NATIONSBANK Master Equipment Lease
NationsBanc Leasing Corporation
Lease Agreement Number 08082-00300
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This Master Equipment Lease Agreement (this "Lease") dated as of
November 3, 1994 between NationsBanc Leasing Corporation ("Lessor"),
a corporation organized under the laws of North Carolina, having its
chief executive office at 2300 Northlake Centre Drive, Suite 300,
Tucker, GA 30084, (Telecopy No. 404-270-8454), and Snyder Oil
Corporation ("Lessee"), a corporation organized under the laws of
Delaware, having its chief executive office at 777 Main Street, Suite
2500, Fort Worth, TX 76102, (Telecopy No. 817-882-5895).
1. Lease Agreement
Subject to the terms and conditions contained herein and in the other
Transaction Papers (as herein defined), Lessor shall lease to Lessee,
and Lessee shall hire from Lessor, the units of personal property
(collectively with all attached parts, replacements, additions,
accessions and accessories attached thereto, the "Equipment")
described in one or more equipment schedules (each a "Schedule")
which incorporate by reference this Master Equipment Lease Agreement.
Each Schedule shall constitute a separate and independent lease and
contractual obligation of Lessee. Until a Schedule is duly signed
and delivered by Lessor, a Schedule signed and delivered by Lessee
constitutes an irrevocable offer by Lessee to lease the Equipment
described in such Schedule from Lessor. In addition to this Lease
and Schedules hereto, Lessor and Lessee are simultaneously herewith
entering into the following documents, instruments and agreements in
connection with the transactions contemplated hereby: (a) a Site
Lease Agreement (herein so called), (b) a Facility Agreement (herein
so called), and (c) an Environmental Indemnity Agreement (herein so
called). This Lease, any and all Schedules hereto, the Site Lease
Agreement, the Facility Agreement, the Environmental Indemnity
Agreement and all other documents, instruments, agreements and
certificates now or at any time hereafter delivered in connection
with this Lease, any Schedules hereto, the Site Lease Agreement, the
Facility Agreement or the Environmental Indemnity Agreement (as the
same may be amended, modified or restated from time to time) are
collectively referred to herein as the "Transaction Papers".
2. Terms of Lease; Rentals and Deposit
The lease term with respect to any Equipment covered by a Schedule
shall consist of an "Interim Term" and a "Base Term" as provided in
the Schedule covering such Equipment. Lessee shall pay rent for the
Interim Term ("Interim Rent") as provided and in amounts determined
by Lessor as set forth in the applicable Schedule, and shall pay rent
for the Base Term ("Base Rent") in such amounts and at such times as
shall be specified in the applicable Schedule. At the time Lessee
signs and delivers a Schedule, Lessee shall deposit with Lessor such
additional sum ("Security Deposit"), if any, specified in such
Schedule as security for the payment and performance of any
obligations of Lessee hereunder or under the other Transaction
Documents.
3. Location and Use of Equipment
Each item of Equipment shall at all times be and remain in the
possession and control of Lessee at the address stated in the
Schedule covering such item. Lessee shall use, operate, protect, and
maintain the Equipment in compliance with all applicable insurance
policies, laws, ordinances, rules, regulations and manufacturer's
instructions. The Equipment shall be used solely for commercial or
business purposes and not for any consumer, personal, home or family
purpose. If requested by Lessor, Lessee shall cause each item of
Equipment to be and remain plainly and conspicuously marked by
insignia, stencilling, plaques, tags, decals or other forms of notice
to disclose Lessor's ownership of the Equipment. Lessee shell keep
the Equipment free and clear of any and all liens, encumbrances,
claims and charges (except for those created expressly by Lessor) and
shall not in any way encumber its rights hereunder or under any
Schedule.
4. Taxes
Lessee shall reimburse Lessor on demand for all taxes, assessments
and other governmental charges paid by Lessor in connection with the
Equipment or its use, ownership or operation while in Lessee's
possession or the payment or receipt of rent or other charges under
any Schedule, including but not limited to foreign, federal, state,
county and municipal fees and taxes, ad valorem, sales (including any
sales taxes payable in connection with the purchase of the Equipment
by Lessor), use, excise, stamp and documentary taxes (other than
federal and state taxes based on Lessor's net income), and all
related penalties, fines and interest charges. Upon Lessor's
request, Lessee will immediately furnish to Lessor such information
as Lessor shall require in connection with the preparation and filing
of all returns relating to such taxes, assessments, or charges.
Lessee acknowledges that tax laws require that Lessor, as the legal
owner of the Equipment, is responsible for listing the Equipment for
all federal, state, county or municipal taxes applicable to the
Equipment. Lessee will declare, when listing property to taxing
authorities, the Equipment as LEASED equipment only.
5. Net Lease, Loss and Damage
(a) Each Schedule is a net lease. All costs, expenses and other
liabilities associated with the Equipment shall be borne by Lessee.
Lessee's obligations under any and all Schedules are absolute and
unconditional, and are not to be subject to any abatement, deferment,
reduction, setoff, defense, counterclaim or recoupment for any reason
whatsoever. Except as otherwise expressly provided herein, no
Schedule shall terminate nor shall the obligations of Lessee be
affected by reason of any defect or damage to, or any destruction,
loss, theft, forfeiture, governmental requisition or obsolescence of
the Equipment, regardless of cause.
(b) Lessee assumes all risk of damage to or loss, theft or
destruction of the Equipment from any cause whatsoever from the date
the Equipment is shipped by the vendor or manufacturer. In the event
of loss or destruction of the Equipment from any cause whatsoever
from the date the Equipment is shipped by the vendor or manufacturer
but prior to its acceptance by the Lessee, Lessee shall promptly pay
to Lessor all sums heretofore paid by Lessor to such vendor or
manufacturer and Lessor shall assign to Lessee all of its rights or
causes of action, if any, against such vendor or manufacturer. In
the event of damage of any kind whatsoever to any item of the
Equipment on or after its acceptance by Lessee, Lessee shall, at
Lessor's option, either place the same in good repair, condition or
working order or if in the reasonable judgment of Lessor the
Equipment is determined by Lessor to be lost, stolen, destroyed or
damaged beyond repair, Lessee shall pay Lessor the Stipulated Loss
Value therefor. Upon such payment, the Lease of such Equipment shall
terminate and Lessee thereupon shall become entitled to such item of
the Equipment "As is and Where is" without warranty, express or
implied, with respect to any matter whatsoever. The Stipulated Loss
Value of any Equipment shall be determined by Lessor in accordance
with the provisions of the Schedule covering such Equipment.
Proceeds of insurance may be available for the repair or payment of
the Stipulated Loss Value, in accordance with Section 6 hereof.
6. Insurance
Lessee shall, at its expense, procure and maintain the following
insurance coverages on the Equipment until the Equipment is returned
to Lessor or Lessee's obligations with respect thereto under any
applicable Schedule are otherwise terminated: (i) insurance against
theft, fire, and such other risks as Lessor shall specify or (absent
any written specification by Lessor) as are customarily insured
against in Lessee's trade or industry, under policies naming Lessor
as loss payee, and (ii) comprehensive public liability and property
damage insurance, under policies naming Lessor as additional insured.
Each such insurance policy shall: (a) include provisions for the
protection of Lessor notwithstanding any action or inaction, neglect,
breach, violation, or default of or by Lessee of any warranty,
condition or declaration, (b) provide for payment of insurance
proceeds to Lessor to the extent of its liability or interest, (c)
provide that such policy may not be modified, terminated or canceled
unless Lessor is given at least thirty (30) days' advance written
notice thereof, (d) provide that the coverage is "primary coverage"
for the protection of Lessee and Lessor notwithstanding any other
coverage carried by Lessee or Lessor protecting against similar risks
or liabilities, and (e) be issued in such amounts (which in the case
of casualty insurance will never be less than the Stipulated Loss
Value of this Equipment covered thereby), with such deductibles, by
such insurance company, and otherwise in such form as shall all be
reasonably satisfactory to Lessor. Lessee shall furnish Lessor with
certificates or other satisfactory evidence of such insurance, and
shall furnish Lessor with a renewal certificate for each policy at
least ten (10) days before the policy renewal date. Lessor shall
have no duty or examine any certificate or other evidence of
insurance, or to advise Lessee in the event that its insurance is not
in compliance with this Section 6. The proceeds of any public
liability or property damage insurance shall be payable first to
Lessor to the extent of its liability, if any, and the balance to
Lessee. The proceeds of fire, theft, or other casualty insurance
shall be payable to Lessor if any Event of Default has occurred which
is continuing or if the insurance proceeds resulting from such
casualty exceed $1,000,000. If no Event of Default has occurred
which is continuing, all insurance proceeds shall be used for the
full and complete repair or replacement of the affected Equipment,
(with any excess proceeds being paid to Lessee). If an Event of
Default shall have occurred which is continuing, such proceeds may,
at Lessor's sole option, be applied toward the payment of Lessee's
obligations under the applicable Schedule or for the repair or
replacement of the affected Equipment. Lessee hereby appoints Lessor
as Lessee's agent and attorney-in-fact with full power to do all
things (including but not limited to making, adjusting, and settling
claims, and receiving payments and endorsing documents, checks, or
drafts) necessary or advisable to secure payment due under any
insurance policy contemplated hereby.
7. [Intentionally Deleted]
8. Tax Indemnity
(a) All references to "Lessor" in this Section 8 shall include each
holder of a beneficial interest in any trust to which any interest of
Lessor in and to the Equipment or any Transaction Paper may be
assigned and shall also include each member of the affiliated group
of corporations, as defined in Section 1504 (a) of the Internal
Revenue Code of 1986, as amended (the "Code"), of which Lessor or any
such holder of a beneficial interest is a member.
(b) Lessor and Lessee agree that Lessor shall be treated for federal,
state and local income tax purposes as the owner of the Equipment and
shall be entitled to take into account in computing its income tax
liabilities, all items of income, deduction, credit, gain or loss
relating to ownership of the Equipment as are provided under the Code
and applicable state and local tax laws to owners of similar
equipment (hereinafter collectively the "Tax Benefits").
(c) If (i) Lessor shall lose, shall be delayed in claiming, shall not
have a right to claim, shall be required to recapture (other than in
connection with a sale of the Equipment following the end of the
lease term, provided Lessee is not then in default), shall not be
allowed or shall not claim as a result of a written opinion or
independent tax counsel selected by Lessor to the effect that
Lessor's claiming of such Tax Benefits probably would not be upheld
by a court if the matter were litigated (that is, the chances of a
finding against Lessor are at least as great as the chances in favor
of Lessor), all or any portion of any Tax Benefits, under any
circumstances, at any time, and for any reason; or (ii) the federal,
state or local income tax rates in effect on the commencement date of
the lease term for such Equipment (the "Tax Rates") are changed with
respect to any period on or prior to the disposition of the Equipment
by Lessor, or (iii) Lessor is required under Section 467 of the Code
or otherwise to include in its gross income with respect to any
Schedule or item of Equipment any amount at any time other than
rentals and other amounts payable by Lessee hereunder at the times
such amounts are payable as provided herein, then Lessor and Lessee
agree that, upon Lessor's demand and at Lessor's option, either: (x)
all further rental payments with respect to such Equipment, if any,
shall be increased, or (y) Lessee shall pay to the Lessor a lump sum
amount, which shall in either case maintain the net economic after-
tax yield, cash-flow and rate of return Lessor originally anticipated
based on the assumptions (including Tax Rates) that were originally
utilized by Lessor in originally evaluating the transaction and
setting the rental therefor and the other terms thereof. Lessee
shall also pay to Lessor all interest, costs (including attorney's
fees) and penalties associated with the loss of Tax Benefits or the
change in Tax Rates, including costs of collecting amounts under this
Section 8.
(d) For purposes of paragraph (c) above, Lessor shall at all times be
deemed to have sufficient taxable income and tax liability to be able
to utilize the Tax Benefits on a current basis and the fact that
Lessor may lose Tax Benefits solely because it either (i) has
insufficient taxable income or tax liability or (ii) is subject to
the alternative minimum tax shall not be taken into account.
9. Delivery, Acceptance and Return of Equipment
(a) Upon delivery to and acceptance by Lessee of any Equipment,
Lessee shall execute and deliver the Schedule relating to such
Equipment, identifying same and acknowledging receipt thereof, with
all information required on the Schedule fully completed. Lessee's
execution of such Schedule shall constitute acceptance of delivery of
such Equipment Lessee's acknowledgement that such Equipment is in
good operating order, repair, condition and appearance, is of the
manufacture, design and capacity selected by Lessee and is suitable
for the purposes for which such Equipment is leased.
(b) Subject to the provisions of any applicable Schedule, at the
expiration of the lease term with respect to any Equipment, including
any renewal thereof, upon demand Lessee shall, at its own expense,
return such Equipment to Lessor at a place reasonably designated by
Lessor, in the same operating order, repair, condition and appearance
as when received, reasonable wear and tear excepted. If upon such
expiration or termination Lessee does not immediately return an item
of Equipment to Lessor, such item shall continue to be held subject
to all the terms and conditions hereof, and Base Rent and other
charges shall continue to accrue and be payable hereunder with
respect to such item until it is returned to Lessor. Payment or
acceptance of any such rent or other charge shall not be deemed a
waiver of any default and shall not suspend or otherwise affect any
right or remedy hereunder including without limitation Lessee's
obligation to return immediately (and Lessor's right to take
immediate possession of) any such item.
10. Maintenance
Lessee shall, at its own expense, maintain and keep the Equipment in
good working order, repair, appearance and condition and make all
necessary adjustments and repairs thereto and replacements thereof.
In furtherance of and in addition to the foregoing, Lessor agrees
that so long as no Event of Default has occurred which is continuing,
Lessee may, at its own cost and expense, make such modifications,
alterations, improvements and additions to the Equipment and
replacements of and substitutes for such Equipment and all components
and parts thereto as Lessee deems necessary or appropriate, and in
connection therewith and in connection with any required repairs or
replacements, Lessee may dispose of, in such manner and on such terms
as Lessee deems appropriate, any and all items of Equipment and parts
and components thereto which are damaged, destroyed, obsolete or no
longer used or useful in the operation of any plant or facility in
which the Equipment is deployed; provided, that, (a) Lessee may not
make any alteration, modification, improvement or addition to the
Equipment which impairs the originally intended function of the
Equipment, (b) Lessee may not dispose of any item of Equipment or any
part or component thereto unless Lessee replaces such item of
Equipment, part or component with a replacement which is in as good
a condition as, and has a value and utility at least equal to, the
item of Equipment, part or component being replaced (assuming that
the item of Equipment, part or component was in good condition and
repair at the time it was disposed of), and (c) all alterations,
modifications, improvements and replacements to the Equipment and
parts and components thereto shall become part of the Equipment for
purposes hereof and shall be the sole and exclusive Property of
Lessor (subject to Lessee's leasehold interest therein).
11. Renewal and Purchase
Except as set forth in the applicable Schedule, Lessee may not renew
or extend the lease term with respect to any Equipment, nor shall
Lessee have any option to purchase such Equipment.
