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EXHIBIT 10.13
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CREDIT AGREEMENT
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VISTA RESOURCES PARTNERS, L.P.
and
MIDLAND RESOURCES, INC.,
as Borrowers,
VISTA ENERGY RESOURCES, INC.,
as Guarantor,
BANKBOSTON, N.A.,
as Administrative Agent
and CERTAIN FINANCIAL INSTITUTIONS,
as Lenders
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$100,000,000
December 18, 1998
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TABLE OF CONTENTS
Page
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CREDIT AGREEMENT..................................................................................................1
ARTICLE I - Definitions and References............................................................................1
Section 1.1. Defined Terms..............................................................................1
Section 1.2. Exhibits and Schedules; Additional Definitions............................................17
Section 1.3. Amendment of Defined Instruments..........................................................17
Section 1.4. References and Titles.....................................................................18
Section 1.5. Calculations and Determinations...........................................................18
ARTICLE II - The Loans...........................................................................................18
Section 2.1. Commitments to Lend; Notes................................................................18
Section 2.2. Requests for New Loans....................................................................19
Section 2.3. Interest Rates; Continuations and Conversions of Existing Loans...........................20
Section 2.4. Use of Proceeds...........................................................................21
Section 2.5. Fees......................................................................................22
Section 2.6. Discretionary Extension of Commitment Period..............................................22
Section 2.7. Conversion: Regular Payments..............................................................23
Section 2.8. Optional Prepayments......................................................................23
Section 2.9. Mandatory Prepayments.....................................................................24
Section 2.10. Initial Borrowing Base...................................................................24
Section 2.11. Subsequent Determinations of Borrowing Base..............................................24
Section 2.12. Special Determination of Borrowing Base..................................................25
Section 2.13. Letters of Credit........................................................................26
Section 2.14. Requesting Letters of Credit.............................................................26
Section 2.15. Reimbursement and Participations.........................................................27
Section 2.16. Letter of Credit Fees....................................................................28
Section 2.17. No Duty to Inquire.......................................................................28
Section 2.18. LC Collateral............................................................................29
Section 2.19. Supplemental Letters of Credit...........................................................30
ARTICLE III - Payments to Lenders................................................................................31
Section 3.1. General Procedures........................................................................31
Section 3.2. Increased Cost and Reduced Return.........................................................32
Section 3.3. Limitation on Types of Loans..............................................................34
Section 3.4. Illegality................................................................................34
Section 3.5. Treatment of Affected Loans...............................................................34
Section 3.6. Compensation..............................................................................35
Section 3.7. Taxes.....................................................................................35
Section 3.8. Compensation Procedure....................................................................37
ARTICLE IV - Conditions Precedent to Lending.....................................................................37
Section 4.1. Documents to be Delivered.................................................................37
Section 4.2. Additional Conditions Precedent...........................................................39
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ARTICLE V - Representations and Warranties.......................................................................40
Section 5.1. No Default................................................................................40
Section 5.2. Organization and Good Standing............................................................40
Section 5.3. Authorization.............................................................................41
Section 5.4. No Conflicts or Consents..................................................................41
Section 5.5. Enforceable Obligations...................................................................41
Section 5.6. Initial Financial Statements..............................................................41
Section 5.7. Other Obligations and Restrictions. ......................................................41
Section 5.8. Full Disclosure...........................................................................41
Section 5.9. Litigation................................................................................42
Section 5.10. Labor Disputes and Acts of God...........................................................42
Section 5.11. ERISA Plans and Liabilities..............................................................42
Section 5.12. Environmental and Other Laws.............................................................43
Section 5.13. Names and Places of Business.............................................................43
Section 5.14. Subsidiaries.............................................................................43
Section 5.15. Title to Properties; Licenses............................................................43
Section 5.16. Government Regulation....................................................................44
Section 5.17. Insider..................................................................................44
Section 5.18. Material Agreements......................................................................44
Section 5.19. Solvency.................................................................................44
Section 5.20. No Financing of Regulated Corporate Takeovers............................................45
ARTICLE VI - Affirmative Covenants...............................................................................45
Section 6.1. Payment and Performance...................................................................45
Section 6.2. Books, Financial Statements and Reports...................................................45
