in connection with, or as security for the payment or performance of the Indebtedness, the Notes, this Agreement, or reimbursement obligations under the Letters of Credit, as such agreements may be amended, modified, supplemented or restated from time to time.
 
Seller ” means Newfield Exploration Company, a Delaware corporation.
 
Senior Notes ” means (a) any senior, senior subordinated or subordinated Debt issued by the Parent or the Borrower (and any guarantees thereof by any Loan Party) on or after the Effective Date under Section 9.02(j) which is unsecured and any Permitted Refinancing Debt in respect thereof, and (b)
 
17

 
any convertible Debt issued by the Parent (and any guarantees thereof by any Loan Party) on or after the Effective Date under Section 9.02(j) which is unsecured and any Permitted Refinancing Debt in respect thereof.
 
Significant Subsidiary ” has the meaning set forth in the indentures relating to the Existing Convertible Notes.
 
S&P ” means Standard & Poor’s Ratings Group, a division of The McGraw-Hill Companies, Inc., and any successor thereto that is a nationally recognized rating agency.
 
Statutory Reserve Rate ” means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board to which the Administrative Agent is subject, with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board).  Such reserve percentages shall include those imposed pursuant to such Regulation D.  Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation.  The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.
 
Subsidiary ” means: (a) any Person of which at least a majority of the outstanding Equity Interests having by the terms thereof ordinary voting power to elect a majority of the board of directors, manager or other governing body of such Person (irrespective of whether or not at the time Equity Interests of any other class or classes of such Person shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by the Parent and/or one or more of its Subsidiaries and (b) any partnership of which the Parent or any Loan Party is a general partner.  Unless otherwise indicated herein, each reference to the term “ Subsidiary ” shall mean a direct or indirect Subsidiary of the Parent.
 
Swap Agreement ” means any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement, whether exchange traded, “over-the-counter” or otherwise, involving, or settled by reference to, one or more interest rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of any Loan Party shall be a Swap Agreement.
 
Swap Termination Value ” means, in respect of any one or more Swap Agreements, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Agreements, (a) for any date on or after the date such Swap Agreements have been closed out and termination value(s) determined in accordance therewith, such termination value(s) and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Agreements, as determined by the counterparties to such Swap Agreements.
 
Synthetic Leases ” means, in respect of any Person, all leases which shall have been, or should have been, in accordance with GAAP, treated as operating leases on the financial statements of the Person liable (whether contingently or otherwise) for the payment of rent thereunder and which were properly treated as indebtedness for borrowed money for purposes of U.S. federal income taxes, if the lessee in respect thereof is obligated to either purchase for an amount in excess of, or pay upon early termination
 
18

 
 
an amount in excess of, 80% of the residual value of the Property subject to such operating lease upon expiration or early termination of such lease.
 
Termination Date ” means the earlier of the Maturity Date and the date of termination of the Commitments.
 
Title Indemnity Agreement ” means that certain Title Indemnity Agreement dated as of August 6, 2007 among the Borrower and the Seller.
 
Total Debt ” means, at any date, all Debt for borrowed money of the Parent and the Consolidated Subsidiaries on a consolidated basis.
 
Transactions ” means, with respect to (a) the Borrower, the execution, delivery and performance by the Borrower of this Agreement and each other Loan Document and Acquisition Document to which it is a party, the Acquisition, the borrowing of Loans, the use of the proceeds thereof and the issuance of Letters of Credit hereunder, and the grant of Liens by the Borrower on Mortgaged Properties and other Properties pursuant to the Security Instruments and (b) each Guarantor, the execution, delivery and performance by such Guarantor of each Loan Document and Acquisition Document to which it is a party, the Acquisition, the guaranteeing of the Indebtedness and the other obligations under the Guaranty Agreement by such Guarantor and such Guarantor’s grant of the security interests and provision of collateral under the Security Instruments, and the grant of Liens by such Guarantor on Mortgaged Properties and other Properties pursuant to the Security Instruments.
 
Transferee ” means any Assignee or Participant.
 
Transition Services Agreement ” means that certain Transition Services Agreement dated as of August 6, 2007 among the Borrower and the Seller.
 
Type ”, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Alternate Base Rate or the Adjusted LIBO Rate.
 
Unrestricted Subsidiary ” means Freeport-McMoRan Energy, LLC, a Delaware limited liability company, any other Subsidiary of the Parent designated as such on Schedule 7.14 and each other Subsidiary of any of the foregoing.
 
Wholly-Owned Subsidiary ” means any Restricted Subsidiary of which all of the outstanding Equity Interests (other than any directors’ qualifying shares mandated by applicable law), on a fully-diluted basis, are owned by the Parent and/or one or more of the Wholly-Owned Subsidiaries.
 
Section 1.03    Types of Loans and Borrowings .  For purposes of this Agreement, Loans and Borrowings, respectively, may be classified and referred to by Type (e.g., a “ Eurodollar Loan ” or a “ Eurodollar Borrowing ”).
 
Section 1.04    Terms Generally ; Rules of Construction .  The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have the same meaning and effect as the word “shall”.  Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth in the Loan Documents), (b) any reference herein to any law shall
 
19

 
be construed as referring to such law as amended, modified, codified or reenacted, in whole or in part, and in effect from time to time, (c) any reference herein to any Person shall be construed to include such Person’s successors and assigns (subject to the restrictions contained in the Loan Documents), (d) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (e) with respect to the determination of any time period, the word “from” means “from and including” and the word “to” means “to and including” and (f) any reference herein to Articles, Sections, Annexes, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Annexes, Exhibits and Schedules to, this Agreement.  No provision of this Agreement or any other Loan Document shall be interpreted or construed against any Person solely because such Person or its legal representative drafted such provision.
 
Section 1.05    Accounting Terms and Determinations; GAAP .  Unless otherwise specified herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if the Borrower or the Parent notifies the Administrative Agent that the Borrower or the Parent requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower or the Parent that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until  such notice shall have been withdrawn or such provision  amended in accordance herewith.
 