12. Assignment of Warranties and Limitation of Responsibility
Lessor hereby transfers and assigns to Lessee, to the extent
allowable by law, for and during the lease term of each Schedule with
respect to any Equipment covered by such Schedule, the warranties, if
any, of the manufacturer issued on such Equipment, and hereby
authorizes Lessee to obtain at is own expense the customary service
furnished by the manufacturer in connection therewith. Lessee
acknowledges that Lessor is not a manufacturer, the agent of a
manufacturer or engaged in the sale or distribution of the Equipment
and has not made, and does not hereby make, any representations as to
merchantability, performance, condition, fitness or suitability of
any of the Equipment for the purposes of Lessee or make any other
representation with respect thereto. Lessor shall not be liable to
Lessee for any loss, claim, liability, cost, damage or expense of any
kind caused, or alleged to be caused, directly or indirectly, by any
Equipment, or by an inadequacy thereof for any purpose, or by any
defect therein, or the use or maintenance thereof, or any repairs,
servicing or adjustments thereof, or any delay in providing or
failure to provide same, or any interruption or loss of service or
use thereof, or any loss of business, profits, consequential or other
damage of any nature. Lessee agrees that its obligations hereunder
shall not in any way be effected by any defect or failure of
performance of Equipment.
13. Personal Property
The Equipment shall remain personal property at all times,
notwithstanding the manner in which it may be attached or affixed to
realty, and title shall at all times continue in Lessor. Lessee
warrants that at any time any Equipment is leased hereunder, or is
removed to a new location that Lessee shall provide to Lessor written
notice thereof within 30 days of the date of such relocation and
either (i) the premises in which such Equipment will be installed
will be owned by Lessee free of any liens or encumbrances, or (ii) if
not owned by Lessee free of liens or encumbrances, the owner of such
premises and/or the holder of any such liens or encumbrances on such
premises shall have consented and acknowledged that such Equipment is
and shall remain personal property subject to all the provisions of
this Lease. Lessee will obtain and record such instruments and take
such steps as may be necessary to prevent any person from acquiring
any right in any Equipment paramount to the rights of Lessor by
reason of such Equipment being deemed to be real property. If any
third party should attempt to establish any legal right in any
Equipment, then Lessee shall, promptly after learning thereof, notify
Lessor in writing and, within thirty (30) days after such notice,
either (i) cause such right to be waived or eliminated to the
satisfaction of Lessor or (ii) otherwise stay such action or
indemnify Lessor to Lessor's satisfaction.
14. Default and Remedies
(a) Each of the following shall constitute an Event of Default
hereunder and under any and all Schedules then in effect (each an
"Event of Default"); as used herein, "Event of Default" shall also
have the meaning given such term in the Facility Agreement; (1)
nonpayment when due of any installment of rent or other sum owing by
Lessee hereunder under any Schedule or under any other agreement
between Lessor and Lessee if such nonpayment continues for ten (10)
days; (2) Lessee's failure to perform and comply with any other
provision or condition hereunder or under any Schedule if such
failure continues for ten (10) days after written notice thereof by
Lessor to Lessee; (3) Except as permitted by Section 10 hereof,
Lessee's attempt to sell, lease or encumber any item of the Equipment
without Lessor's prior written consent, or the attachment of any lien
to any such item in favor of any one other than Lessor, or any
attempted levy, seizure or attachment on such item; (4) any
representation or warranty made by Lessee to Lessor hereunder or
under any Schedule, certificate, agreement, instrument or other
statement including income and financial statements, proves to have
been incorrect in any material respect when made; (5) the merger,
consolidation, reorganization or dissolution of, or transfer of a
controlling stock interest in Lessee or the suspension of Lessee's
present business; (6) Lessee's general assignment for the benefit of
creditors or commencement of any voluntary case or proceeding for
relief under the Bankruptcy Code, or any other present or future law
for the relief of debtors, or the taking of any action to authorize
or implement any of the foregoing; (7) the filing of any petition or
application against Lessee under any present or future law for the
relief of debtors, including proceedings under the Bankruptcy Code or
for the subjection of property of debtors to the control of any
court, receiver or agency for the benefit of creditors if such
petition or application is consented to by Lessee or not dismissed
within sixty (60) days from the date of filing; (8) a default exists
under any other agreement or instrument of Lessee with or in favor of
Lessor; or (9) the attempted repudiation of any guaranties for
obligations of Lessee to Lessor; (10) the Pension Benefit Guaranty
Corporation's commencement of proceedings under Section 4042 of the
Employee Retirement Income Security Act of 1974 to terminate any
employee pension benefit plan of Lessee or any subsidiary of Lessee;
(11) the occurrence of any event described in clauses 6, 7, 8 or 10
of this Section 14 with respect to any guarantor or the person liable
for payment or performance of Lessee's obligations under this Lease.
(b) Upon the occurrence of an Event of Default, Lessor may at its
option; (i) proceed by appropriate court action or actions, either at
law or in equity, to enforce performance by Lessee of the applicable
covenants hereunder and under any or all Schedules or to recover
damages for the breach thereof; or (ii) cancel Lessee's right of
possession of any or all of the Equipment, whereupon all rights of
Lessee to use the Equipment shall absolutely cease and terminate, but
Lessee shall remain liable as herein provided. Upon such
cancellation, Lessee shall, at its own expense, immediately redeliver
such Equipment to Lessor at a place within the continental United
States designated by Lessor. If Lessee shall fail to do so, Lessor
may retake possession of such Equipment by entering upon any premises
at any reasonable time, and thereafter Lessor may hold, possess,
sell, upgrade, lease to others or enjoy the same, free from any
rights of Lessee, its successors or assigns. If Lessor elects to
cancel Lessee's rights of possession of any Equipment, Lessor may
recover from Lessee any and all amounts that, under the terms of the
applicable Schedule, are then due or that have accrued to the date of
such termination, and may also recover forthwith from Lessee, as
damages for loss of its bargain and not as a penalty, an amount equal
to the Stipulated Loss Value of such Equipment as of the rental
payment date on or next preceding the date of default. However, if
Lessor recovers possession of such Equipment, Lessee's obligation
under the preceding sentence shall be reduced by (1) the net amount
Lessor in fact receives from the sale of any of such Equipment, or
(2) at Lessor's election, the present value (determined on the basis
of the "Discount Rate" as hereinafter defined) of the noncancelable
regularly scheduled rentals receivable under a subsequent lease of
any of the Equipment, taking into account only the rentals receivable
from the commencement date of such subsequent lease until the end of
the lease term for such Equipment under the applicable Schedule. For
purposes of this Section 14, the Discount Rate shall be a rate of
interest equal to four percent (4%) plus the "Prime Rate" of
NationsBank of Georgia N.A., Atlanta, Georgia (or any successor
thereto), as announced on the day on which the commencement date of
such subsequent lease occurs.
(c) In addition to any amount recoverable under paragraph (b) above,
Lessor may recover from Lessee all Lessor's costs and expenses
incurred by reason of Lessee's breach or default, including without
limitation costs and expenses of repossession, storing, holding,
transporting, insuring, servicing, repairing, maintaining, renting
and selling any Equipment and collecting rents and other proceeds of
its disposition, and fees and expenses of attorneys in the amount of
fifteen percent (15%) of all amounts due on or after the time of such
breach or default (but not to exceed the amount actually incurred),
and other professionals employed by Lessor in connection with the
protection and enforcement of its title and interest in any and all
Equipment and its rights under any and all Schedules. From and after
the occurrence of an Event of Default, any installment of rent or
other sum owing under any Schedule that is not paid when due shall
accrue interest from the date of such Event of Default or (if later)
the date such amount becomes due to the date it is paid, at a per
annum rate equal to the lesser of (i) 15%, and (ii) the highest rate,
if any, permitted by applicable law.
(d) Except as otherwise expressly provided herein, all rights and
remedies of Lessor are concurrent and cumulative. The exercise or
partial exercise of any remedy shall not restrict Lessor from further
exercise of that remedy or any other remedy provided for herein or
otherwise available under applicable law. To the extent permitted by
applicable law, Lessee waives any rights now or hereafter conferred
by statute or otherwise that may require Lessor to sell, release or
otherwise use or dispose of any of Equipment in mitigation of
Lessor's damages or that may otherwise limit or modify any of
Lessor's rights or remedies.
15. Assignment By Lessor
Lessor may assign or transfer, and Lessee hereby consents to the
assignment or transfer, of all or any part of any schedule or
Lessor's interest in any Equipment without notice to Lessee. Lessee
agrees that the liability of Lessee to any assignee of Lessor and any
subsequent assignee of such assignee shall be absolute and
unconditional and shall not be affected by any default hereunder of
Lessor whatsoever or by any breach of any warranty, express or
implied, in respect of any Equipment or Schedule. Lessee further
agrees that no such assignee shall be required to assume any of the
obligations of Lessor under any Schedule except (i) the obligation in
respect of the application of any insurance monies received by such
assignee, as hereinabove provided, (ii) that the assignee shall be
responsible for its own misconduct after the assignment, and (iii)
that any successor lessor shall be responsible for the Lessor's
duties hereunder after any such assignment. Lessee acknowledges that
no such assignment shall materially change Lessee's duties hereunder
or materially increase any burden or risk imposed on Lessee
hereunder.
16. Assignment by Lessee
Except as expressly permitted pursuant to Section 5.3 of the Facility
Agreement, Lessee shall not assign or in any way dispose of all or
any part of its rights or obligations under any Schedule or enter
into any sublease of all or any part of any Equipment without the
prior written consent of Lessor.
17. [Intentionally Deleted]
18. Miscellaneous
(a) Each Schedule is and is intended to be a lease, and Lessee does
not acquire hereby or under any Schedule any right, title, equity or
other interest in or to any Equipment, except the right to use the
same under the conditions hereof and under the additional conditions
set forth in the applicable Schedule. Lessee waives any right to
assert any lien or security interest on Equipment in Lessee's
possession or control for any reason.
(b) The relationship between Lessor and Lessee shall always and only
be that of lessor and lessee. Lessee shall never at any time for any
purpose whatsoever be or become the agent of Lessor and Lessor shall
not be responsible for the acts or omissions of Lessee or its agents.
(c) At Lessor's request, Lessee shall execute, deliver, file and
record such financing statements and other documents as Lessor shall
deem necessary or advisable to protect Lessor's interests in the
Equipment and to effectuate the purposes of this Lease and the other
Transaction Papers. Lessee hereby irrevocably appoints Lessor as
Lessee's agent and attorney-in-fact for Lessee to execute, deliver,
file or record any such item and to take such action for Lessee and
in Lessee's name, place and stead.
(d) Lessor, its agents and employees shall have the right to enter
any property where Equipment is located to inspect any Equipment at
any reasonable time. Lessor's right to inspect the Equipment is
solely for the benefit of Lessor and shall not impose any obligation
of any kind whatsoever on Lessor.
(e) Lessee agrees to pay Lessor a late charge equal to five percent
(5%) of the rental on all rentals not paid by Lessee to Lessor within
10 days of when due and owing under the provisions of this Lease.
(f) To secure the full and punctual payment and performance of its
obligations under each Schedule and each other Transaction Paper,
Lessee hereby grants to Lessor a security interest in all of Lessee's
right, title and interest, whether now existing or hereafter arising,
in, under and to each other Schedule, lease, security agreement, or
other Transaction Paper between Lessor and Lessee, and each item of
Equipment or other tangible personal property covered thereby.
(g) Lessor's rights and remedies with respect to any of the terms and
conditions of each Schedule and each other Transaction Paper shall be
cumulative and not exclusive and shall be in addition to all other
rights and remedies in its favor. Lessor's failure to enforce
strictly any of the provisions of any Schedule shall not be construed
as a waiver thereof or as excusing Lessee from future performance.
(h) If any provision of the Transaction Papers is held to be illegal,
invalid, or unenforceable under present or future laws effective
during the term thereof, such provision shall be fully severable, the
Transaction Papers shall be construed and enforced as if such
illegal, invalid, or unenforceable provision had never comprised a
part thereof, and the remaining provisions thereof shall remain in
full force and effect and shall not be affected by the illegal,
invalid, or unenforceable provision or by its severance therefrom.
Furthermore, in lieu of such illegal, invalid, or unenforceable
provision there shall be added automatically as a part of the
Transaction Papers a provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible and be legal,
valid or enforceable.
(i) All notices, requests and other communications to Lessor or
Lessee hereunder shall be in writing (including bank wire, telecopy
or similar writing) and shall be given to such party at its address,
telex or telecopy number set forth on the signature pages hereof or
such other address, telex or telecopy number as such party may
hereafter specify for such purpose by notice to the other party.
Each such notice, request or other communication shall be effective
(a) if given by telecopy, when such telecopy is transmitted to the
telecopy number specified in this paragraph (i) and the appropriate
answerback is received or receipt is otherwise confirmed, (b) if
given by mail, one (1) business day after deposit in the mail with
first class postage prepaid, addressed as aforesaid, or (c) if given
by any other means, when delivered at the address specified in this
paragraph (i).
(j) Except as expressly provided herein and in the other Transaction
Papers, no representation, warranty, promise, guaranty or agreement,
oral or written, express or implied, has been made by either party
herein with respect to any Schedule or Equipment. THIS LEASE AND THE
OTHER TRANSACTION PAPERS COLLECTIVELY REPRESENT THE FINAL AGREEMENT
BY AND BETWEEN LESSOR AND LESSEE AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF
LESSOR OR LESSEE, THERE ARE NOT UNWRITTEN ORAL AGREEMENTS BETWEEN
LESSOR AND LESSEE. Any provision of this Lease and the other
Transaction Papers may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by Lessee and Lessor.
(k) To the extent permitted by applicable law, this is "finance
lease" under Section 2A-103(g) of the Uniform Commercial Code.
Lessee waives any right (i) to cancel or repudiate this Lease or any
Schedule governed hereby, (ii) to reject or revoke acceptance of any
item of Equipment, and (iii) to recover from Lessor any general or
consequential damages, for any reason whatsoever.
(l) THIS LEASE AND EACH OTHER TRANSACTION PAPER SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF
THE STATE OF GEORGIA, EXCEPT TO THE EXTENT THE LAWS OF THE STATE OF
COLORADO NECESSARILY GOVERN THE ENFORCEMENT OF ANY REMEDY CONTAINED
IN THE SITE LEASE.
(m) LESSEE AND LESSOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE
TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
LEASE OR ANY OF THE OTHER TRANSACTION PAPERS AND FOR ANY COUNTERCLAIM
THEREIN.
In Witness Whereof, Lessor and Lessee have executed this Lease and
caused their respective seal to be affixed thereto as of the date
first above written.
NationsBanc Leasing Corporation
By:
Printed Name: Paul L. Frihse
Title: Senior Vice President
Snyder Oil Corporation Lessee
By:/s/ Peter E. Lorenzen
Printed Name: Peter E. Lorenzen
Title: Vice President, General Counsel
NATIONSBANK Equipment Lease Schedule
NationsBanc Leasing Corporation
For Master Lease Agreement
- ------------------------------------------------
Schedule Number 1
This Schedule dated as of November 3, 1994 between NationsBank
Leasing Corporation, as Lessor, and Snyder Oil Corporation, as
Lessee, is executed pursuant to and is subject to the terms and
conditions of the Master Equipment Lease Agreement dated as of
November 3, 1994 (the "Lease"). Unless otherwise defined herein,
capitalized terms used in this Schedule have the respective meaning
assigned to such terms in the Lease.