Section 6.3. Other Information and Inspections.........................................................47
Section 6.4. Notice of Material Events and Change of Address...........................................47
Section 6.5. Maintenance of Properties.................................................................48
Section 6.6. Maintenance of Existence and Qualifications...............................................49
Section 6.7. Payment of Trade Debt, Taxes, etc.........................................................49
Section 6.8. Insurance.................................................................................49
Section 6.9. Performance on Related Persons' Behalf....................................................49
Section 6.10. Interest.................................................................................49
Section 6.11. Compliance with Agreements and Law.......................................................50
Section 6.12. Environmental Matters; Environmental Reviews.............................................50
Section 6.13. ERISA Compliance.........................................................................50
Section 6.14. Subordination of Affiliate Obligations...................................................51
Section 6.15. Agreement to Deliver Security Documents..................................................51
Section 6.16. Perfection and Protection of Security Interests and Liens................................51
Section 6.17. Bank Accounts; Offset....................................................................51
Section 6.18. Guaranties of Subsidiaries...............................................................52
Section 6.19. Production Proceeds......................................................................52
ARTICLE VII - Negative Covenants.................................................................................52
Section 7.1. Restricted Debt...........................................................................53
Section 7.2. Limitations on Liens......................................................................53
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Section 7.3. Limitation on Mergers, Issuances of Securities............................................53
Section 7.4. Limitation on Sales of Property...........................................................54
Section 7.5. Limitation on Dividends and Redemptions...................................................54
Section 7.6. Limitation on Investments and New Businesses..............................................55
Section 7.7. Limitation on Credit Extensions...........................................................55
Section 7.8. Transactions with Affiliates..............................................................55
Section 7.9. Certain Contracts; Amendments; Multiemployer ERISA Plans..................................55
Section 7.10. Hedging Contracts........................................................................55
Section 7.11. Current Ratio............................................................................56
Section 7.12. Coverage Ratio...........................................................................56
ARTICLE VIII - Events of Default and Remedies....................................................................56
Section 8.1. Events of Default.........................................................................56
Section 8.2. Remedies..................................................................................59
ARTICLE IX - Agent...............................................................................................59
Section 9.1. Appointment and Authority.................................................................59
Section 9.2. Exculpation, Agent's Reliance, Etc........................................................60
Section 9.3. Credit Decisions..........................................................................60
Section 9.4. Indemnification...........................................................................60
Section 9.5. Rights as Lender..........................................................................61
Section 9.6. Sharing of Set-Offs and Other Payments....................................................61
Section 9.7. Investments...............................................................................62
Section 9.8. Benefit of Article IX.....................................................................62
Section 9.9. Resignation...............................................................................62
ARTICLE X - Miscellaneous........................................................................................62
Section 10.1. Waivers and Amendments; Acknowledgments..................................................62
Section 10.2. Survival of Agreements; Cumulative Nature................................................65
Section 10.3. Notices..................................................................................65
Section 10.4. Payment of Expenses; Indemnity...........................................................66
Section 10.5. Joint and Several Liability; Parties in Interest; Assignments............................67
Section 10.6. Confidentiality..........................................................................69
Section 10.7. Governing Law; Submission to Process.....................................................69
Section 10.8. Limitation on Interest...................................................................69
Section 10.9. Termination; Limited Survival............................................................70
Section 10.10. Severability............................................................................70
Section 10.11. Counterparts............................................................................71
Section 10.12. Waiver of Jury Trial, Punitive Damages, etc.............................................71
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Schedules and Exhibits:
Lender Schedule
Schedule 1 - Disclosure Schedule
Schedule 2 - Security Schedule
Schedule 3 - Insurance Schedule
Schedule 4 - Existing Investments
Exhibit A - Promissory Note
Exhibit B - Borrowing Notice
Exhibit C - Continuation/Conversion Notice
Exhibit D - Certificate Accompanying Financial Statements
Exhibit E - Opinion of Counsel for Related Persons
Exhibit F - Assignment and Assumption Agreement
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT is made as of December 18, 1998, by and among
VISTA RESOURCES PARTNERS, L.P., a Texas limited partnership (herein called
"Vista"), MIDLAND RESOURCES, INC., a Texas corporation (herein called
"Midland", and together with Vista herein called the "Borrowers"), VISTA ENERGY
RESOURCES, INC., a Delaware corporation (herein called "Parent"), BANKBOSTON,
N.A., as Administrative Agent (herein called "Agent") and the Lenders referred
to below. In consideration of the mutual covenants and agreements contained
herein the parties hereto agree as follows:
ARTICLE I - Definitions and References
Section 1.1. Defined Terms. As used in this Agreement, each of the
following terms has the meaning given it in this Section 1.1 or in the sections
and subsections referred to below:
"Acquisition" means the purchase by Vista of oil and gas properties
and related assets pursuant to the Acquisition Agreement.