ARTICLE II 
The Credits
 
Section 2.01    Commitments .  Subject to the terms and conditions set forth herein, each Lender agrees to make Loans to the Borrower during the Availability Period in an aggregate principal amount that will not result in (a) such Lender’s Revolving Credit Exposure exceeding such Lender’s Commitment or (b) the total Revolving Credit Exposures exceeding the total Commitments.  Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, repay and reborrow the Loans.  On the Effective Date (or as soon as practicable with respect to (iii)):
 
(i)    the Borrower shall pay all accrued and unpaid commitment fees, break funding fees under Section 5.02 and all other fees that are outstanding under the Existing Credit Agreement for the account of each “Lender” under the Existing Credit Agreement;
 
(ii)    each “ABR Loan” and “Eurodollar Loan” outstanding under the Existing Credit Agreement shall be deemed to be repaid with the proceeds of a new ABR Loan or Eurodollar Loan, as applicable, under this Agreement;
 
(iii)    the Administrative Agent shall use reasonable efforts to cause such “Lender” under the Existing Credit Agreement to deliver to the Borrower as soon as practicable after the Effective Date the Note issued by the Borrower to it under the Existing Credit Agreement, marked “canceled” or otherwise similarly defaced;
 
(iv)    each Letter of Credit issued and outstanding under the Existing Credit Agreement (if any) shall be deemed issued under this Agreement without the payment of additional fees; and
 
20

 
(v)    the Existing Credit Agreement and the commitments thereunder shall be superceded by this Agreement and such commitments shall terminate.
 
It is the intent of the parties hereto that this Agreement not constitute a novation of the obligations and liabilities existing under the Existing Credit Agreement or evidence repayment of any such obligations and liabilities and that this Agreement amend and restate in its entirety the Existing Credit Agreement and re-evidence the obligations of the Borrower outstanding thereunder.
 
Section 2.02    Loans and Borrowings .
 
(a)    Borrowings; Several Obligations .  Each Loan shall be made as part of a Borrowing consisting of Loans made by the Lenders ratably in accordance with their respective Commitments.  The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments are several and no Lender shall be responsible for any other Lender’s failure to make Loans as required.
 
(b)    Types of Loans .  Subject to Section 3.03 , each Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request in accordance herewith.  Each Lender at its option may make any Eurodollar 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 the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement.
 
(c)    Minimum Amounts; Limitation on Number of Borrowings .  At the commencement of each Interest Period for any Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of $500,000 and not less than $1,000,000.  At the time that each ABR Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of $250,000 and not less than $1,000,000.  Borrowings of more than one Type may be outstanding at the same time, provided that there shall not at any time be more than a total of ten (10) Eurodollar Borrowings outstanding.  Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Maturity Date.
 
(d)    Notes .  If a Lender shall make a written request to the Administrative Agent and the Borrower to have its Loans evidenced by a promissory note, then the Borrower shall execute and deliver a single promissory note of the Borrower in substantially the form of Exhibit A, payable to the order of such Lender in a principal amount equal to its Maximum Credit Amount as then in effect, and otherwise duly completed.  The date, amount, Type, interest rate and, if applicable, Interest Period of each Loan made by each Lender, and all payments made on account of the principal thereof, may be recorded by such Lender on its books for its Note, and, prior to any transfer, may be endorsed by such Lender on a schedule attached to such Note or any continuation thereof or on any separate record maintained by such Lender; provided that the failure to make any such notation or to attach a schedule shall not affect any Lender’s or the Borrower’s rights or obligations in respect of such Loans or affect the validity of such transfer by any Lender of its Note.
 
Section 2.03    Requests for Borrowings   To request a Borrowing, the Borrower shall notify the Administrative Agent of such request by telephone (a) in the case of a Eurodollar Borrowing, not later than 12:00 noon, New York City time, three Business Days before the date of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 12:00 noon, New York City time, on the date of the proposed Borrowing; provided that no such notice shall be required for any deemed request of an ABR Borrowing to finance the reimbursement of an LC Disbursement as provided in Section 2.08(e).  Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand
 
21

 
delivery or telecopy to the Administrative Agent of a written Borrowing Request in substantially the form of Exhibit B and signed by the Borrower.  Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.02 :
 
(i)    the aggregate amount of the requested Borrowing;
 
(ii)    the date of such Borrowing, which shall be a Business Day;
 
(iii)    whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;
 
(iv)    in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period”;
 
(v)    the amount of the then effective Borrowing Base and the then effective Conforming Borrowing Base (if then applicable), the current total Revolving Credit Exposures (without regard to the requested Borrowing) and the pro form a total Revolving Credit Exposures (giving effect to the requested Borrowing); and
 
(vi)    the location and number of the Borrower’s account to which funds are to be disbursed, which shall comply with the requirements of Section 2.05 .
 
After April 1, 2009 (unless the Conforming Borrowing Base remains in effect), information regarding the Conforming Borrowing Base may be omitted from subsequent Borrowing Requests.
 
If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing.  If no Interest Period is specified with respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration.  Each Borrowing Request shall constitute a representation that the amount of the requested Borrowing shall not cause the total Revolving Credit Exposures to exceed the total Commitments (i.e., the lesser of the Aggregate Maximum Credit Amounts and the then effective Borrowing Base).
 
Promptly following receipt of a Borrowing Request in accordance with this Section 2.03 , the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.
 
Section 2.04    Interest Elections .
 
(a)    Conversion and Continuance .  Each Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period as specified in such Borrowing Request.  Thereafter, the Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this Section 2.04 .  The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing.
 
(b)    Interest Election Requests .  To make an election pursuant to this Section 2.04 , the Borrower shall notify the Administrative Agent of such election by telephone by the time that a Borrowing Request would be required under Section 2.03 if the Borrower were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election.  Each such telephonic
 
22

 
Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Interest Election Request in substantially the form of Exhibit C and signed by the Borrower.
 