Lessee hereby authorizes Lessor to insert herein the serial numbers
and other identification data of the Equipment, when determined by
Lessor, and dates or other omitted factual matters.
1. Description of Equipment: The Equipment is fully described on
Exhibit "A" attached hereto and made a part hereof. The total cost
to Lessor of such Equipment is $21,000,000.
2. Term of Lease with respect to Equipment: The Base Term of the
Lease for the Equipment described herein is for a period of 84 months
commencing on November 3, 1994 (the "Base Term Commencement Date")
and continuing through and including November 2, 2001. There is no
Interim Term for the Lease under this Schedule.
3. Rental. Base Rent shall be payable in eighty-four (84) rental
installments of $292,225.50 commencing on the Base Term Commencement
Date and continuing on the 3rd day of each succeeding month
thereafter. No Interim Rent is payable for the Lease under this
Schedule.
4. Security Deposit: No Security Deposit is payable for the Lease
under this Schedule.
5. Stipulated Loss Value:
Upon the occurrence of any casualty loss or other event giving Lessor
the right to require immediate payment of the Equipment's Stipulated
Loss Value, Lessor shall calculate such Stipulated Loss Value and
give Lessee written notice thereof. In no event shall the
Equipment's Stipulated Loss Value exceed an amount computed by
multiplying the total cost of the Equipment to Lessor by the
Stipulated Loss Factor set forth in the table below for the Lease
Half-Year (as hereinafter defined) or other period within which the
casualty loss or other event giving Lessor the right to require such
payment occurs. A "Lease Half-Year" is a six-month period beginning
on the first day of the Base Term or any six month anniversary
thereof. The Stipulated Loss factor for the last Lease Half-Year of
the Lease Term shall also apply to all periods thereafter. The
Stipulated Loss Value shall be payable by Lessee on the first monthly
rental payment date following receipt from Lessor of notice
calculating the Stipulated Loss Value and demanding such payment.
Semi-Annual Period Stipulated Loss Factor
("Lease Half-Year")
After the:
1st monthly rental payment date 99.42%
6th monthly rental payment date 99.42%
12th monthly rental payment date 92.20%
18th monthly rental payment date 87.76%
24th monthly rental payment date 83.01%
30th monthly rental payment date 77.96%
36th monthly rental payment date 72.63%
42nd monthly rental payment date 67.01%
48th monthly rental payment date 61.13%
54th monthly rental payment date 54.98%
60th monthly rental payment date 48.55%
66th monthly rental payment date 41.84%
72nd monthly rental payment date 34.83%
78th monthly rental payment date 27.50%
84th monthly rental payment date 20.00%
6. Assets, Class and Depreciable Life: Lessee hereby warrants and
represents that the above described Equipment qualifies under asset
guidelines class 13.20 "Exploration for and Production of Petroleum
and Natural Gas Deposits" and further qualifies as having a
depreciable class life general recovery period of seven (7) years.
7. Location of Equipment: The Equipment will be located at 13675
Weld County Road 34, Platteville, Weld County, Colorado 80651.
8. End of Base Term Fair Market Value Purchase Option: Upon the
expiration of the Base Term and payment by Lessee of all Base Rent,
and provided that no Event of Default shall have occurred and be
continuing, Lessee, at its option, may purchase all of Lessor's
right, title and interest in and to all, but not less than all, of
the Equipment for a purchase price equal to the fair market value of
the Equipment at such time which is herein stipulated to be
$4,200,000 plus any applicable taxes. In order to exercise such
option, Lessee shall give notice of its intention to exercise such
option at least 90 days prior to the expiration of the Base Term.
9. Renewal; End of Renewal Term Fair Market Value Purchase Option.
If the Lessee for any reason does not purchase the Equipment in
accordance with paragraph 8 hereof, the Base Term shall automatically
and without action on the part of Lessor or Lessee be extended for an
additional term of twelve (12) months at a monthly rent of $277,200,
with the first such rental being due and payable by Lessee on
November 3, 2001. Upon termination of the extended Base Term, the
Lessee shall either (i) return the Equipment to Lessor in accordance
with the terms of the Lease and the Facility Agreement, or (ii) upon
written notice delivered not less than ninety (90) days prior to the
expiration of such extended Base Term, purchase Lessor's right, title
and interest in and to all, but not less than all, of the Equipment
for its then fair market value, plus any applicable taxes. For
purposes of this paragraph 9 only, fair market value shall be
determined in accordance with the following procedure: promptly upon
receipt of Lessee's notice of its intention to exercise the purchase
option pursuant to this paragraph 9, Lessor and Lessee shall commence
discussions regarding the fair market value of the Equipment. If
within 30 days after the sending of the notice, Lessor and Lessee
agree upon an estimate of the fair market value of the Equipment,
that estimate shall be binding upon both parties for purposes of this
Schedule. If the parties do not agree within 30 days after the
sending of the notice, each party shall promptly appoint an
appraiser. If, within 20 days after the expiration of the 30-day
period, the appraisers agree upon an appraisal of the fair market
value of the Equipment, that appraisal shall be binding upon Lessor
and Lessee for purposes of this Schedule. If the appraisals do not
differ by more than 4% of the Equipment's total cost, then the fair
market value shall be the average of such appraisals. If the
appraisals differ by more than 4% of the Equipment's total cost, then
such appraisers shall select a third appraiser. The Third appraiser
shall, at least 15 days prior to the expiration of the extended Base
Term make an appraisal of the fair market value of the Equipment,
which appraisal shall be binding upon Lessor and Less for purposes of
this instrument.
10. Early Termination Option: Beginning on the first anniversary of
the Base Term Commencement Date, and on each semi-annual anniversary
thereafter, provided that no Event of Default has occurred which is
continuing, Lessee may, upon giving Lessor not less than sixty (60)
days' prior written notice (which shall be irrevocable), terminate
the Base Term for not less than all the Equipment. Upon return of
not less than all the Equipment to Lessor, Lessor shall sell such
Equipment by public or private sale, for immediately available funds,
to a third party unrelated to Lessee. Lessee shall continue to pay
Lessor Base Rent until Lessor receives the proceeds of sale. Lessee
shall use diligent efforts to solicit bids and buyers for any such
sale. Lessor shall have the right, but no obligation, to solicit
bids or buyers for any such sale. The proceeds of sale shall be
applied in the order following to: (a) pay the reasonable expenses of
(i) holding and preparing the Equipment for sale, and (ii) selling
the Equipment, and (b) the remaining proceeds of sale to Lessor. If
the proceeds of sale received by Lessor as set forth in clause (b) of
this paragraph 10 are less than the Equipment's then "Termination
Value", as set forth below, Lessee shall promptly pay to Lessor, as
additional rent, at the same time and in the same manner as the
proceeds of sale are required to be paid to the Lessor, an amount
equal to such deficiency, together with all other sums then due and
owing by Lessee hereunder. If the proceeds of sale received by
Lessor as set forth in Item (b) above are more than the Equipment's
then "Termination Value", as set forth below, Lessor shall pay to
Lessee an amount equal to such excess.
Termination Value
Option Date (expressed as a percentage of total cost)
Last Day of Month 12 93.70%
Last Day of Month 18 89.26%
Last Day of Month 24 84.26%
Last Day of Month 30 79.21%
Last Day of Month 36 73.63%
Last Day of Month 42 68.01%
Last Day of Month 48 61.88%
Last Day of Month 54 55.73%
Last Day of Month 60 49.05%
Last Day of Month 66 42.34%
Last Day of Month 72 35.08%
Last Day of Month 78 27.75%
11. Terms of Sale: Any sale of the Equipment by Lessor pursuant to
paragraphs 8, 9 or 10 of this Schedule shall be in accordance with
the following terms: (a) the purchase price shall be paid in cash or
by certified or bank cashiers check, (b) if such sale is pursuant to
paragraph 8 or 9, the purchase price shall be paid on the last day of
the Base Term or the extended Base Term as applicable (in the case of
any sale made pursuant to paragraph 10, the purchase price shall be
paid on the date specified pursuant to the terms of any third party
bid accepted by Lessor), and (c) the Equipment will be sold on an
"AS-IS", "WHERE-IS" basis, with no representations or warranties
(express or implied) by Lessor as to any matter whatsoever, except
that no security interest, lien or encumbrance against such Equipment
then exists that has been created by Lessor.
12. Acknowledgement of Receipt of Equipment: Lessee acknowledges
that the Equipment described hereinabove has been delivered to and
received by it, is conforming as represented, and is acceptable and
satisfactory to it, and that the same has been accepted as Equipment
leased by Lessee under this Schedule.
Accepted by Lessee as of the 3rd day of November, 1994 ("Acceptance
Date").
NationsBank Leasing Corporation Snyder Oil Corporation
By: By:
Paul L. Frihse
Printed Name:
Title: Senior Vice President
By:
/s/ Peter E. Lorenzen
Printed Name:
Title: Vice President and General Counsel
Exhibit A
Description of Equipment
All machinery, equipment and fixtures which, on the date hereof,
are located on, comprise a part of, or are used or useful in
connection with the ownership or operation of (a) a natural gas
processing plant (the "Plant") located on certain real property owned
by Lessee located in Weld County, Colorado and which is more
particularly described on Annex 1 attached hereto and incorporated
herein by reference for all purposes (the "Land"), and (b) fifty-five
(55) miles of pipelines, gathering systems and other natural gas
transportation equipment located in Weld County, Colorado utilized
for the purpose of transporting natural gas and other hydrocarbons to
and from the Plant (the "Pipeline Systems"). Without limiting the
foregoing, the Equipment shall include (w) all pipe, casings, seals,
insulators, vents, joints, compressors, connections, tanks, pumps,
pump sites, engines, racks, valves, instruments, meters, gauges,
measuring equipment, signs, posts, boilers, furniture, towers, air
conditioning and heating equipment, tools, spare parts, telephone and
other communication equipment and computers which, on the date
hereof, are located on, comprise a part of, or are used or useful in
connection with the ownership or operation of the Plant or the
Pipeline Systems, (x) the machinery, equipment and fixtures described
in Annex 2 attached hereto, (y) all accessions, additions and
replacements to, and substitutes for, the machinery, equipment and
fixtures described in this paragraph, and (z) all books, records,
manuals, plans and specifications related to the manufacture, use,
ownership, maintenance and operation of the machinery, equipment and
fixtures described in this paragraph.
Annex 1
Legal Description
A parcel of land located in the Southeast quarter (SE1/4) of
Section 8, Township 4 North, Range 66 West of the Sixth Principal
Meridian, County of Weld, State of Colorado, more particularly
described as follows:
Commencing at the Southeast (SE) corner of Section 8, Township
4 North, Range 66 West of the sixth principal meridian, thence
North 90 degrees 00'00" West along the South line of the
Southeast quarter (SE1/4) of said Section 8, also being the
basis of bearing, a distance of 650.96 feet, thence North 00
degrees 00'00" East, a distance of 30.00 feet to the true point
of beginning; thence North 00 degrees 00'00" East distance of
660.00 feet; thence North 90 degrees 00'00" West, a distance of
1,320.00 feet; thence South 00 degrees 00'00" West, a distance
of 660.00 feet; thence South 90 degrees 00'00" East, a distance
of 1,320.00 feet to the true point of beginning.
Said parcel of land contains 20.00 acres, more or less.
Annex 2
Certain Equipment
Pipeline Equipment (in the yard)
Two Twenty Inch Pig receivers with Yale Closures
One Twelve Inch Pig Receiver with Yale Closure
Process Equipment
Three Slug catchers 150 Psig 60" dia. 100' long V-201 ABC
Three Slug catchers 1100 Psig 48" dia. 130' long V-202 ABC
One Scrubber 60" dia. 12' vertical vessel V-203
One Condensate Stabilizer Skid mounted containing:
One scrubber 48" dia 8' tall 1100 psi rated V-245
One scrubber 48" dia 8' tall 250 psi rated V-204
Four Exchangers, E-201, E-202, E-203, and E-204.
Partical Filter F-805
Control valves, pipe and fittings
One Condensate Stabilizer Tower 36" dia by 48' tall T-1900
One Allis Chalmers Ro-Flo vane type compressor 50 hp K-610
One Air Compressor, Gardner Denver with dryer and building
Three FMC 200 hp Plunger Pumps Quinplex skid mounted with motor P-
55 ABC.
Three Sundstrand pumps 40 hp P-10 ABC
One Sundstrand pump P-50
One surge tank V-190 15,000 gallon 370 psi rated
One De-methanizer tower T-1000 52' dia by 80 ft
One Fuel Scrubber V-140
One Regen Scrubber V-130
One Process Skid containing:
Regeneration Cooler with Two Fans AC-710
Inlet Filter Separator F-800
Dust Filter F-810
Cold Seperator V-160
Liquid/Gas exchanger E-450
Reboiler E-440
Chiller E-470
Side Heater E-430
Refrigerant Disengaging Vessel V-220
Control Valves and pipe
Two Methanol Pumps P-25 A and B
Refrigerant Surge tank V-210
Two Dehy Beds V-110 and V-120
Refrigerant Condenser Two Fans AC-730
Refrigerant Economizer V-205
Refrigerant Suction Scrubber V-240
Gas/Gas Exchangers E-400 and E-420
Expander/Compressor X-600/K-600 Mafi-Trench rated at 924/905
horse power skid mounted
One Flare Stack
Control
20 x 50 structure housing the Motor Control Center, the
Distributive Control System, and Variable speed drive for the
pipeline pumps
Compressor 60 x 270:
Overhead Hoist, insulated steel structure, lighting and
ventilation fans, gas detection, flame detection, Centerline
vents
Compression
Inlet
KC-531A Engine SN 32627 Compressor SN 326910
KC-531B Engine SN 32628 Compressor SN 326920
Refrigeration
K-630 Engine SN 295629 Compressor SN 292090
Residue
KC-532A Engine SN 32625 Compressor SN 326930
KC-532B Engine SN 32626 Compressor SN 326940
Storage
Five 30,000 gallon Storage tanks, 250 psig rated.
One 18,000 gallon Storage tank, 250 psig rated.
Seven Used 300 bbl. Stock Tanks,
12' x 15' atmospheric
Hot Oil system
Pipe and related equipment
Instrumentation and Electrical equipment
Miscellaneous Consumable and Condensate Storage
Pipelines
Low Pressure Inlet
Two miles of 20" pipe including pig launcher/receiver
High Pressure Inlet
25 miles of 12" pipe including launcher/receiver
Liquid Pipeline to Amoco and Phillips
28 miles of 4" pipe including valve stations/measurement
FACILITY AGREEMENT
executed as of
November 3, 1994
by and between
SNYDER OIL CORPORATION
and
NATIONSBANC LEASING CORPORATION
THIS FACILITY AGREEMENT (this "Agreement") is entered into as of
the 3rd day of November, 1994, between SNYDER OIL CORPORATION, a
Delaware corporation ("Lessee"), and NATIONSBANC LEASING CORPORATION,
a North Carolina corporation ("Lessor").