"Acquisition Agreement" means that certain Purchase and Sale Agreement
dated as of November 25, 1998, by and between IP and Vista.
"Acquisition Documents" means the Acquisition Agreement and all
agreements, assignments, deeds, conveyances, certificates and other documents
and instruments now or hereafter executed and delivered by or between Parent or
Vista and IP pursuant to the Acquisition Agreement or in connection with the
Acquisition.
"Affiliate" means, as to any Person, each other Person that directly
or indirectly (through one or more intermediaries or otherwise) controls, is
controlled by, or is under common control with, such Person. A Person shall be
deemed to be "controlled by" any other Person if such other Person possesses,
directly or indirectly, power
(a) to vote 10% or more of the securities (on a fully diluted
basis) having ordinary voting power for the election of directors or
managing general partners; or
(b) to direct or cause the direction of the management and
policies of such Person whether by contract or otherwise, provided
that such term shall not include any Person which would otherwise be
deemed to be an Affiliate hereunder solely as a result of NGP's
investment in such Person or such Person's investment in, or control
of, NGP.
"Agreement" means this Credit Agreement.
"Agent" means BankBoston, N.A., as Administrative Agent hereunder, and
its successors in such capacity.
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"Applicable Lending Office" means, with respect to each Lender, such
Lender's Domestic Lending Office in the case of Base Rate Loans and such
Lender's Eurodollar Lending Office in the case of Eurodollar Loans.
"Applicable Utilization Level" means on any date the level set forth
below that corresponds to the percentage, at the close of business on such day,
equivalent to the (i) Facility Usage divided by (ii) the Borrowing Base (the
"Utilization Percent"):
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Applicable Utilization Level Utilization Percent
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Level I less than or equal to 50%
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Level II greater than 50% but less
than 75%
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Level III greater than or equal to 75%
but less than or equal to 90%
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Level IV greater than 90%
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"Base Rate" means the per annum rate of interest equal to the sum of
the Base Rate Margin plus the Alternate Base Rate. As used in this paragraph,
"Alternate Base Rate" means the higher of (a) that variable rate of interest
per annum established by BankBoston, N.A. from time to time as its "base rate"
(which rate of interest may not be the lowest rate charged on similar loans)
and (b) the Federal Funds Rate plus one-half percent (0.5%) per annum. Each
change in the Base Rate shall become effective without prior notice to
Borrowers automatically as of the opening of business on the date of a change
in the Base Rate Margin or the Alternate Base Rate. The Base Rate shall in no
event, however, exceed the Highest Lawful Rate.
"Base Rate Loan" means a Loan which bears interest at the Base Rate.
"Base Rate Margin" means, on any date, with respect to each Base Rate
portion of a Loan, the rate per annum set forth below based on the Applicable
Utilization Level on such date:
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Applicable Utilization Level Base Rate Margin
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Level I 0
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Level II 0
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Level II 0
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Level IV 50%
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Changes in the applicable Base Rate Margin will occur automatically without
prior notice as changes in the Applicable Utilization Level occur. Agent will
give notice promptly to Borrowers and the Lenders of changes in the Base Rate
Margin.
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"Borrowers" has the meaning set forth in the introduction to this
Agreement.
"Borrowing" means a borrowing of new Loans of a single Type pursuant
to Section 2.2 or a Continuation or Conversion of existing Loans into a single
Type (and, in the case of Eurodollar Loans, with the same Interest Period)
pursuant to Section 2.3.
"Borrowing Base" means, at the particular time in question, either the
amount provided for in Section 2.10 or the amount determined in accordance with
the provisions of Section 2.11, as reduced by Borrowers pursuant to Section
2.12; provided, however, that in no event shall the Borrowing Base ever exceed
the Maximum Loan Amount.
"Borrowing Base Deficiency" has the meaning given it in Section 2.9.
"Borrowing Notice" means a written or telephonic request, or a written
confirmation, made by Borrowers which meets the requirements of Section 2.2.