(c)    Information in Interest Election Requests .  Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.02 :
 
(i)    the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to Section 2.04(c)(iii) and (iv) shall be specified for each resulting Borrowing);
 
(ii)    the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;
 
(iii)    whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and
 
(iv)    if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period”.
 
If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration.
 
(d)    Notice to Lenders by the Administrative Agent .  Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.
 
(e)    Effect of Failure to Deliver Timely Interest Election Request and Events of Default and Borrowing Base Deficiencies on Interest Election .  If the Borrower fails to deliver a timely Interest Election Request with respect to a Eurodollar Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing.  Notwithstanding any contrary provision hereof, if an Event of Default or a Borrowing Base Deficiency has occurred and is continuing:  (i) no outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing (and any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective) and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto.
 
Section 2.05    Funding of Borrowings .
 
(a)    Funding by Lenders .  Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 1:00 p.m., New York City time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders.  The Administrative Agent will make such Loans available to the Borrower by promptly crediting the amounts so received, in like funds, to an account of the Borrower maintained with the Administrative Agent in New York, New York and designated by the Borrower in the applicable Borrowing Request; provided that ABR Loans made to finance the reimbursement of an LC Disbursement as provided in Section 2.08(e) shall be remitted by the Administrative Agent to the Issuing Bank.  Nothing herein shall be deemed to obligate any Lender to obtain the funds for its Loan in any particular place or
 
23

 
manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for its Loan in any particular place or manner.
 
(b)    Presumption of Funding by the Lenders .  Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section 2.05(a) 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 Borrowing 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 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 or (ii) in the case of the Borrower, the interest rate applicable to ABR Loans.  If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing.
 
Section 2.06    Termination and Reduction of Aggregate Maximum Credit Amounts .
 
(a)    Scheduled Termination of Commitments .  Unless previously terminated, the Commitments shall terminate on the Maturity Date.  If at any time the Aggregate Maximum Credit Amounts or the Borrowing Base is terminated or reduced to zero, then the Commitments shall terminate on the effective date of such termination or reduction.
 
(b)    Optional Termination and Reduction of Aggregate Maximum Credit Amounts .
 
(i)    The Borrower may at any time terminate, or from time to time reduce, the Aggregate Maximum Credit Amounts; provided that (A) each reduction of the Aggregate Maximum Credit Amounts shall be in an amount that is an integral multiple of $1,000,000 and not less than $10,000,000 and (B) the Borrower shall not terminate or reduce the Aggregate Maximum Credit Amounts if, after giving effect to any concurrent prepayment of the Loans in accordance with Section 3.04(c) , the total Revolving Credit Exposures would exceed the total Commitments.
 
(ii)    The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Aggregate Maximum Credit Amounts under Section 2.06(b)(i) at least three Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof.  Promptly following receipt of any notice, the Administrative Agent shall advise the Lenders of the contents thereof.  Each notice delivered by the Borrower pursuant to this Section 2.06(b)(ii) shall be irrevocable.  Any termination or reduction of the Aggregate Maximum Credit Amounts shall be permanent and may not be reinstated.   Each reduction of the Aggregate Maximum Credit Amounts pursuant to this Section 2.06(b)(ii) shall be made ratably among the Lenders in accordance with each Lender’s Applicable Percentage.
 
(c)    Scheduled and Mandatory Reductions of Aggregate Maximum Commitment Amounts .
 
(i)    The Aggregate Maximum Credit Amounts shall reduce by $300,000,000 in five (5) consecutive and equal quarterly installments of $60,000,000, the initial reduction of which shall occur on December 31, 2007 and the last such reduction shall occur on December 31, 2008.  Each
 
24

 
reduction of the Aggregate Maximum Credit Amounts pursuant to this Section 2.06(c)(i) shall be made ratably among the Lenders in accordance with each Lender’s Applicable Percentage.
 
(ii)    The Aggregate Maximum Credit Amounts shall automatically reduce by an amount equal to the prepayment amounts accepted by the Lenders from time to time pursuant to Section 3.04(c)(iv).  Each reduction of the Aggregate Maximum Credit Amounts pursuant to this Section 2.06(c)(ii) shall be made ratably among the Lenders in accordance with each Lender’s Applicable Percentage.
 
Section 2.07    Borrowing Base .
 
(a)    Initial Borrowing Base and Initial Conforming Borrowing Base .  For the period from and including the Effective Date to but excluding the first Redetermination Date, the amount of the Borrowing Base shall be $700,000,000 and the amount of the Conforming Borrowing Base shall be $500,000,000.   Notwithstanding the foregoing, the Borrowing Base may be subject to further adjustments from time to time pursuant to Section 2.08(k) [preferential purchase rights], Section 8.13(c) [title defects], Section 8.13(d) [MMS approvals] or Section 9.11(d) [asset sales].  As of April 1, 2009, the Conforming Borrowing Base shall equal the Borrowing Base and all references to “Conforming Borrowing Base” in this Agreement shall mean the Borrowing Base.  The Borrowing Base shall, under no circumstances, exceed the Aggregate Maximum Credit Amounts.
 
(b)    Scheduled and Interim Redeterminations .  The Borrowing Base and the Conforming Borrowing Base shall be redetermined semi-annually in accordance with this Section 2.07 (a “ Scheduled Redetermination ”), and, subject to Section 2.07(d) , such redetermined Borrowing Base and Conforming Borrowing Base shall become effective and applicable to the Borrower, the Agents, the Issuing Bank and the Lenders on April 1st and October 1st of each year; provided that the initial Scheduled Redetermination shall be November 1, 2007.  In addition, the Borrower may, by notifying the Administrative Agent thereof, and the Administrative Agent may, at the direction of the Required Lenders, by notifying the Borrower thereof, one time during any 12 month period, each elect to cause the Borrowing Base and the Conforming Borrowing Base to be redetermined between Scheduled Redeterminations (an “ Interim Redetermination ”) in accordance with this Section 2.07 ; provided that the Required Lenders shall not have the right to make such a request for an Interim Redetermination during calendar year 2007 for the thirty (30) days following the Effective Date.
 