W I T N E S S E T H
WHEREAS, Lessee has requested that Lessor enter into a Master
Equipment Lease Agreement of even date herewith and, pursuant to such
Master Equipment Lease Agreement and certain Schedules thereto,
acquire and lease certain equipment to Lessee to be used by Lessee at
a natural gas processing facility owned by Lessee located in Weld
County, Colorado; and
WHEREAS, Lessor has required, as a condition to entering into
the Master Equipment Lease Agreement and Schedules thereto and
acquiring and leasing equipment to Lessee thereunder, that Lessee
inter into this Agreement to evidence certain additional obligations,
covenants, agreements, representations, and warranties of Lessee
related to such Master Equipment Lease Agreement.
NOW, THEREFORE, for and in consideration of the agreements of
Lessor to enter into such Master Equipment Lease Agreement and
Schedules thereto and to lease certain equipment to Lessee
thereunder, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged and
confessed, Lessee hereby agrees with Lessor as follows:
ARTICLE I
TERMS DEFINED
SECTION 1.1. Definitions. The following terms, as used herein,
have the following meanings:
"Adjusted Consolidated Cash Flow" means, with respect to Lessee
for any time period, Consolidated Cash Flow of Lessee for such time
period, adjusted, however, to reflect all revenues and expenses
(including lease operating expense, severance taxes, additional
overhead and other expenses) attributable to material oil and gas
properties purchased by Lessee or any of its Subsidiaries after the
first day of such period as if such properties had been owned by
Lessee or such Subsidiary on the first day of such period. As used
in this definition, "material oil and gas properties" means oil and
gas properties purchased for a purchase price not less than
$25,000,000.
"Affiliate" means, as to any Person, any subsidiary of such
Person or any Person which, directly or indirectly, controls, is
controlled by, or is under common control with such Person. For
purposes of this definition, "control" means the possession of the
power to direct or cause the direction of management and policies of
such Person, whether through the ownership of voting securities or
partnership interests, by contract or otherwise.
"Applicable Environmental Law" means any law, statute,
ordinance, rule, regulation, order or determination of any
governmental authority or any board of fire underwriters (or other
body exercising similar functions), affecting the ownership, leasing
or operation of any real or personal property owned, operated or
leased by Lessee or any of its Subsidiaries in any way pertaining to
health, safety or the environment, including, without limitation, all
applicable zoning ordinances and building codes, flood disaster laws
and health, safety and environmental laws and regulations, and
further including without limitation, (a) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization Act of 1986
(as amended from time to time, herein referred to as "CERCLA"), (b)
the Resource Conservation and Recovery Act of 1976, as amended by the
Used Oil Recycling Act of 1980 and the Solid Waste Recovery Act of
1976, as amended by the Solid Waste Disposal Act of 1980 and the
Hazardous and Solid Waste Amendments of 1984 (as amended from time to
time herein referred to as "RCRA"), (c) the Safe Drinking Water Act,
as amended, (d) the Toxic Substances Control Act, as amended, (e) the
Clean Air Act, as amended, (f) the Occupational Safety and Health Act
of 1970, as amended, and (g) all laws, rules and regulations of state
or any political subdivisions thereof having jurisdiction over the
ownership, leasing or operation of any real or personal property
owned, leased or operated by Lessee or any of its Subsidiaries which
relate to health, safety or the environment, as each may be amended
from time to time. The terms "hazardous substance", "petroleum",
"release" and "threatened release" have the meanings specified in
CERCLA, and the terms "solid waste" and "disposal" (or "disposed")
have the meanings specified in RCRA; provided, however, in the event
either CERCLA or RCRA is amended so as to broaden the meaning of any
term defined thereby, such broader meaning shall apply subsequent to
the effective date of such amendment with respect to all provisions
of this Agreement; and provided further that, to the extent the laws
of any state or any political subdivisions thereof having
jurisdiction over the ownership, leasing or operation of any real or
personal property owned, leased or operated by Lessee or any of its
Subsidiaries establish a meaning for "hazardous substance",
"petroleum", "release", "solid waste" or "disposal" which is broader
than that specified in either CERCLA or RCRA, such broader meaning
shall apply.
"Authorized Officer" means, as to any Person, its Chairman,
Vice-Chairman, President, Executive Vice President(s), Senior Vice
President(s) or Vice President(s) duly authorized to act on behalf of
such Person.
"Cash Flow from Operating Activities" means, for any Person for
any period, the cash flow from operating activities which would be
reflected on a statement of cash flow for such Person for such period
prepared in accordance with generally accepted accounting principles,
but in all events, applying the accounting methods adopted and
applied by Lessee for purposes of computing its consolidated cash
flow from operating activities for the six month period ended June
30, 1994 as reported on its consolidated statement of cash flow for
such period referenced in Section 3.4(b).
"Code" means the Internal Revenue Code of 1986, as amended.
"Consolidated Cash Flow" means, with respect to Lessee for a
time period, consolidated net income of Lessee for such time period
as set forth in the financial statements delivered to Lessor pursuant
to Section 4.1(a) or (b), (a) exclusive of net gain or loss (after
provision for Taxes) on the sale of assets, other than inventory sold
in the ordinary course of business, during such time period, (b) plus
or minus, as appropriate, changes in deferred Taxes with respect to
such time period, and (c) plus depreciation, depletion, amortization
of principal and other non-cash charges for such time period.
"Consolidated Current Assets" means, for any Person at any time,
the sum of (a) consolidated current assets of such Person and its
Consolidated Subsidiaries including accounts or notes receivable (if
properly reserved in accordance with generally accepted accounting
principles), but excluding (i) prepaid expenses, and (ii) assets held
for resale, plus (b) in the case of Lessee, the unused portion of the
Senior Credit Facility to the extent then available to Lessee.
"Consolidated Current Liabilities" means, for any Person at any
time, the current liabilities of such Person and its Consolidated
Subsidiaries at such time but excluding, in the case of Lessee,
required principal payments under the Senior Credit Facility.
"Consolidated Liabilities" means, for any Person at any time,
the liabilities of such Person and its Consolidated Subsidiaries at
such time, but in any event including any Debt or Guarantee of such
Person or any Consolidated Subsidiaries.
"Consolidated Senior Debt" means, for Lessee at any time, (a)
the consolidated Debt of Lessee and its Consolidated Subsidiaries at
such time, plus (b) the Consolidated Current Liabilities of Lessee
and its Consolidated Subsidiaries at such time in excess of the
Consolidated Current Assets of Lessee and its Consolidated
Subsidiaries at such time, minus, to the extent included in (a) or
(b) preceding, (c) (i) the principal balance of other Debt of Lessee
and its Consolidated Subsidiaries at such time which by its terms is
expressly subordinate to the obligations of Lessee under the Senior
Credit Facility, and (ii) Nonrecourse Debt of Lessee and its
Consolidated Subsidiaries at such time.
"Consolidated Subsidiary" or "Consolidated Subsidiaries" means,
for any Person, at any time, any Subsidiary or other entity the
accounts of which would be consolidated with those of such Person in
its consolidated financial statements as of such time.
"Consolidated Tangible Net Worth" means, with respect to Lessee
at any time, the consolidated shareholder's equity of Lessee at such
time less the consolidated intangible assets of Lessee at such time.
For purposes of this definition "intangible assets" means the amount
(to the extent reflected in determining such consolidated
shareholder's equity) of all unamortized debt discount and expense,
unamortized deferred charges, goodwill, patents, trademarks, service
marks, trade names, copyrights, organization expenses and other
intangible items.
"Consolidated Total Covered Debt" means, with respect to Lessee
at any time, (a) the consolidated Debt of Lessee and its Consolidated
Subsidiaries at such time, plus (b) Consolidated Current Liabilities
of Lessee and its Consolidated Subsidiaries in excess of Consolidated
Current Assets of Lessee and its Consolidated Subsidiaries at such
time.
"Debt" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of
such Person evidenced by bonds, debentures, notes or other similar
instruments, (c) all other indebtedness (including capitalized lease
obligations, other than usual and customary oil and gas leases) of
such Person on which interest charges are customarily paid or
accrued, (d) all Guarantees by such Person, (e) the unfunded or
unreimbursed portion of all letters of credit issued for the account
of such Person, and (f) all liability of such Person as a general
partner of a partnership for obligations of such partnership of the
nature described in (a) through (e) preceding. "Debt" shall not
include liabilities and obligations expressly excluded from "Debt" in
the definition of "Debt" contained in the Senior Credit Agreement as
in effect on the date hereof.
"Default" means any condition or event which constitutes an
Event of Default or which with the giving of notice or lapse of time
or both would, unless cured or waived, become an Event of Default.
"Environmental Indemnity Agreement" means the Environmental
Indemnity Agreement of even date herewith by and between Lessee and
Lessor.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Event of Default" means any event defined as an "Event of
Default" in Section 14(a) of the Master Lease and the Events of
Default set forth in Section 7.1 of this Agreement.
"Exhibit" refers to an exhibit attached to this Agreement and
incorporated herein by reference, unless specifically provided
otherwise.
"Facility" means the natural gas gathering, processing and
transportation facility owned (except to the extent of the Leased
Equipment) by Lessee located in Weld County, Colorado consisting of
a natural gas processing facility located on the Land and fifty-five
(55) miles of pipelines and related equipment located on the Rights
of Way and used for the gathering, transportation and processing of
natural gas and other hydrocarbons. The Facility shall expressly
include (a) the Land, (b) the Rights-of-Way, (c) all improvements now
existing or hereafter constructed on the Land or the Rights-of-Way,
(d) all personal property and fixtures forming a part of, pertaining
to, affixed or attached to or situated upon, or used in connection
with, all or any part of such natural gas gathering, processing and
transportation facility, and including, without limitation, all
books, records, plans, specifications, manuals, pipe, casings, seals,
insulators, vents, joints, compressors, connections, tanks, pumps,
pump sites, engines, racks, valves, instruments, meters, gauges,
measuring equipment, signs, posts, boilers, furniture, towers, air
conditioning and heating equipment, tools, spare parts, telephone and
other communication equipment, computers and other machinery and
equipment of every type or character and all accessions, additions
and replacements to, and all substitutes for, the foregoing, (e) all
general intangibles, including all contracts, licenses, permits,
authorizations, documents, instruments and agreements in favor of or
to which Lessee is now, or may hereafter, become a party which are
necessary or useful for the ownership or operation of such natural
gas gathering, processing and transportation facility, and (f) all
proceeds and products of the foregoing.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any
Debt of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or
otherwise, of such Person (a) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Debt or other
obligation (whether arising by virtue of partnership arrangements, by
agreement to keep-well, to purchase assets, goods, securities or
services, to take-or-pay, or to maintain financial statement
conditions, by "comfort letter" or other similar undertaking of
support or otherwise) or (b) entered into for the purpose of assuring
in any other manner the obligee of such Debt or other obligation of
the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part), provided that the term
Guarantee shall not include endorsements for collection or deposit in
the ordinary course of business.
"Initial Closing Date" means the date Lessor acquires the
Initial Equipment from Lessee and leases such Equipment to Lessor
pursuant to (a) Article II hereof, (b) the Master Lease, and
(c) Schedule No. 1.
"Initial Equipment" means the Leased Equipment described on
Exhibit A hereto to be acquired by Lessor from Lessee and leased by
Lessor to Lessee pursuant to Schedule No. 1 and the Master Lease.
"Land" means the real property located in Weld County, Colorado
on which the natural gas processing plant comprising a part of the
Facility is located and which is more particularly described on
Exhibit B attached hereto.
"Leased Equipment" means all property which is leased by Lessor
to Lessee pursuant to the Master Lease.
"Lien" means with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in
respect of such asset. For the purposes of this Agreement, Lessee
and its Subsidiaries shall be deemed to own subject to a Lien any
asset which is acquired or held subject to the interest of a vendor
or lessor under any conditional sale agreement, capital lease or
other title retention agreement relating to such asset.
"Margin Regulations" mean Regulations G, T, U and X of the Board
of Governors of the Federal Reserve System, as in effect from time to
time.
"Margin Stock" means "margin stock" as defined in Regulation U.
"Master Lease" means the Master Equipment Lease Agreement of
even date herewith by and between Lessor and Lessee, and "Master
Lease" shall specifically include all leases entered into by and
between Lessor and Lessee pursuant to the execution and delivery by
Lessor and Lessee of Schedules to such Master Equipment Lease
Agreement.
"Material Debt" means Debt of Lessee or any of its Subsidiaries
issued under one or more related or unrelated agreements or
instruments in an aggregate principal amount exceeding $5,000,000.
"Material Subsidiaries" means, for purposes of Section 8.1(e)
and (f) hereof, any Subsidiary or Subsidiaries of Lessee which
individually or in the aggregate meet any of the following criteria:
(a) its or their Cash Flow from Operating Activities for the period
of four fiscal quarters ending immediately prior to the occurrence of
any event with respect to such Subsidiary or Subsidiaries described
in Section 8.1(e) or (f) equals or exceeds ten percent (10%) of
Lessee's consolidated Cash Flow from Operating Activities for the
period of four fiscal quarters ending June 30, 1994, (b) its or their
gross revenues for the period of four (4) fiscal quarters ending
immediately prior to the occurrence of any event described in Section
8.1(e) or (f) with respect to such Subsidiary or Subsidiaries equals
or exceeds ten percent (10%) of Lessee's consolidated revenues for
the period of four (4) fiscal quarters ending June 30, 1994, (c) its
or their net income for the period of four (4) fiscal quarters ending
immediately prior to the occurrence of any event with respect to such
Subsidiary or Subsidiaries equals or exceeds ten percent (10%) of
Lessee's consolidated net income for the period of four (4) fiscal
quarters ending June 30, 1994, or (d) its or their assets as of the
last day of the fiscal quarter ending immediately prior to the
occurrence of any event described in Section 8.1(e) or (f) with
respect to such Subsidiary or Subsidiaries equals or exceeds ten
percent (10%) of Lessee's consolidated assets on June 30, 1994.
"Nonrecourse Debt" means indebtedness (a) secured solely by the
assets acquired with the proceeds of such indebtedness and (b) with
respect to which neither Lessee nor any of its Subsidiaries have any
liability for repayment beyond the assets pledged.
"Permitted Encumbrances" (a) to the extent expressly stated, has
the meaning given such term in the Senior Credit Agreement in effect
on the date hereof, and (b) in each other case, means, with respect
to the Facility: (i) the rights of Lessor in and to the Leased
Equipment; (ii) the Site Lease, (iii) minor defects in title which do
not secure the payment of money and otherwise have no material
adverse effect on the value or operation of the Facility; (iv)
mechanic's, materialmen's, warehouseman's, journeyman's and carrier's
liens and other similar liens arising by operation of law or statute
in the ordinary course of business which are not delinquent (except
to the extent permitted by Section 4.5); and (v) liens for Taxes or
assessments not yet due or not yet delinquent, or, if delinquent,
that are being contested in good faith in the normal course of
business by appropriate action, as permitted by Section 4.6.