"Business Day" means a day, other than a Saturday or Sunday, on which
commercial banks are open for business with the public in Boston, Massachusetts
and New York, New York. Any Business Day in any way relating to Eurodollar
Loans (such as the day on which an Interest Period begins or ends) must also be
a day on which, in the judgment of Agent, significant transactions in dollars
are carried out in the interbank eurocurrency market.
"Cash Equivalents" means investments in:
(a) open market commercial paper, maturing within 270 days after
acquisition thereof, which has the highest or second highest credit rating
given by either Rating Agency.
(b) marketable obligations, maturing within 12 months after
acquisition thereof, issued or unconditionally guaranteed by the United States
of America or an instrumentality or agency thereof and entitled to the full
faith and credit of the United States of America.
(c) demand deposits, and time deposits (including certificates of
deposit) maturing within 12 months from the date of deposit thereof, with any
office of any Lender or with a domestic office of any national or state bank or
trust company which is organized under the Laws of the United States of America
or any state therein, which has capital, surplus and undivided profits of at
least $500,000,000, and whose certificates of deposit have at least the third
highest credit rating given by either Rating Agency.
(d) money market funds acceptable to Agent substantially all of whose
assets comprise securities of the types described in clauses (a) through (c)
above.
"Change of Control" means the occurrence of any of the following
events: (i) any Person other than Parent or one of its wholly-owned
Subsidiaries shall acquire or hold any legal or beneficial ownership of either
of the Borrowers, (ii) any Person or two or more Persons acting as a group
(other than NGP) shall acquire beneficial ownership (within the meaning of Rule
13d-3 of the SEC under the Securities Act of 1934, as amended, and including
holding proxies to vote
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for the election of directors other than proxies held by Parent's management or
their designees to be voted in favor of Persons nominated by Parent's Board of
Directors) of 20% or more of the outstanding voting securities of Parent,
measured by voting power (including both common stock and any preferred stock
or other equity securities entitling the holders thereof to vote with the
holders of common stock in elections for directors of Parent), (iii) NGP shall
cease to own more than 30% of the outstanding voting securities of Parent,
measured by voting power (including both common stock and any preferred stock
or other equity securities entitling the holders thereof to vote with the
holders of common stock in elections for directors of Parent), (iv) more than
50% of the directors of Parent shall consist of Persons other than individuals
that are executive officers of Parent on the date of this Agreement or
individuals that are Affiliates of NGP or (v) two or more of C. Randall Hill,
Steven D. Gray and R. Cory Richards cease to be executive officers of Parent.
"Collateral" means all property of any kind which is subject to a Lien
in favor of Lenders (or in favor of Agent for the benefit of Lenders) or which,
under the terms of any Security Document, is purported to be subject to such a
Lien.
"Commitment Period" means the period from and including the date
hereof until and including December 15, 2001 (or, if earlier, the day on which
the commitments of the Lenders are terminated pursuant to Section 8.1, or the
day the Notes first become due and payable in full); provided that Lenders may,
in their sole discretion, extend the Commitment Period as provided in Section
2.6.
"Contested Claim" means any Tax, Debt or other claim or liability of
any Related Person, (i) the validity or amount of which is being contested by
appropriate proceedings, (ii) for which adequate reserves, as required by GAAP,
have been established and (iii) with respect to which any right to execute upon
or sell any assets of such Related Person has not matured or has been and
continues to be effectively enjoined, superseded or stayed.
"Consolidated" refers to the consolidation of any Person, in
accordance with GAAP, with its properly consolidated subsidiaries. References
herein to a Person's Consolidated financial statements, financial position,
financial condition, liabilities, etc. refer to the consolidated financial
statements, financial position, financial condition, liabilities, etc. of such
Person and its properly consolidated subsidiaries.
"Consolidated EBITDA" means, with respect to any period, the sum of
(a) the Consolidated Net Income of Parent and its Subsidiaries during such
period, plus (b) Consolidated Interest Expense which was deducted in
determining such Consolidated Net Income, plus (c) all income taxes which were
deducted in determining such Consolidated Net Income, plus (d) all
depreciation, depletion, amortization (including amortization of good will and
debt issue costs) and other non-cash charges (including any provision for the
reduction in the carrying value of assets recorded in accordance with GAAP)
which were deducted in determining such Consolidated Net Income, minus (e) all
non-cash items of income which were included in determining such Consolidated
Net Income. Revenues and expenses derived from Hedging Contracts related to
interest rates will be treated as adjustments to interest expense for purposes
of this definition.