(c)    Scheduled and Interim Redetermination Procedure .
 
(i)    Each Scheduled Redetermination and each Interim Redetermination shall be effectuated as follows:  Upon receipt by the Administrative Agent of (A) the Reserve Report and the certificate required to be delivered by the Borrower to the Administrative Agent, in the case of a Scheduled Redetermination, pursuant to Section 8.12(a) and (c) , and, in the case of an Interim Redetermination, pursuant to Section 8.12(b) and (c) , and (B) such other reports, data and supplemental information, including, without limitation, the information provided pursuant to Section 8.12(c) , as may, from time to time, be reasonably requested by the Majority Lenders (the Reserve Report, such certificate and such other reports, data and supplemental information being the “ Engineering Reports ”), the Administrative Agent shall evaluate the information contained in the Engineering Reports and shall, in its sole discretion, propose a new Borrowing Base and which shall prior to October 1, 2008 further specify a new Conforming Borrowing Base (collectively, the “ Proposed Borrowing Base ”) based upon such information and such other information (including, without limitation, the status of title information with respect to the Oil and Gas Properties as described in the Engineering Reports and the existence of any other Debt)
 
25

 
as the Administrative Agent deems appropriate in its sole discretion and consistent with its customary oil and gas lending criteria as it exists at the particular time.
 
(ii)    The Administrative Agent shall notify the Borrower and the Lenders of the Proposed Borrowing Base (the “ Proposed Borrowing Base Notice ”):
 
(A)    in the case of a Scheduled Redetermination (1) if the Administrative Agent shall have received the Engineering Reports required to be delivered by the Borrower pursuant to Section 8.12(a) and (c) in a timely and complete manner, then on or before March 15th and September 15th of such year following the date of delivery or (2) if the Administrative Agent shall not have received the Engineering Reports required to be delivered by the Borrower pursuant to Section 8.12(a) and (c) in a timely and complete manner, then promptly after the Administrative Agent has received complete Engineering Reports from the Borrower and has had a reasonable opportunity to determine the Proposed Borrowing Base in accordance with Section 2.07(c)(i) ; and
 
(B)    in the case of an Interim Redetermination, promptly, and in any event, within fifteen (15) days after the Administrative Agent has received the required Engineering Reports.
 
(iii)    Any Proposed Borrowing Base that would increase the Borrowing Base (or the Conforming Borrowing Base) then in effect must be approved or deemed to have been approved by all of the Lenders as provided in this Section 2.07(c)(iii) ; and any Proposed Borrowing Base that would decrease or maintain the Borrowing Base (or the Conforming Borrowing Base) then in effect must be approved or be deemed to have been approved by the Required Lenders as provided in this Section 2.07(c)(iii) .  Such decisions will be made by each Lender based upon such criteria as such Lender deems appropriate in its sole discretion and consistent with its customary oil and gas lending criteria as it exists at the particular time.  Upon receipt of the Proposed Borrowing Base Notice, each Lender shall have fifteen (15) days to agree with the Proposed Borrowing Base or disagree with the Proposed Borrowing Base by proposing an alternate Borrowing Base (which proposal must also propose a Conforming Borrowing Base, if appropriate).  If at the end of such fifteen (15) days, any Lender has not communicated its approval or disapproval in writing to the Administrative Agent, such silence shall be deemed to be an approval of the Proposed Borrowing Base.  If, at the end of such 15-day period, all of the Lenders, in the case of a Proposed Borrowing Base that would increase the Borrowing Base (or the Conforming Borrowing Base) then in effect, or the Required Lenders, in the case of a Proposed Borrowing Base that would decrease or maintain the Borrowing Base (or the Conforming Borrowing Base) then in effect, have approved or deemed to have approved, as aforesaid, then the Proposed Borrowing Base shall become the new Borrowing Base (and the new Conforming Borrowing Base), effective on the date specified in Section 2.07(d) .  If, however, at the end of such 15-day period, all of the Lenders or the Required Lenders, as applicable, have not approved or deemed to have approved, as aforesaid, then the Administrative Agent shall poll the Lenders to ascertain the highest Borrowing Base (or the highest Conforming Borrowing Base) then acceptable to a number of Lenders sufficient to constitute the Required Lenders and, so long as such amount does not increase the Borrowing Base (or the Conforming Borrowing Base) then in effect, such amount shall become the new Borrowing Base (and the new Conforming Borrowing Base), effective on the date specified in Section 2.07(d) .  While the Conforming Borrowing Base is in effect, the foregoing procedures shall apply to each proposed Borrowing Base and each proposed Conforming Borrowing Base separately.
 
(d)    Effectiveness of a Redetermined Borrowing Base .  After a redetermined Borrowing Base (and Conforming Borrowing Base) is approved or is deemed to have been approved by all
 
26

 
of the Lenders or the Required Lenders, as applicable, pursuant to Section 2.07(c)(iii) , the Administrative Agent shall notify the Borrower and the Lenders (the “ New Borrowing Base Notice ”) of the amount of the redetermined Borrowing Base (and Conforming Borrowing Base), and such amount shall become the new Borrowing Base (and new Conforming Borrowing Base), effective and applicable to the Borrower, the Agents, the Issuing Bank and the Lenders:
 
(i)    in the case of a Scheduled Redetermination, (A) if the Administrative Agent shall have received the Engineering Reports required to be delivered by the Borrower pursuant to Section 8.12(a) and (c) in a timely and complete manner, then on the April 1st or October 1st, as applicable, following such notice, or (B) if the Administrative Agent shall not have received the Engineering Reports required to be delivered by the Borrower pursuant to Section 8.12(a) and (c) in a timely and complete manner, then on the Business Day next succeeding delivery of such notice; and
 
(ii)    in the case of an Interim Redetermination, on the Business Day next succeeding delivery of such notice.
 