"Permitted Transfer" means a sale, transfer or assignment by
Lessee of the Facility, including, without limitation its rights in
and to all Leased Equipment and under the Master Lease, (a) to a
wholly owned Subsidiary of Lessee, (b) in connection with a sale,
transfer or assignment by Lessee of substantially all of the oil and
gas properties, pipelines, gathering systems, processing facilities
and similar assets owned by Lessee and its subsidiaries in the
Wattenberg Field in Morgan, Adams and Weld Counties, Colorado, or (c)
in connection with a sale, transfer or assignment by Lessee of
substantially all of the gas gathering, transportation, processing
and marketing assets owned by Lessee and its Subsidiaries in the
Wattenberg Field in Morgan, Adams and Weld Counties, Colorado;
provided that at the time of any sale, transfer or assignment
contemplated by (a), (b) or (c) of this definition, (x) no Default or
Event of Default shall have occurred which is continuing, (y) the
assignee or transferee shall expressly assume and agree to pay and
perform each and every obligation of Lessee under the Transaction
Papers pursuant to an assumption agreement and other documents in
form and substance acceptable to Lessor, and (z) Lessee shall not be
released from (and by written instruments and agreements in form and
substance acceptable to Lessor, shall expressly, ratify and confirm
that it remains primarily liable for) the payment and performance of
each and every obligation of Lessee under the Transaction Papers.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including
a government or political subdivision or an agency or instrumentality
thereof.
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System as in effect from time to time.
"Rights of Way" means all easements, rights of way, licenses,
permits, surface leases, certificates of convenience and authority,
documents, instruments, agreements, rights, interests and property
pursuant to which Lessee is granted the right to the use or occupancy
of real property for the construction, maintenance and operation of
all gathering lines, transportation lines and other pipelines
comprising a part of or used in connection with the Facility.
"Schedule No. 1" means Schedule No. 1 to the Master Lease to be
entered into on the date hereof by and between Lessor and Lessee
pursuant to which Lessor will lease the Initial Equipment to Lessee.
"Senior Credit Agreement" means the Fifth Restated Credit
Agreement dated as of June 30, 1994, by and among Lessee, NationsBank
of Texas, N.A. and the Banks from time to time parties thereto as the
same may hereafter be amended, modified, renewed, extended, restated,
increased or replaced from time to time, including, without
limitation, any replacement thereof entered into with banks or other
financial institutions which are not parties to the Senior Credit
Agreement as in effect or the date hereof.
"Senior Credit Facility" means the revolving credit facility
available to Lessee pursuant to the Senior Credit Agreement as the
same may be amended, modified, renewed, extended, increased,
refinanced or replaced from time to time.
"Site Lease" means that certain Site Lease Agreement of
event date herewith by and between Lessor and Lessee pursuant to
which Lessee has agreed to lease the Facility to Lessor and it
successors and assigns upon the occurrence of an Event of Default.
"Special Cash Flow Cure Period" means the period commencing on
the last day of any fiscal quarter for which Lessee's ratio of
Consolidated Cash Flow to Consolidated Total Covered Debt is less
than required by Section 6.4 and ending on the earlier of (a) ninety
(90) days following the expiration of such quarter, or (b) the date
specified in a written notice from Lessor stating that Lessor has, in
its discretion, selected such date as the expiration date for such
Special Cash Flow Cure Period.
"Subsidiary" means, for any Person, any corporation or other
entity of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of directors
or other persons performing similar functions (including that of a
general partner) are at the time directly or indirectly owned,
collectively, by such Person and any Subsidiaries of such Person.
The term Subsidiary shall include Subsidiaries of Subsidiaries (and
so on). Notwithstanding the foregoing, for all purposes of this
Agreement, DJ Partners, L.P. shall be deemed a "Subsidiary" of
Lessee.
"Taxes" means all taxes, assessments, filing or other fees,
levies, imposts, duties, deductions, withholdings, stamp taxes,
interest equalization taxes, capital transaction taxes, foreign
exchange taxes or other charges, or other charges of any nature
whatsoever, from time to time or at any time imposed by law or any
federal, state or local governmental agency. "Tax" means any one of
the foregoing.
"Transaction Papers" means this Agreement, the Master Lease, the
Site Lease, the Environmental Indemnity Agreement and all other
documents, instruments, agreements or certificates now or at any time
hereafter delivered in connection with this Agreement, the Master
Lease, the Site Lease or the Environmental Indemnity Agreement as the
same may be amended, modified or restated from time to time.
SECTION 1.2. Accounting Terms and Determinations. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made,
and all financial statements required to be delivered hereunder shall
be prepared in accordance with generally accepted accounting
principles as in effect from time to time, applied on a basis
consistent with the most recent audited consolidated financial
statements of Lessee and its Consolidated Subsidiaries delivered to
Lessor except for changes concurred in by Lessee's independent
certified public accountants and which are disclosed to Lessor on the
next date on which financial statements are required to be delivered
to Lessor pursuant to Section 4.1(a) or (b); provided that, unless
Lessor shall otherwise agree in writing, no such change shall modify
or affect the manner in which (a) compliance with the covenants
contained in Article V is computed such that all such computations
shall be made utilizing financial information presented consistently
with prior periods, or (b) the computations contemplated by the
definition of Material Subsidiary are made so that all such
computations shall be made using financial information presented
consistently with the financial information referenced in Section
3.4(b).
ARTICLE II
COMMITMENT WITH RESPECT TO
INITIAL EQUIPMENT; CLOSING CONDITIONS
SECTION 2.1. Commitment. Subject to the satisfaction of each
condition precedent set forth in Section 2.2 hereof and compliance by
Lessee with the other terms and provisions of this Agreement, Lessor
agrees to (a) purchase the Initial Equipment from Lessee for
$21,000,000 (said amount representing the total cost to Lessee of
such Initial Equipment), and (b) execute and deliver the Master Lease
and Schedule No. 1 thereto and lease the Initial Equipment to Lessee
thereunder.
SECTION 2.2. Conditions to Initial Transaction. The obligation
of Lessor to purchase the Initial Equipment and lease such equipment
to Lessee pursuant to the Master Lease and Schedule No. 1, is subject
to the satisfaction by Lessee of each of the following conditions on
or before 5:00 p.m., Fort Worth, Texas time, November 3, 1994:
(a) Lessor shall have received each of the following
documents, instruments and agreements, duly executed and delivered by
all requisite parties, each of which shall, unless otherwise
indicated, be dated the Initial Closing Date;
(i) the Master Lease;
(ii) Schedule No. 1;
(iii) the Site Lease;
(iv) the Environmental Indemnity Agreement;
(v) a Warranty Bill of Sale in form and substance acceptable to
Lessor evidencing the conveyance of the Initial Equipment from Lessee
to Lessor;
(vi) certificates of insurance evidencing the physical damage,
property damage and comprehensive liability insurance maintained by
Lessee;
(vii) financing statements on Form UCC-1 or such other form
as Lessor shall request in form and substance acceptable to Lessor to
evidence and perfect Lessor's interests in and to the Initial
Equipment and the Facility evidenced by the Transaction Papers.
(viii) Lessee's Certificate of Incorporation and Bylaws and
resolutions of Lessee's board of directors authorizing the
transactions contemplated by the Transaction Papers, all of which
shall be accompanied by a certificate of Lessee's corporate secretary
certifying (A) that such documents are in full force and effect and
have not been waived, amended, modified, revoked or repealed in any
respect, and (B) as to the incumbency and signatures of the corporate
officers of Lessee which shall execute and deliver the Transaction
Papers on behalf of Lessee;
(ix) a Certificate of Existence and Good Standing with respect
to Lessee issued by the Secretary of State of Delaware;
(x) a Certificate of Qualification as a foreign corporation and
a Certificate of Good Standing with respect to Lessee in each case
issued by the appropriate governmental authorities of the State of
Colorado; and
(xi) a waiver or consent in form and substance acceptable to
Lessor executed by the Banks which are parties to the Senior Credit
Agreement on the Initial Closing Date pursuant to which such Banks
consent to the transactions contemplated by the Transaction Papers.
(b) Neither a Default nor an Event of Default shall have
occurred which is continuing on the Initial Closing Date;
(c) Each representation and warranty contained herein and
in each other Transaction Paper shall be true and correct on the
Initial Closing Date;
(d) No material adverse condition shall exist with respect
to the Facility or the Initial Leased Equipment on the Initial
Closing Date as determined by Lessee in its sole discretion; and
(e) No material adverse change in the business, financial
condition, results of operations or prospects of Lessee or Lessee and
its Subsidiaries on a consolidated basis since June 30, 1994 as
determined by Lessee in its sole discretion.
SECTION 2.3. No Further Commitment. Subject only to the
commitment of Lessor with respect to the Initial Equipment contained
in Section 2.1 hereof, Lessor has no commitment to acquire or lease
any equipment or other assets to Lessee of any nature, and any
commitment other than that set forth in Section 2.1 to acquire or
lease any such equipment shall be made or declined by Lessor in its
sole and absolute discretion. To the extent Lessor elects to make
any such commitment, such commitment may be made subject to such
conditions precedent, representations, warranties, covenants or
agreements as Lessor may elect in its sole and absolute discretion.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
In order to induce Lessor to enter into the Master Lease and
acquire and lease Leased Equipment to Lessee thereunder, Lessee
represents and warrants to Lessor that:
SECTION 3.1. Corporate Existence and Power. Lessee (a) is a
corporation duly incorporated, validly existing and in good standing
under the laws of the State of Delaware, (b) has all corporate power
and all material governmental licenses, authorizations, consents and
approvals required to carry on its businesses as now conducted and as
proposed to be conducted, and (c) is duly qualified to transact
business as foreign corporation in the State of Colorado and in each
other jurisdiction where a failure to be so qualified could have a
material adverse effect on its financial condition or operations.
SECTION 3.2. Corporate and Governmental Authorization;
Contravention. The execution, delivery and performance of this
Agreement, the Master Lease, the Site Lease and the other Transaction
Papers by Lessee are within Lessee's corporate powers, when executed
will be duly authorized by all necessary corporate action, require no
action by or in respect of, or filing with, any governmental body,
agency or official and do not contravene, or constitute a default
under, any provision of applicable law or regulations or of the
certificate of incorporation or bylaws of Lessee or of any agreement,
judgment, injunction, order, decree or other instrument binding upon
such Person or result in the creation or imposition of any Lien on
any asset of Lessee or any of its Subsidiaries except Liens in favor
of Lessor.
SECTION 3.3. Binding Effect. This Agreement constitutes a
valid and binding agreement of Lessee; the other Transaction Papers,
when executed and delivered, will constitute valid and binding
obligations of Lessee, and will be enforceable in accordance with
their respective terms except as (a) the enforceability thereof may
be limited by bankruptcy, insolvency or similar laws affecting
creditors rights generally, and (b) the availability of equitable
remedies may be limited by equitable principles of general
applicability.
SECTION 3.4. Financial Information. (a) The consolidated
balance sheet of Lessee as of December 31, 1993, and the related
consolidated statements of operations and cash flows for the fiscal
year then ended, reported on by Arthur Anderson & Co., copies of
which have been delivered to Lessor, fairly present, in conformity
with generally accepted accounting principles, the consolidated
financial position of Lessee as of such date and its consolidated
results of operations and cash flows for such fiscal year.
(b) The quarterly unaudited consolidated balance sheet of
Lessee as of June 30, 1994, and the related unaudited consolidated
statements of operations and cash flows for the portion of Lessee's
fiscal year then ended, fairly present, in conformity with generally
accepted accounting principles (subject to year end audit adjustments
which will not materially alter the accuracy of the information set
forth therein) applied on a basis consistent with the financial
statements referred to in Section 3.4(a), the consolidated financial
position of Lessee as of such date and its consolidated results of
operations and cash flows for such portion of Lessee's fiscal year.
(c) Except as disclosed in writing to Lessor prior to the
execution and delivery of this Agreement, since June 30, 1994, there
has been no material adverse change in the business, financial
position, results of operations or prospects of Lessee or any of its
Subsidiaries.
SECTION 3.5. Litigation. There is no action, suit or
proceeding pending against, or to the knowledge of Lessee, threatened
against or affecting Lessee or any of its Subsidiaries before any
court or arbitrator, any governmental body, agency or official (a)
which in any way relates to the construction, ownership or operation
of the Facility, (b) in which there is a reasonable possibility of an
adverse decision which could materially and adversely affect the
business, consolidated financial position or consolidated results of
operations of Lessee, or (c) which could in any manner draw into
question the validity of any of the Transaction Papers.
SECTION 3.6. Taxes and Filing of Tax Returns. Each of Lessee,
its predecessors and their respective Subsidiaries has filed all
material tax returns required to have been filed and has paid all
Taxes shown to be due and payable on such returns, including interest
and penalties, and all other Taxes which are payable by such party,
to the extent the same have become due and payable other than Taxes
with respect to which a failure to pay would not have a material
adverse effect on Lessee or its Subsidiaries. Lessee does not know
of any proposed material Tax assessment against it or any of its
Subsidiaries, and all Tax liabilities of each of Lessee, its
predecessors and their respective Subsidiaries are adequately
provided for.
SECTION 3.7. Title to Properties; Liens (Generally). Lessee
and each of its Subsidiaries have good and indefeasible title to all
material assets purported to be owned by them subject only to
Permitted Encumbrances (for purposes of this Section 3.7, Permitted
Encumbrances shall have the meaning given such term in the Senior
Credit Agreement as in effect on the date hereof).
SECTION 3.8. Business; Compliance (Generally). Lessee and each
of its Subsidiaries have performed and abided by all obligations
required to be performed by them to the extent Lessee individually or
Lessee and its Subsidiaries taken as a whole could be materially and
adversely affected under any license, permit, order, authorization,
grant, contract, agreement, or regulation to which any of them is a
party or by which any of them or any of their assets are bound;
provided that to the extent oil and gas properties owned by Lessee or
its Subsidiaries are operated by operators other than Lessee or its
Subsidiaries, Lessee has no knowledge that any such obligation
remains unperformed and the appropriate Person has diligently
enforced all contractual obligations of such operators to insure
performance.
SECTION 3.9. Licenses, Permits, Etc. (Generally). Lessee and
its Subsidiaries possess such valid franchises, certificates of
convenience and necessity, operating rights, licenses, permits,
consents, authorizations, exemptions and orders of tribunals as are
necessary to carry on their business as now being conducted except to
the extent a failure to obtain any such item would not have a
material adverse effect on Lessee individually or on Lessee and its
Subsidiaries taken as a whole; provided that to the extent oil and
gas properties owned by Lessee and its Subsidiaries are operated by
operators other than Lessee or its Subsidiaries, Lessee has no
knowledge that possession of such items has not been obtained, and
the appropriate Person has diligently enforced all contractual
obligations of such operators to obtain such items.
SECTION 3.10. Compliance with Law (Generally). The business
and operations of Lessee and its Subsidiaries have been and are being
conducted in accordance with all applicable laws, rules and
regulations of all tribunals, other than laws, rules and regulations
the violation of which could not (either individually or
collectively) have a material adverse effect on Lessee's individual
financial condition or operations or on the financial condition or
operations of Lessee and its Subsidiaries taken as a whole; provided
that to the extent oil and gas properties owned by Lessee and its
Subsidiaries are operated by operators other than Lessee or its
Subsidiaries, Lessee has no knowledge of non-compliance and the
appropriate Person has diligently enforced all contractual
obligations of such operators to insure compliance.