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"Consolidated Interest Expense" means, with respect to any period, the
sum (without duplication) of the following (in each case, eliminating all
offsetting debits and credits between Parent and its Subsidiaries and all other
items required to be eliminated in the course of the preparation of
Consolidated financial statements of Parent and its Subsidiaries in accordance
with GAAP): (a) all interest, commitment fees and loan fees in respect of
Restricted Debt of Parent or any of its Subsidiaries (including imputed
interest on Capital Lease Obligations) deducted in determining Consolidated Net
Income for such period, together with all interest capitalized or deferred
during such period and not deducted in determining Consolidated Net Income for
such period, plus (b) all fees, expenses and charges in respect of letters of
credit issued for the account of Parent or any of its Subsidiaries deducted in
determining Consolidated Net Income for such period, together with all such
fees, expenses and charges in respect of letters of credit capitalized or
deferred during such period and not deducted in determining Consolidated Net
Income for such period. Revenues and expenses derived from Hedging Contracts
related to interest rates will be treated as adjustments to interest expense
for purposes of this definition.
"Consolidated Net Income" means, with respect to any period, Parent's
and its Subsidiaries' gross revenues for such period, including any cash
dividends or distributions actually received from any other Person during such
period, minus Parent's and its Subsidiaries' expenses and other proper charges
against income (including but not limited to income taxes), determined on a
Consolidated basis after eliminating earnings or losses attributable to
outstanding minority interests and excluding the net earnings of any Person
other than a Subsidiary in which Parent or any of its Subsidiaries has an
ownership interest; provided, however, there shall be excluded (i) any net
income or gain or net loss during such period from disposition of capital
assets or other non-recurring events and (ii) non-recurring cash expenses
associated with the acquisition by Parent of Midland up to the amount of
$850,000.
"Continuation/Conversion Notice" means a written or telephonic
request, or a written confirmation, made by Borrowers which meets the
requirements of Section 2.3.
"Continue", "Continuation", and "Continued" shall refer to the
continuation pursuant to Section 2.3 hereof of a Eurodollar Loan from one
Interest Period to the next Interest Period.
"Convert", "Conversion", and "Converted" shall refer to a conversion
pursuant to Section 2.3 or Article III of one Type of Loan into another Type of
Loan.
"Debt" means, as to any Person, all indebtedness, liabilities and
obligations of such Person, whether matured or unmatured, liquidated or
unliquidated, primary or secondary, direct or indirect, absolute, fixed or
contingent and whether or not required to be considered pursuant to GAAP.
"Default" means any Event of Default and any default, event or
condition which would, with the giving of any requisite notices and the passage
of any requisite periods of time, constitute an Event of Default.
"Default Rate" means, at the time in question, two percent (2.0%) per
annum plus the Base Rate then in effect; provided that, with respect to any
Eurodollar Loan with an Interest
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Period extending beyond the date such Eurodollar Loan becomes due and payable,
"Default Rate" shall mean two percent (2.0%) per annum plus the related
Eurodollar Rate. The Default Rate shall never exceed the Highest Lawful Rate.
"Deficiency Notice" has the meaning given it in Section 2.9.
"Determination" means a determination of the Borrowing Base pursuant
to Section 2.11 or a Special Determination pursuant to Section 2.12.
"Determination Date" means 45 days after Lenders have received the
Reserve Report and other information pursuant to Section 2.11 or 2.12.
"Disclosure Report" means either a notice given by Borrowers or Parent
under Section 6.4 or a certificate given by Borrowers' or Parent's chief
financial officer under Section 6.2(b).
"Disclosure Schedule" means Schedule 1 hereto.
"Distribution" means (a) any dividend or other distribution made by a
Related Person on or in respect of any stock, partnership interest, or other
equity interest in such Related Person (including any option or warrant to buy
such an equity interest), or (b) any payment made by a Related Person to
purchase, redeem, acquire or retire any stock, partnership interest, or other
equity interest in such Related Person (including any such option or warrant).
"Domestic Lending Office" means, with respect to any Lender, the
office of such Lender specified as its "Domestic Lending Office" below its name
on the Lender Schedule attached hereto, or such other office as such Lender may
from time to time specify to Borrowers and Agent.
"Eligible Transferee" means a Person which either (a) is a Lender or
Lender Affiliate or (b) is consented to as an Eligible Transferee by Agent and,
so long as no Event of Default is continuing, by Borrowers, which consents in
each case will not be unreasonably withheld.