Such amount shall then become the Borrowing Base (and the Conforming Borrowing Base) until the next Scheduled Redetermination Date, the next Interim Redetermination Date or the next adjustment to the Borrowing Base (and the Conforming Borrowing Base) under Section 8.13(c) , Section 8.13(d) or Section 9.11(d), whichever occurs first.  Notwithstanding the foregoing, no Scheduled Redetermination or Interim Redetermination shall become effective until the New Borrowing Base Notice related thereto is received by the Borrower.
 
Section 2.08    Letters of Credit .
 
(a)    General .  Subject to the terms and conditions set forth herein, the Borrower may request the issuance of dollar denominated Letters of Credit for its own account or for the account of the Parent or any of its Restricted Subsidiaries, in a form reasonably acceptable to the Administrative Agent and the Issuing Bank, at any time and from time to time during the period from the Effective Date until the day which is five (5) Business Days prior to the end of the Availability Period; provided that the Borrower may not request the issuance, amendment, renewal or extension of Letters of Credit hereunder if a Borrowing Base Deficiency exists at such time or would exist as a result thereof.  In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the Borrower to, or entered into by the Borrower with, the Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control.
 
(b)    Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions .  To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), the Borrower shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by the Issuing Bank) to the Issuing Bank and the Administrative Agent (not less than five (5) Business Days in advance of the requested date of issuance, amendment, renewal or extension) a notice:
 
(i)    requesting the issuance of a Letter of Credit or identifying the Letter of Credit to be amended, renewed or extended;
 
(ii)    specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day);
 
27

 
(iii)    specifying the date on which such Letter of Credit is to expire (which shall comply with Section 2.08(c) );
 
(iv)    specifying the amount of such Letter of Credit;
 
(v)    specifying the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit; and
 
(vi)    specifying the amount of the then effective Borrowing Base and whether a Borrowing Base Deficiency exists at such time, the current total Revolving Credit Exposures (without regard to the requested Letter of Credit or the requested amendment, renewal or extension of an outstanding Letter of Credit) and the pro forma total Revolving Credit Exposures (giving effect to the requested Letter of Credit or the requested amendment, renewal or extension of an outstanding Letter of Credit).
 
Each notice shall constitute a representation that after giving effect to the requested issuance, amendment, renewal or extension, as applicable, (i) the LC Exposure shall not exceed the LC Commitment, provided clause (i) shall not be applicable to the PPR Letter of Credit and (ii) the total Revolving Credit Exposures shall not exceed the total Commitments (i.e. the lesser of the Aggregate Maximum Credit Amounts and the then effective Borrowing Base).
 
If requested by the Issuing Bank, the Borrower also shall submit a letter of credit application on the Issuing Bank’s standard form in connection with any request for a Letter of Credit and shall guarantee the reimbursement of any Letter of Credit issued for the account of the Parent or a Restricted Subsidiary.
 
(c)    Expiration Date .  Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date one year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, one year after such renewal or extension) and (ii) the date that is five Business Days prior to the Maturity Date.
 
(d)    Participations .  By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby grants to each Lender, and each Lender hereby acquires from the Issuing Bank, a participation in such Letter of Credit equal to such Lender’s Applicable Percentage of the aggregate amount available to be drawn under such Letter of Credit.  In consideration and in furtherance of the foregoing, each Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the Issuing Bank, such Lender’s Applicable Percentage of each LC Disbursement made by the Issuing Bank or of any reimbursement payment required to be refunded to the Borrower for any reason.  Each Lender acknowledges and agrees that its obligation to acquire participations pursuant to this Section 2.08(d) in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default, the existence of a Borrowing Base Deficiency or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.
 
(e)    Reimbursement .  If the Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement by paying to the Administrative Agent an amount equal to such LC Disbursement not later than 2:00 p.m., New York City time, on the date that is one (1) Business Day after such LC Disbursement is made, if the Borrower shall have received notice of such LC Disbursement prior to 12:00 noon, New York City time, on the payment date, or, if such notice has not been received by the Borrower prior to such time on the payment date, then not later than
 
28

 
2:00 p.m., New York City time, on the second Business Day after the Borrower receives such notice; provided that if such LC Disbursement is not less than $1,000,000, the Borrower shall, subject to the conditions to Borrowing set forth herein, be deemed to have requested, and the Borrower does hereby request under such circumstances, that such payment be financed with an ABR Borrowing in an equivalent amount and, to the extent so financed, the Borrower’s obligation to make such payment shall be discharged and replaced by the resulting ABR Borrowing.  If the Borrower fails to make such payment when due, the Administrative Agent shall notify each Lender of the applicable LC Disbursement, the payment then due from the Borrower in respect thereof and such Lender’s Applicable Percentage thereof.  Promptly following receipt of such notice, each Lender shall pay to the Administrative Agent its Applicable Percentage of the payment then due from the Borrower, in the same manner as provided in Section 2.05 with respect to Loans made by such Lender (and Section 2.05 shall apply, mutatis mutandis , to the payment obligations of the Lenders), and the Administrative Agent shall promptly pay to the Issuing Bank the amounts so received by it from the Lenders.  Promptly following receipt by the Administrative Agent of any payment from the Borrower pursuant to this Section 2.08(e) , the Administrative Agent shall distribute such payment to the Issuing Bank or, to the extent that Lenders have made payments pursuant to this Section 2.08(e) to reimburse the Issuing Bank, then to such Lenders and the Issuing Bank as their interests may appear.  Any payment made by a Lender pursuant to this Section 2.08(e) to reimburse the Issuing Bank for any LC Disbursement shall not constitute a Loan and shall not relieve the Borrower of its obligation to reimburse such LC Disbursement.
 