SECTION 3.11. Full Disclosure. All information heretofore
furnished by Lessee (or any other party in its behalf) to Lessor for
purposes of or in connection with the Master Lease, the Site Lease,
this Agreement or any other Transaction Paper or any transaction
contemplated hereby or thereby is, and all such information hereafter
furnished by Lessee or in its behalf to Lessor will be, true,
complete and accurate in every material respect or based on
reasonable estimates on the date as of which such information is
stated or certified. Lessee has disclosed to Lessor in writing any
and all facts (other than facts of general public knowledge) which
might reasonably be expected to materially and adversely affect or
might affect (to the extent Lessee can now reasonably foresee), the
business, operations, prospects or condition, financial or otherwise,
of Lessee or its Subsidiaries or the ability of Lessee to perform its
obligations under this Agreement.
SECTION 3.12. Environmental Matters. No real or personal
property owned or leased by Lessee or any Subsidiary of Lessee
(including without limitation, Lessee's and its Subsidiaries oil and
gas properties and related assets) and no operations conducted
thereon, and to Lessee's knowledge, no operations of any prior owner,
lessee or operator of any such properties, is or has been in
violation of any Applicable Environmental Law other than violations
which individually and in the aggregate will not have a material
adverse effect on Lessee and its Subsidiaries taken as a whole.
Neither Lessee, any Subsidiary of Lessee nor any such property or
operation is the subject of any existing, pending or, to Lessee's
knowledge, threatened action, suit, investigation, inquiry or
preceding with respect to Applicable Environmental Laws which could,
individually or in the aggregate, have a material adverse effect on
Lessee and its Subsidiaries taken as a whole. All notices, permits,
licenses, and similar authorizations, if any, required to be obtained
or filed in connection with the ownership or operation of any and all
real and personal property owned, leased or operated by Lessee or any
of its Subsidiaries, including, without limitation, notices,
licenses, permits and authorizations required in connection with any
past or present treatment, storage, disposal, or release of hazardous
substances, petroleums, or solid waste into the environment, have
been duly obtained or filed except to the extent the failure to
obtain or file such notices, licenses, permits and authorizations
would not have a material adverse effect on Lessee and its
Subsidiaries taken as a whole. To Lessee's knowledge, all hazardous
substances, if any, generated by or at any and all real or personal
property owned, leased or operated by Lessee or any of its
Subsidiaries have been transported, treated, and disposed of only by
carriers maintaining valid permits under RCRA and other Applicable
Environmental Laws. There has been no release or threatened release
of any quantity of any hazardous substances or petroleum on, to or
from any real or personal property owned, leased, or operated by
Lessee or any Subsidiary which was not in compliance with Applicable
Environmental Laws other than releases which would not, individually
or in the aggregate, have a material adverse effect on Lessee and its
Subsidiaries taken as a whole. Neither Lessee nor any Subsidiary has
any contingent liability in connection with any release or threatened
release of any hazardous substance, petroleum, or solid waste into
the environment which could have a material adverse effect on Lessee
and its Subsidiaries taken as a whole.
SECTION 3.13. Title to Facility. Lessee has good and
marketable title to the Facility, including, without limitation, all
Rights of Way, free and clear of all Liens other than Permitted
Encumbrances.
SECTION 3.14. Facility Compliance. The Facility was
constructed in full compliance with, and the Facility and its past,
present and anticipated operations comply in all respects with all
applicable licenses, permits, orders, authorizations and all
applicable laws, rules and regulations of governmental authorities,
including, without limitation, all applicable restrictive covenants,
zoning ordinances, building codes and flood disaster laws. Lessee
possesses such valid franchises, certificates of convenience and
necessity, operating rights, licenses, permits, consents,
authorizations, exemptions and orders of governmental authorities as
are necessary to own and operate the Facility in accordance with its
intended uses.
ARTICLE IV
AFFIRMATIVE COVENANTS
Lessee agrees that, so long as the Master Lease is in effect or
Lessee has any obligation or liability to Lessor thereunder.
SECTION 4.1. Information. Lessee will deliver, or cause to be
delivered, to Lessor:
(a) as soon as available and in any event within ninety
(90) days after the end of each fiscal year of Lessee, consolidated
and consolidating balance sheets of Lessee as of the end of such
fiscal year and the related consolidated and consolidating statements
of income and changes in financial position for such fiscal year,
setting forth in each case in comparative form the figures for the
previous fiscal year, all reported by Lessee in accordance with
generally accepted accounting principles and audited by Arthur
Anderson & Co. or other independent public accountants of nationally
recognized standing acceptable to Lessor;
(b) as soon as available and in any event within
forty-five (45) days after the end of each of the first three (3)
quarters of each fiscal year of Lessee, consolidated and
consolidating balance sheets of Lessee as of the end of such quarter
and the related consolidated and consolidating statements of income
and changes in financial position for such quarter and for the
portion of Lessee's fiscal year ended at the end of such quarter,
setting forth in each case in comparative form the figures for the
corresponding quarter and the corresponding portion of Lessee's
previous fiscal year. All financial statements delivered pursuant to
this Section 4.1(b) shall be certified as to fairness of
presentation, generally accepted accounting principles and
consistency by the chief financial officer of Lessee;
(c) simultaneously with the delivery of each set of
financial statements referred to in Sections 4.1(a) and (b), a
certificate of an Authorized Officer, (i) setting forth in reasonable
detail the calculations required to establish whether Lessee was in
compliance with the requirements of Article V on the date of such
financial statements, (ii) stating whether there exists on the date
of such certificate any Default and, if any Default then exists,
setting forth the details thereof and the action which Lessee is
taking or proposes to take with respect thereto, and (iii) stating
whether or not such financial statements fairly reflect the business
and financial condition of Lessee as of the date of the delivery of
such financial statements;
(d) as soon as available and in any event by August 15 and
February 15 of each year, an operating statement for the Facility for
the semi-annual period ending the immediately preceding June 30 or
December 31, as applicable, substantially in the form of Exhibit C
attached hereto, which shall set forth for such six month period (i)
the average prices received by Lessee for hydrocarbons produced and
processed at the Facility, (ii) the cost of all natural gas and other
hydrocarbons purchased by Lessee and gathered, processed or
transported at or through the Facility, (iii) operating expenses
incurred in the operation of the Facility, (iv) volumes of natural
gas processed at the Facility, (v) volumes of natural gas liquids,
condensate, gasoline and other hydrocarbons produced in connection
with the operation of the Facility, and (vi) such other information
regarding the operation of the Facility as Lessor shall reasonably
request;
(e) immediately upon any Authorized Officer becoming aware
of the occurrence of any Default or Event of Default, including,
without limitation, a Default or Event of Default under Article VI,
a certificate of an Authorized Officer setting forth the details
thereof and the action which Lessee is taking or proposes to take
with respect thereto;
(f) promptly upon the mailing thereof to the stockholders
of Lessee generally, copies of all financial statements, reports and
proxy statements so mailed;
(g) promptly upon the filing thereof, copies of all final
registration statements (other than the exhibits thereto and any
registration statements on Form S-8 or its equivalent), post
effective amendments thereto and annual, quarterly or special reports
which Lessee shall have filed with the Securities and Exchange
Commission;
(h) promptly following the occurrence thereof, notice of
(i) any material adverse change in the financial condition of Lessee,
or (ii) the occurrence of any acceleration of the maturity of any
Debt owing by Lessee or any of its Subsidiaries or any default under
any indenture, mortgage, agreement, contract or other instrument to
which any of them is a party or by which any of them or any of their
properties is bound, if such default or acceleration might have a
material adverse effect upon their financial condition;
(i) promptly upon receipt of same, any notice or other
information received by Lessee or any Subsidiary of Lessee indicating
any potential, actual or alleged (i) non-compliance with or violation
of the requirements of any Applicable Environmental Law which (A)
relates in any way to the Facility to the extent such non-compliance
could result in liability to Lessee for fines, clean up or
remediation obligations or other liability in excess of $25,000 in
the aggregate, or (B) could result in liability to Lessee or any
Subsidiary for fines, clean up or any other remediation obligations
or any other liability in excess of $250,000 in the aggregate; (ii)
release or threatened release of any toxic or hazardous waste,
substance, or constituent, or other substance into the environment
which release would impose on Lessee or any Subsidiary a duty to
report to a governmental authority or to pay cleanup costs or to take
remedial action under any Applicable Environmental Law and which (A)
arises out of or results in any way from the operation of the
Facility to the extent that such release or threatened release (1)
involves more than two hundred (200) gallons of Hazardous Substances,
or (2) could result in liability to Lessee for fines, clean up or
remediation or other liability in excess of $25,000 in the aggregate,
or (B) could result in liability to Lessee or any Subsidiary for
fines, clean up and other remediation obligations or any other
liability in excess of $250,000 in the aggregate; or (iii) the
existence of any Lien arising under any Applicable Environmental Law
which (A) encumbers all or any part of the Facility and which secures
any obligation to pay fines, clean up or other remediation costs or
other liability in excess of $25,000 in the aggregate, or (B) secures
any obligation to pay fines, clean up or other remediation costs or
any other liability in excess of $250,000 in the aggregate. Without
limiting the foregoing, Lessee shall provide to Lessor promptly upon
receipt of same copies of all environmental consultants or engineers
reports received by Lessee or any Subsidiary of Lessee which (A)
relates in any manner to the Facility, or (B) would render the
representation and warranty contained in Section 3.12 untrue or
inaccurate in any respect;
(j) in the event any notification is provided by Lessee to
Lessor pursuant to Section 4.1(i) hereof or Lessor otherwise learns
of any event or condition under which any such notice would be
required, then, upon request of Lessor, Lessee shall, within 90 days
of such request, cause to be furnished to Lessor a report by an
environmental consulting firm acceptable to Lessor, stating that a
review of such event, condition or circumstance has been undertaken
(the scope of which shall be acceptable to Lessor) and detailing the
findings, conclusions, and recommendations of such consultant.
Lessee shall bear all expenses and costs associated with such review
and updates thereof, as well as all remediation or curative action
recommended by any such environmental consultant; and
(l) from time to time such additional information
regarding the Facility and the financial condition, business or
operations of Lessee and its Subsidiaries as Lessor may reasonably
request.
SECTION 4.2. Business of Lessee. The primary business of
Lessee and its Subsidiaries will continue to be the acquisition,
exploration for, development, production, transportation, processing
and marketing of liquid or gaseous hydrocarbons and accompanying
elements and related businesses.
SECTION 4.3. Maintenance of Existence. Lessee shall at all
times (a) maintain its corporate existence in the state of Delaware,
and (b) be in good standing and maintain its qualification to
transact business in the State of Colorado and in all other
jurisdictions where the failure to be in good standing or failure to
be qualified to transact business could have a material adverse
effect on the financial condition or operations of Lessee
individually or Lessee and its Subsidiaries taken as a whole.
SECTION 4.4. Right of Inspection. Lessee will permit and will
cause each of its Subsidiaries to permit any officer, employee or
agent of Lessor to visit and inspect the Facility, examine Lessee's
and its Subsidiaries books of record and accounts, take copies and
extracts therefrom, and discuss the affairs, finances and accounts
(including, without limitation, the operations of the Facility) of
Lessee and its Subsidiaries with Lessee's and its Subsidiaries'
officers, accountants and auditors, all at such reasonable times and
as often as Lessor may desire, all at the expense of Lessee. Lessor
covenants and agrees to preserve the confidentiality of any
information with respect to which Lessee, or any of its Subsidiaries
has an obligation of confidentiality to a third party (to the extent
such obligation has been disclosed to Lessor), except to the extent
Lessor is required to disclose such information pursuant to any
applicable law, rule or regulation of any governmental body or
pursuant to the order of any court of competent jurisdiction.
SECTION 4.5. Payment of Taxes and Claims. Lessee will, and
will cause each of its Subsidiaries to, pay (a) all Taxes imposed
upon it or any of its assets or with respect to any of its
franchises, business, income or profits before any material penalty
or interest accrues thereon and (b) all material claims (including,
without limitation, claims for labor, services, materials and
supplies) for sums which have become due and payable and which by law
have or might become a Lien (other than a Permitted Encumbrance) on
any of its assets; provided, however, no payment of Taxes or claims
shall be required if (i) the amount, applicability or validity
thereof is currently being contested in good faith by appropriate
action promptly initiated and diligently conducted in accordance with
good business practices and neither the Facility nor any material
part of the other property or assets of Lessee or any of its
Subsidiaries are subject to levy or execution, (ii) Lessee as and to
the extent required in accordance with generally accepted accounting
principles, shall have set aside on its books reserves (segregated to
the extent required by generally accepted accounting practices)
deemed by it to be adequate with respect thereto, and (iii) Lessee
has notified Lessor of such circumstances, in detail satisfactory to
Lessor.
SECTION 4.6. Compliance with Laws and Documents. Lessee will
and will cause each of its Subsidiaries to comply with all laws,
their respective certificates of incorporation, bylaws, partnership
agreements and similar organizational documents and all material
agreements to which Lessee or any of its Subsidiaries is a party, if
a violation, alone or when combined with all other such violations,
could have a material adverse effect on the financial condition or
operations of Lessee individually or Lessee and its Subsidiaries
taken as a whole.
SECTION 4.7. Operation of Facility. Lessee will operate the
Facility in a good and workmanlike manner and in accordance with all
applicable permits, authorizations, licenses and consents and all
applicable laws, rules and regulations of governmental authorities
and will pay all fees or charges of any kind in connection therewith.
Lessee will at all times comply fully with the terms of all Rights of
Way and pay all such amounts and take all other actions as are
required to preserve and maintain the Rights of Way in full force and
effect at all times; provided that Lessee will comply with and will
cause to be performed all of the covenants, agreements and
obligations imposed upon it or the Facility in the Permitted
Encumbrances and Rights of Way in accordance with their respective
terms and provisions and will take all actions, pay such amounts and
do all such further acts and things as are necessary to preserve and
maintain the Rights of Way in full force and effect at all times;
provided, that Lessee will not be required to maintain any Right of
Way in force if (a) such right of way is no longer being used by
Lessee in the operation of the Facility, (b) all Leased Equipment is
removed from such Right of Way and is either incorporated into
another part of the Facility or stored on the Land, and (c) Lessee
provides Lessor notice of its intent to abandon such Right of Way not
less than thirty (30) days prior to the effective date of such
abandonment. If Lessee receives a notice or claim from any
governmental authority pertaining to the Facility, including
specifically, but without limitation, a notice that the Facility is
not in compliance with any permit, authorization, license or consent
or any law, rule or regulation of any governmental authority, Lessee
will promptly furnish a copy of such notice or claim to Lessor.
SECTION 4.8. Repair and Maintenance of the Facility. Lessee
will maintain the Facility in a good operating order and condition,
causing all necessary repairs, renewals and replacements to be
promptly made, and will not allow any part of the Facility to be
misused, abused or wasted or to deteriorate.