"Environmental Laws" means any and all Laws relating to the
environment or to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes into the environment including ambient air, surface water,
ground water, or land, or otherwise relating to the manufacture, processing,
distribution use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all rules and regulations promulgated
with respect thereto.
"ERISA Affiliate" means Related Persons and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control that, together with Related Persons, are
treated as a single employer under Section 414 of the Internal Revenue Code of
1986, as amended.
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"ERISA Plan" means any pension benefit plan subject to Title IV of
ERISA maintained by any ERISA Affiliate with respect to which any Related
Person has a fixed or contingent liability.
"Eurodollar Loan" means a Loan which is properly designated as a
Eurodollar Loan pursuant to Section 2.2 or 2.3.
"Eurodollar Margin" means, on any date, with respect to each
Eurodollar Loan, the rate per annum set forth below based on the Applicable
Utilization Level on such date:
- - -------------------------------------------------------------------------------
Applicable Utilization Level Eurodollar Margin
- - -------------------------------------------------------------------------------
Level I 1.25%
- - -------------------------------------------------------------------------------
Level II 1.50%
- - -------------------------------------------------------------------------------
Level II 2.00%
- - -------------------------------------------------------------------------------
Level IV 2.50%
- - -------------------------------------------------------------------------------
Changes in the applicable Eurodollar Margin will occur automatically without
prior notice as changes in the Applicable Utilization Level occur. Agent will
give notice promptly to Borrowers and the Lenders of changes in the Eurodollar
Margin.
"Eurodollar Lending Office" means, with respect to any Lender, the
office of such Lender specified as its "Eurodollar Lending Office" below its
name on the Lender Schedule attached hereto (or, if no such office is
specified, its Domestic Lending Office), or such other office of such Lender as
such Lender may from time to time specify to Borrowers and Agent.
"Eurodollar Rate" means, with respect to each particular Eurodollar
Loan and the associated LIBOR Rate and Reserve Percentage, the rate per annum
calculated by Agent (rounded upwards, if necessary, to the nearest 1/1000th of
1%) determined on a daily basis pursuant to the following formula:
Eurodollar Rate =
LIBOR Rate + Eurodollar Margin
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100.0% - Reserve Percentage
The Eurodollar Rate for any Eurodollar Loan shall change whenever the
Eurodollar Margin or the Reserve Percentage changes. No Eurodollar Rate shall
ever exceed the Highest Lawful Rate.
"Event of Default" has the meaning given it in Section 8.1.
"Existing Credit Facility" means the Second Amended and Restated
Credit Agreement among Borrowers, Parent and Union Bank of California, N.A.,
dated October 28, 1998, and the other "Loan Documents" as defined therein.
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"Facility Usage" means, at the time in question, the aggregate amount
of outstanding Loans and existing LC Obligations at such time.
"Federal Funds Rate" shall mean, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/1000th of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that (i) if the day for which such rate is
to be determined is not a Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Business Day as
so published on the next succeeding Business Day, and (ii) if such rate is not
so published for any day, the Federal Funds Rate for such day shall be the
average rate quoted to Agent on such day on such transactions as determined by
Agent.
"Fiscal Quarter" means a three month period ending on March 31, June
30, September 30 or December 31 of any year.
"Fiscal Year" means the twelve-month period ending on December 31 of
any year.
"GAAP" means those generally accepted accounting principles and
practices which are recognized as such by the Financial Accounting Standards
Board (or any generally recognized successor) and which, in the case of Parent
and its Consolidated Subsidiaries, are applied for all periods after the date
hereof in a manner consistent with the manner in which such principles and
practices were applied to the audited Initial Financial Statements. If any
change in any accounting principle or practice is required by the Financial
Accounting Standards Board (or any such successor) in order for such principle
or practice to continue as a generally accepted accounting principle or
practice, all reports and financial statements required hereunder with respect
to Parent or with respect to Parent and its Consolidated Subsidiaries may be
prepared in accordance with such change, but all calculations and
determinations to be made hereunder may be made in accordance with such change
only after notice of such change is given to the Agent; provided however if
such change in generally accepted accounting principles and practices
materially affects the calculation of the covenants set forth in Sections 7.11
and 7.12, such calculation shall continue to be made in a manner consistent
with the audited Initial Financial Statements.