(f)    Obligations Absolute .  The Borrower’s obligation to reimburse LC Disbursements as provided in Section 2.08(e) shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit, any Letter of Credit Agreement or this Agreement, or any term or provision therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit or any Letter of Credit Agreement, or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section 2.08(f) , constitute a legal or equitable discharge of, or provide a right of setoff against, the Borrower’s obligations hereunder.  Neither the Administrative Agent, the Lenders nor the Issuing Bank, nor any of their Related Parties shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the Issuing Bank; provided that the foregoing shall not be construed to excuse the Issuing Bank from liability to the Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by the Issuing Bank’s failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof.  The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the part of the Issuing Bank (as finally determined by a court of competent jurisdiction), the Issuing Bank shall be deemed to have exercised all requisite care in each such determination.  In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to
 
29

 
accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.
 
(g)    Disbursement Procedures .  The Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit.  The Issuing Bank shall promptly notify the Administrative Agent and the Borrower by telephone (confirmed by telecopy) of such demand for payment and whether the Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse the Issuing Bank and the Lenders with respect to any such LC Disbursement.
 
(h)    Interim Interest .  If the Issuing Bank shall make any LC Disbursement, then, until the Borrower shall have reimbursed the Issuing Bank for such LC Disbursement, the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that the Borrower reimburses such LC Disbursement, at the rate per annum then applicable to ABR Loans.  Interest accrued pursuant to this Section 2.08(h) shall be for the account of the Issuing Bank, except that interest accrued on and after the date of payment by any Lender pursuant to Section 2.08(e) to reimburse the Issuing Bank shall be for the account of such Lender to the extent of such payment.
 
(i)    Replacement of the Issuing Bank .  The Issuing Bank may be replaced at any time by written agreement among the Borrower, the Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank.  The Administrative Agent shall notify the Lenders of any such replacement of the Issuing Bank.  At the time any such replacement shall become effective, the Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 3.05(b) .  From and after the effective date of any such replacement, (i) the successor Issuing Bank shall have all the rights and obligations of the Issuing Bank under this Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term “Issuing Bank” shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require.  After the replacement of the Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of the Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit.
 
(j)    Cash Collateralization .  If (i) any Event of Default shall occur and be continuing and the Borrower receives notice from the Administrative Agent or the Majority Lenders demanding the deposit of cash collateral pursuant to this Section 2.08(j) , or (ii) the Borrower is required to pay to the Administrative Agent the excess attributable to an LC Exposure in connection with any prepayment pursuant to Section 3.04(c) , then the Borrower shall deposit, in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Lenders, an amount in cash equal to, in the case of an Event of Default, the LC Exposure, and in the case of a payment required by Section 3.04(c) , the amount of such excess as provided in Section 3.04(c) , as of such date plus any accrued and unpaid interest thereon; provided that the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to the Borrower or any Restricted Subsidiary described in Section 10.01(h) or Section 10.01(i) .  The Borrower hereby grants to the Administrative Agent, for the benefit of the Issuing Bank and the Lenders, an exclusive first priority and continuing perfected security interest in and Lien on such account and all cash, checks, drafts, certificates and instruments, if any, from time to time deposited or held in such account, all deposits or wire transfers made thereto, any and all investments purchased with funds deposited in such account, all interest, dividends, cash, instruments, financial assets and other Property from time to time received, receivable or
 
30

 
otherwise payable in respect of, or in exchange for, any or all of the foregoing, and all proceeds, products, accessions, rents, profits, income and benefits therefrom, and any substitutions and replacements therefor.  The Borrower’s obligation to deposit amounts pursuant to this Section 2.08(j) shall be absolute and unconditional, without regard to whether any beneficiary of any such Letter of Credit has attempted to draw down all or a portion of such amount under the terms of a Letter of Credit, and, to the fullest extent permitted by applicable law, shall not be subject to any defense or be affected by a right of set-off, counterclaim or recoupment which the Borrower or any of its Restricted Subsidiaries may now or hereafter have against any such beneficiary, the Issuing Bank, the Administrative Agent, the Lenders or any other Person for any reason whatsoever.  Such deposit shall be held as collateral securing the payment and performance of the Borrower’s and the Guarantor’s obligations under this Agreement and the other Loan Documents.  The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account.  Other than any interest earned on the investment of such deposits, which investments shall be made at the option and sole discretion of the Administrative Agent and at the Borrower’s risk and expense, such deposits shall not bear interest.  Interest or profits, if any, on such investments shall accumulate in such account.  Moneys in such account shall be applied by the Administrative Agent to reimburse the Issuing Bank for LC Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the Borrower for the LC Exposure at such time or, if the maturity of the Loans has been accelerated, be applied to satisfy other obligations of the Borrower and the Guarantors under this Agreement or the other Loan Documents.  If the Borrower is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, and the Borrower is not otherwise required to pay to the Administrative Agent the excess attributable to an LC Exposure in connection with any prepayment pursuant to Section 3.04(c) , then such amount (to the extent not applied as aforesaid) shall be returned to the Borrower within three Business Days after all Events of Default have been cured or waived.
 
(k)    Preferential Purchase Right Letter of Credit .  Without limitation of the foregoing, on the Effective Date, the Issuing Bank will issue a Letter of Credit (the “ PPR Letter of Credit ”) for the benefit of the Seller, in an amount not to exceed $110,000,000 (provided that the amount of the PPR Letter of Credit shall not be deducted from the LC Commitment) to fund the purchase of the Preferential Purchase Right Properties subject of preferential purchase rights which rights have not expired, have not been waived or have not been exercised by the holders thereof on or before the Effective Date.  The PPR Letter of Credit shall expire on the 45 th day after the Effective Date, and to the extent such preferential purchase rights in respect of a Preferential Purchase Right Property are waived or expire without being exercised after the Effective Date, the PPR Letter of Credit will be drawn in an amount equal to the allocated purchase price for such Preferential Purchase Right Property and such Preferential Purchase Right Properties subject thereof will be conveyed to the Borrower.  In connection with such conveyance, the Borrower shall grant to the Administrative Agent a first priority perfected Lien in such conveyed Preferential Purchase Right Properties.  Otherwise, if such preferential purchase rights in respect of a Preferential Purchase Right Property are exercised, the PPR Letter of Credit will reduce by an amount equal to the purchase price allocated to Preferential Purchase Right Property in the Acquisition Documents.  In addition, the Borrowing Base and Conforming Borrowing Base will be permanently reduced by an amount equal to the value, if any, attributed to such Property in the Borrowing Base based on Initial Reserve Report.
 