SECTION 4.9. Environmental Law Compliance. Lessee will, and
will cause each of its Subsidiaries to, comply in all material
respects with all Applicable Environmental Laws related to the
ownership, leasing or operation of all other assets owned, operated
or leased by Lessee or any of its Subsidiaries, in each case,
including, without limitation, (a) all licensing, permitting,
notification and similar requirements of Applicable Environmental
Laws, and (b) all provisions of Applicable Environmental Laws
regarding storage, discharge, release, transportation, treatment and
disposal of hazardous substances, petroleum, solid waste or other
contaminants. Lessee will, and will cause each of its Subsidiaries
to, promptly pay and discharge when due all debts, claims,
liabilities and obligations with respect to any clean-up or
remediation measures necessary to comply with Applicable
Environmental Laws.
SECTION 4.10. Additional Cost Information. Lessee acknowledges
that Lessor has required that Lessee provide Lessor with invoices,
purchase orders, purchase contracts and other documentation required
by Lessor (the "Cost Information") to verify to Lessor's satisfaction
that the actual cost to Lessee of the Initial Equipment equals or
exceeds $21,000,000. Lessee hereby agrees that on or before December
23, 1994, Lessee will provide additional Cost Information verifying
that the actual cost of the Initial Equipment equals or exceeds
$21,000,000. If, upon receipt of such information, Lessor reasonably
determines that the actual cost of the Initial Equipment is less than
$21,000,000, then (a) Lessee shall immediately refund to Lessor the
difference between $21,000,000 and the actual cost of the Initial
Equipment as determined by Lessor, (b) each monthly payment of Base
Rent payable pursuant to Schedule No. 1 (i) during the initial Base
Term shall be reduced to 1.39155% of the actual cost of the Initial
Equipment as determined by Lessor (and Lessor will promptly credit
Lessee's account in an amount equal to the excess portion of monthly
payments of Base Rent previously received by Lessor), and (ii) during
the extended portion of the Base Term (as contemplated by Section 9
of Schedule No. 1) shall be reduced to 1.32% of the actual cost of
the Initial Equipment as determined by Lessor, (c) the stipulated
amount of the fair market value of the Leased Equipment for purposes
of the fair market value purchase option set forth in Section 8 of
Schedule No. 1 shall be reduced by twenty percent (20%) of the
difference between $21,000,000 and the actual cost of the Leased
Equipment as determined by Lessor, and (d) the actual cost of the
Leased Equipment for all other purposes of Schedule No. 1, including,
without limitation, for purposes of Sections 1, 5 and 10 of Schedule
No. 1, shall be the actual cost as determined by Lessor.
SECTION 4.11. Supplemental Documentation Regarding Rights of
Way. As soon as reasonably possible, but in all events on or before
January 3, 1994, Lessee shall (a) cause record title in and to all
Rights of Way to be transferred to Lessee, (b) deliver to Lessor
evidence satisfactory to Lessor that (i) record title in and to all
Rights of Way has been transferred to, and is vested in, Lessee, (ii)
such Rights of Way constitute all Rights of Way necessary for the
construction, maintenance and operation of all pipelines, gathering
systems, transportation lines and related machinery, equipment and
fixtures forming a part of the Facility, and (iii) that the Facility
has been constructed and lies wholly within the boundaries of the
Land and such Rights of Way, and (c) execute, deliver and file of
record (i) a supplement to the Site Lease, (ii) such UCC-1 financing
statement, and (iii) all such other documents, instruments and
agreements (all in form and substance satisfactory to Lessor) as
Lessor shall reasonably require to fully evidence and perfect of
record all rights and interests with respect to the Rights of Way
which are intended to be afforded to Lessor under the Site Lease.
SECTION 4.12. Evidence of Title; Survey and Insurance
Endorsement. As soon as available, but in all events on or before
December 3, 1994, Lessee shall provide to Lessor (a) a survey of the
land in form and substance acceptable to Lessor, but which will, in
all events, (i) contain a metes and bounds legal description of the
boundaries of the Land Site, (ii) contain a survey of the boundaries
of the Land with field notes corresponding to the metes and bounds
legal description, (iii) set forth the location of the major
equipment components and improvements located on the Land, and (iv)
contain a current surveyor's or engineer's certification in form and
substance acceptable to Lessor, (b) a copy of an Owner's Policy of
Title Insurance reflecting that Lessee holds good and marketable
title to the Land subject to no Liens other than Permitted
Encumbrances, and (c) endorsements to the policies of physical
damage, property damage and comprehensive liability insurance
maintained by Lessee in accordance with Section 6 of the Master Lease
reflecting that Lessor has been named as a loss payee and an
additional insured under each such policy.
ARTICLE V
NEGATIVE COVENANTS
Lessee agrees that, so long as the Master Lease is in effect or
any obligation of Lessee thereunder remains unpaid:
SECTION 5.1. Negative Pledge. Lessee will not create, assume
or suffer to exist any Lien on all or any part of the Facility except
Permitted Encumbrances.
SECTION 5.2. Consolidations and Mergers. Lessee will not
consolidate or merge with or into any other Person; provided, that so
long as no Default or Event of Default exists or will result, Lessee
may merge or consolidate with another Person so long as Lessee is the
surviving corporation.
SECTION 5.3. Asset Dispositions. (a) Lessee will not sell,
lease, abandon or otherwise transfer the Facility to any other
Person, (b) Lessee will not sell, lease, abandon or otherwise
transfer substantially all of its assets to any other Person, and (c)
Lessee will not, and will not permit its Subsidiaries to, sell,
lease, abandon, or otherwise transfer substantially all of the assets
of Lessee and its Subsidiaries on a consolidated basis.
Notwithstanding the foregoing, Lessor will not unreasonably withhold
its consent to a Permitted Transfer.
SECTION 5.4. Use of Proceeds. The proceeds received by Lessee
in respect of the transactions contemplated by the Transaction Papers
will not be used, directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, of purchasing or carrying any
Margin Stock, and none of such proceeds will be used in violation of
applicable law (including, without limitation, the Margin
Regulations).
SECTION 5.5. Transactions with Affiliates. Lessee will not,
and will not permit any Subsidiary, to engage in any material
transaction with an Affiliate of Lessee unless such transaction is
generally as favorable to Lessee or such Subsidiary as could be
obtained in an arm's length transaction with an unaffiliated Person
in accordance with prevailing industry customs and practices.
ARTICLE VI
FINANCIAL COVENANTS
Lessee agrees that, so long as the Master Lease is in effect or
any obligation of Lessee thereunder remains unpaid;
SECTION 6.1. Consolidated Working Capital of Lessee. Lessee
will not permit the amount by which its Consolidated Current Assets
exceeds its Consolidated Current Liabilities as of the end of any
fiscal quarter to be less than $1,000,000.
SECTION 6.2. Current Ratio of Lessee. Lessee will not permit
the ratio of its Consolidated Current Assets to its Consolidated
Current Liabilities as of the end of any fiscal quarter to be less
than 1.0 to 1.0.
SECTION 6.3. Ratio of Consolidated Total Debt and Consolidated
Senior Debt to Consolidated Tangible Net Worth of Lessee. Lessee
will not permit its consolidated total Debt as of the end of any
fiscal quarter to exceed one hundred fifty percent (150%) of its
Consolidated Tangible Net Worth as of the end of such fiscal quarter.
Lessee will not permit its Consolidated Senior Debt as of the end of
any fiscal quarter to exceed one hundred twenty percent (120%) of its
Consolidated Tangible Net Worth as of the end of such fiscal quarter.
SECTION 6.4. Adjusted Consolidated Cash Flow Coverage of
Lessee. If, as of the end of any fiscal quarter the aggregate
Adjusted Consolidated Cash Flow of Lessee for (a) the fiscal quarter
then ended is less than five percent (5%) of Lessee's Consolidated
Total Covered Debt as of the end of such fiscal quarter, or (b) the
four fiscal quarters then ended is less than twenty five percent
(25%) of Lessee's Consolidated Total Covered Debt as of the end of
such fiscal quarter exclusive of such portion of Consolidated Total
Covered Debt, then, in either event, Lessee will, prior to the
expiration of the applicable Special Cash Flow Cure Period, make a
principal payment on its outstanding Debt in an amount such that, if
the principal so paid had not been outstanding at the end of such
fiscal quarter, the percentage set forth herein would have been
satisfied for such fiscal quarter.
ARTICLE VII
INDEMNIFICATION
Lessee shall indemnify Lessor and hold Lessor harmless from and
against any and all liabilities, losses, damages, costs and expenses
of any kind, including, claims arising out of any negligence, strict
liability in tort or claims for infringement (and further including,
without limitation, the reasonable fees and disbursements of counsel
for Lessor in connection with any investigative, administrative or
judicial proceeding, whether or not Lessor shall be designated a
party thereto) which may be incurred by Lessor and which in any way
relate to or arise out of (a) this Agreement or any other Transaction
Paper, (b) any actual or proposed use of amounts paid by Lessor to
Lessee pursuant to the transactions contemplated by the Transaction
Papers, (c) the ordering, acquisition, rejection, installation,
possession, maintenance, use, ownership, condition, destruction,
operation, return or disposition of the Leased Equipment, or (d) the
construction, ownership, use, maintenance, condition, disposition or
operation of the Facility; provided that Lessor shall not have the
right to be indemnified hereunder for its own gross negligence or
willful misconduct, IT BEING THE EXPRESS INTENTION OF LESSEE THAT
LESSOR SHALL BE INDEMNIFIED FOR THE CONSEQUENCES OF ITS ORDINARY
NEGLIGENCE. The indemnification provided for in this Article VII is
in addition to that contained in the Environmental Indemnity
Agreement. Lessee's obligations under this Article VII shall survive
any partial or total termination, expiration, or cancellation of the
Master Lease, this Agreement and all other Transaction Papers. For
purposes of this Article VII, "Lessor" shall include is shareholders,
directors, officers, employees, agent, attorneys and Affiliates.
ARTICLE VIII
DEFAULTS
SECTION 8.1. Events of Default. In addition to the Events of
Default contained in the Master Lease and the Site Lease, the
occurrence of any one or more of the following events shall
constitute an Event of Default for all purposes of this Agreement,
the Master Lease, the Site Lease and all other Transaction Papers.
(a) Lessee shall fail to observe or perform any covenant
or agreement contained in Section 4.11, Section 4.12, Article V or
Article VI of this Agreement and, as to Section 6.1 through and
including 6.3 only, the continuance of such failure for a period not
to exceed thirty (30) consecutive days (with respect to the first
such failure within a given calendar year) and five (5) days (with
respect to the second and third such failures within a given calendar
year); provided that no grace period shall apply after the third such
failure in any calendar year;
(b) Lessee shall fail to observe or perform any covenant
or agreement contained in this Agreement or any other Transaction
Paper (other than those covered by Section 8.1(a)) for ten (10) days
after written notice thereof has been given to Lessee by Lessor;
(c) Lessee shall fail to cause the financial statements
described in Section 4.1(a) to be accompanied by the opinion without
qualification (except for qualifications required by changes in
accounting methods with which Lessee's auditors concur) of the
accountants preparing such opinion, that such financial statements
were prepared in accordance with generally accepted accounting
principles and fairly present the consolidated financial position and
results of operations of Lessee;
(d) Lessee or any of its Subsidiaries shall fail or pay
any Material Debt at maturity or any event or condition (i) shall
occur which results in the acceleration of the maturity of any
Material Debt of Lessee or any of its Subsidiaries, or (ii) shall
occur and continue for a period of thirty (30) days (or such shorter
cure period as is provided pursuant to the terms of such Material
Debt) which entitles (or, with the giving of notice or lapse of time
or both, would unless cured or waived, entitle) the holder of such
Material Debt to accelerate the maturity thereof;
(e) any Material Subsidiary of Lessee shall commence a
voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or
any substantial part of its property, or shall consent to any such
relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against
it, or shall make a general assignment for the benefit of creditors,
or shall fail generally to pay its debts as they become due, or shall
take any corporate action to authorize any of the foregoing;
(f) an involuntary case or other proceeding shall be
commenced against any Material Subsidiary of Lessee seeking
liquidation, reorganization or other relief with respect to it or its
debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or
any substantial part of its property, and such involuntary case or
other proceeding shall remain undismissed and unstayed for a period
of sixty (60) days; or an order for relief shall be entered against
any Material Subsidiary of Lessee under the federal bankruptcy laws
as now or hereafter in effect;
(g) one (1) or more judgments or orders for the payment of
money aggregating in excess of $1,000,000 shall be rendered against
Lessee or any of its Subsidiaries and such judgment or order (i)
shall continue unsatisfied and unstayed (unless bonded with a
supersedeas bond at least equal to such judgment or order) for a
period of thirty (30) days, or (ii) is not fully paid and satisfied
at least ten (10) days prior to the date on which any of its assets
may be lawfully sold to satisfy such judgment or order;
(h) one (1) or more judgments or orders for the payment of
money aggregating in excess of the sum of (i) $20,000,000 plus (ii)
(A) the amount of such judgment which is covered by insurance to the
satisfaction of Lessor and its counsel, and (B) any amounts which
Lessee has deposited with the agent bank under the Senior Credit
Agreement (or any other party designated by the financial
institutions which are parties to the Senior Credit Agreement) to be
held as security for the payment of such judgment shall be rendered
against Lessee or any of its Subsidiaries, whether or not otherwise
bonded or stayed; or
(i) the Site Lease shall for any reason cease to
constitute a valid, binding and enforceable obligation of Lessee in
accordance with its terms or Lessee shall so state in writing.
SECTION 8.2. Remedies Upon Default. Upon the occurrence of any
Event of Default specified in Section 8.1, Lessor shall be entitled
to exercise any and all remedies available to Lessor under (a)
Section 14(b) of the Master Lease, (b) the provisions of the Site
Lease which are contingent upon the existence of an Event of Default,
including, without termination, Articles II and V thereof, and (c)
any other remedy available to Lessor under any other Transaction
Paper or applicable law which is contingent upon the occurrence of an
Event of Default, a "default", an "event of default", a "breach", a
"violation", or any similar event.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Return of Leased Equipment; Storage Obligation.
In addition to Lessee's obligations under Section 9(b) of the Master
Lease, Lessee agrees that at the expiration of the lease term with
respect to any item of Leased Equipment, Lessee shall return such
Leased Equipment to Lessor clean and in good condition and working
order, ordinary wear and tear excepted, with all parts fully
functional, free and clear of all Liens, and free and clear of all
insignia, logos, advertising information or other markings made by
Lessee thereon. Upon request by Lessor, Lessee will, at its expense,
(a) deliver such Leased Equipment to any site or sites in the
continental United States designated by Lessor, and (b) to the extent
Lessor requests and Lessee has suitable space available, defer such
return and store such Leased Equipment for Lessor for up to ninety
(90) days. Lessor shall pay all costs of maintenance and insurance
on the Leased Equipment during such deferral period.