ARTICLE III
Payments of Principal and Interest; Prepayments; Fees
 
Section 3.01    Repayment of Loans .  The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Loan on the Termination Date.
 
31

 
Section 3.02    Interest .
 
(a)    ABR Loans .  The Loans comprising each ABR Borrowing shall bear interest at the Alternate Base Rate plus the Applicable Margin.
 
(b)    Eurodollar Loans .  The Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Margin.
 
(c)    Post-Default Rate Rate .  Notwithstanding the foregoing, if an Event of Default has occurred and is continuing, or if any principal of or interest on any Loan or any fee or other amount payable by the Borrower or any Guarantor hereunder or under any other Loan Document is not paid when due, whether at stated maturity, upon acceleration or otherwise, and including any payments in respect of a Borrowing Base Deficiency under Section 3.04(c) , then all Loans outstanding, in the case of an Event of Default, and such overdue amount, in the case of a failure to pay amounts when due, shall on or after the date the Required Lenders so request bear interest, after as well as before judgment, at a rate per annum equal to two percent (2%) plus the rate applicable to ABR Loans as provided in Section 3.02(a) .
 
(d)    Interest Payment Dates .  Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and on the Termination Date; provided that (i) interest accrued pursuant to Section 3.02(c) shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than an optional prepayment of an ABR Loan prior to the Termination Date), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment, and (iii) in the event of any conversion of any Eurodollar Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.
 
(e)    Interest Rate Computations .  All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day).  The applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error, and be binding upon the parties hereto.
 
Section 3.03    Alternate Rate of Interest .  If prior to the commencement of any Interest Period for a Eurodollar Borrowing:
 
(a)    the Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate for such Interest Period; or
 
(b)    the Administrative Agent is advised by the Majority Lenders that the Adjusted LIBO Rate or LIBO Rate, as applicable, for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Loans included in such Borrowing for such Interest Period;
 
then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone or telecopy as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a
 
32

 
Eurodollar Borrowing shall be ineffective, and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR Borrowing.
 
Section 3.04    Prepayments .
 
(a)    Optional Prepayments .  The Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, subject to prior notice in accordance with Section 3.04(b) .
 
(b)    Notice and Terms of Optional Prepayment .  The Borrower shall notify the Administrative Agent by telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later than 12:00 noon, New York City time, three Business Days before the date of prepayment, or (ii) in the case of prepayment of an ABR Borrowing, not later than 12:00 noon, New York City time, one Business Day before the date of prepayment.  Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid.  Promptly following receipt of any such notice relating to a Borrowing, the Administrative Agent shall advise the Lenders of the contents thereof.  Each partial prepayment of any Borrowing shall be in an amount that would be permitted in the case of an advance of a Borrowing of the same Type as provided in Section 2.02 .  Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing.  Prepayments shall be accompanied by accrued interest to the extent required by Section 3.02 and any amounts due under Section 5.02.
 
(c)    Mandatory Prepayments .
 
(i)    If, after giving effect to any termination or reduction of the Aggregate Maximum Credit Amounts pursuant to Section 2.06(b) or Section 2.06(c), the total Revolving Credit Exposures exceeds the total Commitments, then the Borrower shall (A) prepay the Borrowings on the date of such termination or reduction in an aggregate principal amount equal to such excess, and (B) if any excess remains after prepaying all of the Borrowings as a result of an LC Exposure, pay to the Administrative Agent on behalf of the Lenders an amount equal to such excess to be held as cash collateral as provided in Section 2.08(j) .
 
(ii)    Upon any redetermination of or adjustment to the amount of the Borrowing Base in accordance with Section 2.07 , Section 8.13(c) or Section 8.13(d), if the total Revolving Credit Exposures exceeds the redetermined or adjusted Borrowing Base, then the Borrower shall (A) prepay the Borrowings in an aggregate principal amount equal to such excess, and (B) if any excess remains after prepaying all of the Borrowings as a result of an LC Exposure, pay to the Administrative Agent on behalf of the Lenders an amount equal to such excess to be held as cash collateral as provided in Section 2.08(j) .  The Borrower shall be obligated to make such prepayment and/or deposit of cash collateral within forty-five (45) days following its receipt of the New Borrowing Base Notice in accordance with Section 2.07(d) or the date the adjustment occurs; provided that all payments required to be made pursuant to this Section 3.04(c)(ii) must be made on or prior to the Termination Date.
 
(iii)    Upon any adjustments to the Borrowing Base pursuant to Section 9.11(d), if the total Revolving Credit Exposures exceeds the Borrowing Base as adjusted, then the Borrower shall (A) prepay the Borrowings in an aggregate principal amount equal to such excess, and (B) if any excess remains after prepaying all of the Borrowings as a result of an LC Exposure, pay to the Administrative Agent on behalf of the Lenders an amount equal to such excess to be held as cash collateral as provided in Section 2.08(j) .  The Borrower shall be obligated to make such prepayment and/or deposit of cash collateral within two (2) Business Days following the date it or any Restricted
 
33

 
Subsidiary receives cash proceeds as a result of such disposition; provided that all payments required to be made pursuant to this Section 3.04(c)(iii)   must be made on or prior to the Termination Date.
 