SECTION 9.2. Notices. All notices, requests and other
communications to Lessor or Lessee hereunder shall be in writing
(including bank wire, telecopy or similar writing) and shall be given
to such party at its address, telex or telecopy number set forth on
the signature pages hereof or such other address, telex or telecopy
number as such party may hereafter specify for such purpose by notice
to the other party. Each such notice, request or other communication
shall be effective (a) if given by telecopy, when such telecopy is
transmitted to the telecopy number specified in this Section 9.2 and
the appropriate answerback is received or receipt is otherwise
confirmed, (b) if given by mail, one (1) business day after deposit
in the mails with first class postage prepaid, addressed as
aforesaid, or (c) if given by any other means, when delivered at the
address specified in this Section 9.2.
SECTION 9.3. No Waivers. No failure or delay by Lessor in
exercising any right, power or privilege hereunder or under any other
Transaction Paper shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by
law or in any of the other Transaction Papers.
SECTION 9.4. Expenses. Lessee shall pay (a) all out-of-pocket
expenses of Lessor, including reasonable fees and disbursements of
special counsel for Lessor in connection with the preparation of this
Agreement and the other Transaction Papers, any waiver or consent
hereunder or thereunder or any amendment hereof or thereof, and (b)
if an Event of Default occurs, all out-of-pocket expenses incurred by
Lessor including (i) fees and disbursements of counsel in connection
with such Default or Event of Default and collection and other
enforcement proceedings resulting therefrom, (ii) fees of auditors
and consultants incurred in connection therewith, and (iii)
investigation expenses incurred by Lessor in connection therewith.
The fees and disbursements of counsel for Lessor which Lessee is
required to pay pursuant to this Section 9.4 in connection with the
preparation of this Agreement and the other Transaction Papers
(excluding any amendments, modifications or supplements thereto
entered into after November 3, 1994 and expressly excluding the
supplement to the Site Lease and other documents contemplated by
Sections 4.11 and 4.12) and the closing of the transactions
contemplated hereby shall not exceed $12,500. The fees and expenses
of special counsel for Lessor incurred in connection with the
preparation, execution, delivery and recording of the supplement to
the Site Lease and other documents contemplated by Sections 4.11 and
4.12 shall be paid by Lessee in accordance with such counsel's
standard hourly rates.
SECTION 9.5. Right Set-Off. Upon the occurrence and during the
continuance of any Event of Default, Lessor and each of its
Affiliates are hereby authorized at any time and from time to time,
to the fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by
such Person to or for the credit or the account of Lessee against any
and all of the obligations of Lessee now or hereafter existing under
the Master Lease, this Agreement and any other Transaction Papers,
irrespective of whether or not Lessor shall have made any demand
under this Agreement or such other Transaction Papers and although
such obligations may be unmatured. Lessor agrees promptly to notify
Lessee after any such setoff and application made by Lessor; or any
of its Affiliates provided that the failure to give such notice shall
not affect the validity of such setoff and application. The rights
of Lessor under this Section 9.4 are in addition to other rights and
remedies (including, without limitation, other rights of setoff)
which Lessor may have.
SECTION 9.6. Amendments and Waivers. Any provision of this
Agreement, the Master Lease or the other Transaction Papers may be
amended or waived if, but only if, such amendment or waiver is in
writing and is signed by Lessee and Lessor.
SECTION 9.7. Survival. All representations, warranties and
covenants made by Lessee herein or in any certificate or other
instrument delivered by it or in its behalf under the Transaction
Papers shall be considered to have been relied upon by Lessor and
shall survive the execution and delivery to Lessor of such
Transaction Papers, including any Schedule to the Master Lease,
regardless of any investigation made by or on behalf of Lessor.
SECTION 9.8. Invalid Provisions. If any provision of the
Transaction Papers is held to be illegal, invalid, or unenforceable
under present or future laws effective during the term thereof, such
provision shall be fully severable, the Transaction Papers shall be
construed and enforced as if such illegal, invalid, or unenforceable
provision had never comprised a part thereof, and the remaining
provisions thereof shall remain in full force and effect and shall
not be affected by the illegal, invalid, or unenforceable provision
or by its severance therefrom. Furthermore, in lieu of such illegal,
invalid, or unenforceable provision there shall be added
automatically as a part of the Transaction Papers a provision as
similar in terms to such illegal, invalid, or unenforceable provision
as may be possible and be legal, valid and enforceable.
SECTION 9.9. Successors and Assigns. (a) The provisions of
this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns; provided,
that, except under the circumstances permitted in Section 4.3 hereof,
Lessee may not assign or otherwise transfer any of its rights under
this Agreement or any other Transaction Paper. Lessor may sell,
assign, transfer or otherwise convey all or any part of its rights
under this Agreement and the other Transaction Papers at any time.
Without limiting the foregoing, the provisions of this Agreement
shall inure to the benefit of the holders of the beneficial interests
in any trust to which any interest of Lessor in and to the Equipment
or under this Agreement or any other transaction document may be
assigned.
(b) Subject to Lessee's prior written consent, such
consent to not be unreasonably withheld, Lessor shall have the right
to disclose any information in its possession regarding Lessee, its
Subsidiaries, the Facility or the Leased Equipment, or regarding to
any transferee, participant, potential transferee or potential
participant of any of rights of Lessor under the Transaction Papers
or any part thereof.
SECTION 9.10. GEORGIA LAW. THIS AGREEMENT AND EACH OTHER
TRANSACTION PAPER SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH
AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF GEORGIA, EXCEPT TO
THE EXTENT THE LAWS OF THE STATE OF COLORADO NECESSARILY GOVERN THE
ENFORCEMENT OF ANY REMEDY CONTAINED IN THE SITE LEASE.
SECTION 9.11. Consent to Jurisdiction; Waiver of Immunities.
(a) Except to the extent the jurisdiction of the courts of the State
of Colorado is required for the exercise of the remedies provided in
the Site Lease, Lessee hereby irrevocably submits to the jurisdiction
of any Texas State or Federal court sitting in the Northern District
of Texas over any action or proceeding arising out of or relating to
this Agreement or any other Transaction Paper, and Lessee hereby
irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such Texas State or Federal
court. Lessee hereby irrevocably appoints Prentice-Hall Corporate
Systems, Inc. (the "Process Agent"), with an office on the date
hereof at 400 N. St. Paul, Dallas, Texas 75201, as its agent to
receive on behalf of Lessee proper service of copies of the summons
and complaint and any other process which may be made by mailing or
delivering a copy of such process to Lessee in care of the Process
Agent at the Process Agent's above address, and Lessee hereby
irrevocably authorizes and directs the Process Agent to accept such
service on its behalf. Such appointment and authorization shall be
automatically and immediately effective without the necessity of any
further action on the part of Lessee or Lessor in the event Lessee
ceases to maintain its principal executive office in the Dallas/Fort
Worth Metropolitan area. As an alternative method of service, Lessee
also irrevocably consents to the service of any and all process in
any such action or proceeding by the mailing of copies of such
process to Lessee at its address specified in Section 9.2. Lessee
agree that a final judgment on any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.
(b) Nothing in this Section 9.11 shall affect any right of
Lessor to serve legal process in any other manner permitted by law or
affect the right of Lessor to bring any action or proceeding against
Lessee or its Subsidiaries or their properties in the courts of any
other jurisdictions.
(c) To the extent that Lessee has or hereafter may acquire
any immunity from jurisdiction of any court or from any legal process
(whether through service or notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect
to itself or its property, Lessee hereby irrevocably waives such
immunity in respect of its obligations under this Agreement and the
other Transaction Papers.
SECTION 9.12. Counterparts; Effectiveness. This Agreement may
be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and
hereto were upon the same instrument. This Agreement shall become
effective when counterparts hereof have been signed by Lessor and
Lessee and delivered each to the other.
SECTION 9.13. No Third Party Beneficiaries. It is expressly
intended that there shall be no third party beneficiaries of the
covenants, agreements, representations or warranties herein contained
other than transferees or assignees of all or any part of any
Lessor's interest hereunder and permitted transferees or assignees of
all or any part of Lessee's interest hereunder.
SECTION 9.14. COMPLETE AGREEMENT. THIS AGREEMENT AND THE
OTHER TRANSACTION PAPERS COLLECTIVELY REPRESENT THE FINAL AGREEMENT
BY AND BETWEEN LESSOR AND LESSEE AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF
LESSOR OR LESSEE. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
LESSOR AND LESSEE.
SECTION 9.15. WAIVER OF JURY TRIAL. LESSEE AND LESSOR HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OF THE OTHER
TRANSACTION PAPERS AND FOR ANY COUNTERCLAIM THEREIN.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers
on the day and year first above written.
Lessee:
SNYDER OIL CORPORATION,
a Delaware corporation
By: /s/ Peter E. Lorenzen
Peter E. Lorenzen,
Vice President, General Counsel
777 Main Street, Suite 2500
Fort Worth, Texas 76102
Attn: James H. Shonsey
Telecopy No.: 817-882-5895
with a copy to:
Thomas J. Edelman
595 Madison Avenue
27th Floor
New York, New York 10022
Telecopy No.: 212-888-6877
Lessor:
NATIONSBANC LEASING CORPORATION,
a North Carolina corporation
By:
Paul L. Frihse
Senior Vice President
2300 Northlake Centre Drive, Suite 300
Tucker, Georgia 30084
Attn: Paul L. Frihse
Telecopy No.: 404-270-8454
EXHIBIT A
Description of Initial Equipment
All machinery, equipment and fixtures which, on the date hereof,
are located on, comprise a part of, or are used or useful in
connection with the Facility. Without limiting the foregoing, the
Initial Equipment shall include (w) all pipe, casings, seals,
insulators, vents, joints, compressors, connections, tanks, pumps,
pump sites, engines, racks, valves, instruments, meters, gauges,
measuring equipment, signs, posts, boilers, furniture, towers, air
conditioning and heating equipment, tools, spare parts, telephone and
other communication equipment and computers which, on the date
hereof, are located on, comprise a part of, or are used or useful in
connection with the ownership or operation of the Facility, (x) the
machinery, equipment and fixtures described in Annex 1 attached
hereto, (y) all accessions, additions and replacements to, and
substitutes for, the machinery, equipment and fixtures described in
this paragraph, and (z) all books, records, manuals, plans and
specifications related to the manufacture, use, ownership,
maintenance and operation of the machinery, equipment and fixtures
described in this paragraph.
ANNEX 1
to Exhibit A
Certain Equipment
Pipeline Equipment (in the yard)
Two Twenty Inch Pig receivers with Yale Closures
One Twelve Inch Pig Receiver with Yale Closure
Process Equipment
Three Slug catchers 150 Psig 60" dia. 100' long V-201 ABC
Three Slug catchers 1100 Psig 48" dia. 130' long V-202 ABC
One Scrubber 60" dia. 12' vertical vessel V-203
One Condensate Stabilizer Skid mounted containing:
One scrubber 48" dia 8' tall 1100 psi rated V-245
One scrubber 48" dia 8' tall 250 psi rated V-204
Four Exchangers, E-201, E-202, E-203, and E-204.
Partical Filter F-805
Control valves, pipe and fittings
One Condensate Stabilizer Tower 36" dia by 48' tall T-1900
One Allis Chalmers Ro-Flo vane type compressor 50 hp K-610
One Air Compressor, Gardner Denver with dryer and building
Three FMC 200 hp Plunger Pumps Quinplex skid mounted with motor
P-55 ABC.
Three Sundstrand pumps 40 hp P-10 ABC
One Sundstrand pump P-50
One surge tank V-190 15,000 gallon 370 psi rated
One De-methanizer tower T-1000 52' dia by 80 ft
One Fuel Scrubber V-140
One Regen Scrubber V-130
One Process Skid containing:
Regeneration Cooler with Two Fans AC-710
Inlet Filter Separator F-800
Dust Filter F-810
Cold Seperator V-160
Liquid/Gas exchanger E-450
Reboiler E-440
Chiller E-470
Side Heater E-430
Refrigerant Disengaging Vessel V-220
Control Valves and pipe
Two Methanol Pumps P-25 A and B
Refrigerant Surge tank V-210
Two Dehy Beds V-110 and V-120
Refrigerant Condenser Two Fans AC-730
Refrigerant Economizer V-205
Refrigerant Suction Scrubber V-240
Gas/Gas Exchangers E-400 and E-420
Expander/Compressor X-600/K-600 Mafi-Trench rated at 924/905
horse power skid mounted
One Flare Stack
Control
20 x 50 structure housing the Motor Control Center, the
Distributive Control System, and Variable speed drive for the
pipeline pumps
Compressor 60 x 270:
Overhead Hoist, insulated steel structure, lighting and
ventilation fans, gas detection, flame detection, Centerline
vents
Compression
Inlet
KC-531A Engine SN 32627 Compressor SN 326910
KC-531B Engine SN 32628 Compressor SN 326920
Refrigeration
K-630 Engine SN 295629 Compressor SN 292090
Residue
KC-532A Engine SN 32625 Compressor SN 326930
KC-532B Engine SN 32626 Compressor SN 326940
Storage
Five 30,000 gallon Storage tanks, 250 psig rated.
One 18,000 gallon Storage tank, 250 psig rated.
Seven Used 300 bbl. Stock Tanks,
12' x 15' atmospheric
Hot Oil system
Pipe and related equipment
Instrumentation and Electrical equipment
Miscellaneous Consumable and Condensate Storage
Pipelines
Low Pressure Inlet
Two miles of 20" pipe including pig launcher/receiver
High Pressure Inlet
25 miles of 12" pipe including launcher/receiver
Liquid Pipeline to Amoco and Phillips
28 miles of 4" pipe including valve stations/measurement
EXHIBIT B
Land
A parcel of land located in the Southeast quarter (SE1/4) of
Section 8, Township 4 North, Range 66 West of the Sixth Principal
Meridian, County of Weld, State of Colorado, more particularly
described as follows:
Commencing at the Southeast (SE) corner of Section 8, Township
4 North, Range 66 West of the sixth principal meridian, thence
North 90 degrees 00'00" West along the South line of the
Southeast quarter (SE1/4) of said Section 8, also being the
basis of bearing, a distance of 650.96 feet, thence North 00
degrees 00'00" East, a distance of 30.00 feet to the true point
of beginning; thence North 00 degrees 00'00" East distance of
660.00 feet; thence North 90 degrees 00'00" West, a distance of
1,320.00 feet; thence South 00 degrees 00'00" West, a distance
of 660.00 feet; thence South 90 degrees 00'00" East, a distance
of 1,320.00 feet to the true point of beginning.
Said parcel of land contains 20.00 acres, more or less.
EXHIBIT C
REPORTING FORMAT
FOR
SEMI-ANNUAL WEST PLANT PERFORMANCE
Per MCF
of
FOR SIX MONTHS ENDING_____ Actual Throughout
Average Daily
Throughout (MMCFD) _____
Average Residue Price
($/gallons) $____
Average NGL Price
($/gallons) _____
Total Residue (MMCF) _____
Total NGL (thousand
gallons) _____
Revenues $____ $_____
Cost of Gas (____) (_____)
Gross Margin _____ ______ (*)
Direct Operating Expense (____) (_____)
Lease Expense (____) (_____)
Net Operating Cash Flow ______ _______
(*) Includes Gathering and Processing Margin