(iv)    If at any time, the Borrower or the Parent shall be required to prepay or redeem (or make any offer to prepay or redeem) all or any portion of the Bridge Loans or any Exchange Notes (other than (i) a prepayment or redemption with the proceeds of an Equity Issuance (other than an Equity Issuance of Disqualified Capital Stock), (ii) with the proceeds of Permitted Refinancing Debt or (iii) a change of control offer as defined in the Bridge Credit Agreement or the Exchange Notes), then not later than the fifth (5 th ) Business Day prior to the day on which such prepayment or redemption (or earlier offer to prepay or redeem) of any Bridge Loans or Exchange Notes shall be made, the Borrower shall make an offer to the Lenders by notice to the Administrative Agent to prepay outstanding Loans under this Agreement and cash collateralize Letters of Credit in an amount equal to such amount required to be prepaid or redeemed (or offered to prepay or redeem) under the Bridge Credit Agreement or any agreement evidencing the Exchange Notes, provided that if such prepayment or redemption is the result of an asset sale, then (A) if the aggregate Revolving Credit Exposures of the Lenders exceeds  or is equal to the Conforming Borrowing Base (or if no Conforming Borrowing Base is then in effect, the Borrowing Base), the amount offered to the Lenders shall be the amount required to be prepaid or redeemed (or offered to prepay or redeem) under the Bridge Credit Agreement or any agreement evidencing the Exchange Notes and (B) if the aggregate Revolving Credit Exposures of the Lenders is less than the Conforming Borrowing Base (or if no Conforming Borrowing Base is then in effect, the Borrowing Base), the amount offered to the Lenders shall be the lesser of (x) the amount allocated the Properties subject of such asset sale in the most recent Conforming Borrowing Base and (y) the Net Available Cash (as defined in the Bridge Credit Agreement) from such asset sale received by a Loan Party.  Within three Business Days after the Administrative Agent receives notice of an offer from the Borrower under this Section 3.04(c)(iv), each Lender shall decide to accept or decline such prepayment of Loans.  If a Lender shall fail to respond within three Business Days, its failure shall be deemed a rejection of the offer.  If the Majority Lenders have agreed to accept such prepayment, then each of the Lenders shall accept its pro rata share of the entire prepayment amount.  If the prepayment is accepted by the Majority Lenders then such prepayment amounts shall be paid by the Borrower to the Lenders within one Business Day following acceptance.  If the Majority Lenders fail to accept such prepayment, then the entire prepayment amount shall be applied as required pursuant to the mandatory prepayment provisions of the Bridge Loans or Exchange Notes.  Any amounts not required to be offered to the Lenders under clause (B) shall be applied as required pursuant to the mandatory prepayment provisions of the Bridge Loans or Exchange Notes.
 
(v)    Each prepayment of Borrowings pursuant to this Section 3.04(c) shall be applied, first, ratably to any ABR Borrowings then outstanding, and, second, to any Eurodollar Borrowings then outstanding as the Borrower may direct.
 
(vi)    Prepayments pursuant to this Section 3.04(c) shall be accompanied by accrued interest to the extent required by Section 3.02 .
 
(d)    No Premium or Penalty .  Prepayments permitted or required under this Section 3.04 shall be without premium or penalty, except as required under Section 5.02 .
 
Section 3.05    Fees .
 
(a)    Commitment Fees .  The Borrower agrees to pay to the Administrative Agent for the account of each Lender a commitment fee, which shall accrue at the applicable Commitment Fee Rate on the average daily amount of the unused amount of the Commitment of such Lender during the period from and including the date of this Agreement to but excluding the Termination Date.  Accrued
 
34

 
commitment fees shall be payable in arrears on the third Business Day after the last day of March, June, September and December of each year and on the Termination Date, commencing on the first such date to occur after the date hereof.  All commitment fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).
 
(b)    Letter of Credit Fees .  The Borrower agrees to pay (i) to the Administrative Agent for the account of each Lender a participation fee with respect to its participations in Letters of Credit, which shall accrue at the same Applicable Margin used to determine the interest rate applicable to Eurodollar Loans on the average daily amount of such Lender’s LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the date of this Agreement to but excluding the later of the date on which such Lender’s Commitment terminates and the date on which such Lender ceases to have any LC Exposure, (ii) to the Issuing Bank a fronting fee, which shall accrue at the rate of 0.125% per annum on the average daily amount of the LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the date of this Agreement to but excluding the later of the date of termination of the Commitments and the date on which there ceases to be any LC Exposure, provided that in no event shall such fee be less than $500 during any quarter, and (iii) to the Issuing Bank, for its own account, its standard fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder.  Participation fees and fronting fees accrued through and including the last day of March, June, September and December of each year shall be payable on the third Business Day following such last day, commencing on the first such date to occur after the date of this Agreement; provided that all such fees shall be payable on the Termination Date and any such fees accruing after the Termination Date shall be payable on demand.  Any other fees payable to the Issuing Bank pursuant to this Section 3.05(b) shall be payable within 10 days after demand.  All participation fees and fronting fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).
 
(c)    Administrative Agent Fees .  The Borrower agrees to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times separately agreed upon between the Borrower and the Administrative Agent.
 
ARTICLE IV
Payments; Pro Rata Treatment; Sharing of Set-offs
 
Section 4.01    Payments Generally; Pro Rata Treatment; Sharing of Set-offs .
 
(a)    Payments by the Borrower .  The Borrower shall make each payment required to be made by it hereunder (whether of principal, interest, fees or reimbursement of LC Disbursements, or of amounts payable under Section 5.01 , Section 5.02 , Section 5.03 or otherwise) prior to noon, New York, New York time, on the date when due, in immediately available funds, without defense, deduction, recoupment, set-off or counterclaim.  Fees, once paid, shall be fully earned and shall not be refundable under any circumstances.  Any amounts received after such time on any date may, in the dis

SITE SEARCH

AGREEMENTS / CONTRACTS

Document Title:

Entire Document: (optional)

Governing Law:(optional)
 

CLAUSES

Search Contract Clauses >>

Browse Contract Clause Library>>

Close this window