"General Partner" means Vista Resources I, Inc., a Texas corporation.
"Guarantor" means any Person who has guaranteed some or all of the
Obligations pursuant to a guaranty listed on the Security Schedule or any other
Person who has guaranteed some or all of the Obligations and who has been
accepted by Agent as a Guarantor or any Subsidiary of Parent which now or
hereafter executes and delivers a guaranty to Agent pursuant to Section 6.17.
"Guaranty" of any Person means any contract, agreement or
understanding of such Person pursuant to which such Person guarantees, or in
effect guarantees, any Debt of any other Person
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(the "primary obligor") in any manner, whether directly or indirectly,
including without limitation:
(i) agreements to purchase such Debt or any property
constituting security therefor;
(ii) agreements to advance or supply funds (i) for the purchase
or payment of such Debt, or (ii) to maintain working capital, equity
capital or other balance sheet conditions;
(iii) agreements to purchase property, securities or services
primarily for the purpose of assuring the holder of such Debt of the
ability of the primary obligor to make payment of the Debt;
(iv) letters or agreements commonly known as "comfort" or
"keepwell" letters or agreements; or
(v) any other agreements to assure the holder of the Debt of the
primary obligor against loss in respect thereof; provided that
"Guaranty" shall not include the endorsement by any Related Person in
the ordinary course of business of negotiable instruments or
documents for deposit or collection.
"Hazardous Materials" means any substances regulated under any
Environmental Law, whether as pollutants, contaminants, or chemicals, or as
industrial, toxic or hazardous substances or wastes, or otherwise.
"Hedging Contract" means (a) any agreement providing for options,
swaps, floors, caps, collars, forward sales or forward purchases involving
interest rates, commodities or commodity prices, equities, currencies, bonds,
or indexes based on any of the foregoing, (b) any option, futures or forward
contract traded on an exchange, and (c) any other derivative agreement or other
similar agreement or arrangement.
"Highest Lawful Rate" means, with respect to each Lender, the maximum
nonusurious rate of interest that such Lender is permitted under applicable Law
to contract for, take, charge, or receive with respect to its Loan. All
determinations herein of the Highest Lawful Rate, or of any interest rate
determined by reference to the Highest Lawful Rate, shall be made separately
for each Lender as appropriate to assure that the Loan Documents are not
construed to obligate any Person to pay interest to any Lender at a rate in
excess of the Highest Lawful Rate applicable to such Lender.
"Initial Reserve Report" means the following engineering reports:
(i) Report dated November ____, 1998 prepared by Williamson
Petroleum Consultants, Inc. concerning the properties owned by
Borrowers prior to the Acquisition; and
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(ii) Report dated November 24, 1998 prepared by Joe C. Neal &
Associates, concerning the properties to be acquired by Vista in
the Acquisition.
"Initial Financial Statements" means (i) the audited annual
Consolidated financial statements of Parent dated as of December 31, 1997, and
(ii) the unaudited quarterly Consolidated financial statements of Parent dated
as of September 30, 1998.
"Insurance Schedule" means Schedule 3 attached hereto.
"Interest Period" means, with respect to each particular Eurodollar
Loan in a Borrowing, a period of 1, 2, 3, 6 or 12 months (if 12 months is
available for each Lender), as specified in the Borrowing Notice or
Continuation/Conversion Notice applicable thereto, beginning on and including
the date specified in such Borrowing Notice or Continuation/Conversion Notice
(which must be a Business Day), and ending on but not including the same day of
the month as the day on which it began (e.g., a period beginning on the third
day of one month shall end on but not include the third day of another month),
provided that each Interest Period which would otherwise end on a day which is
not a Business Day shall end on the next succeeding Business Day (unless such
next succeeding Business Day is the first Business Day of a calendar month, in
which case such Interest Period shall end on the immediately preceding Business
Day). No Interest Period may be elected which would require a prepayment of the
associated Eurodollar Loan in order to make a scheduled prepayment of any Note
after the end of the Commitment Period.
"Investment" means any investment, in cash or by delivery of property
made, directly or indirectly in any Person, whether by acquisition of shares of
capital stock, indebtedness or other obligations or securities or by loan,
advance, capital contribution or otherwise.
"IP" means IP Petroleum Corporation, a Delaware corporation.
"Law" means any statute, law, regulation, ordinance, rule, treaty,
judgment, order, decree, permit, concession, franchise, license, agreement or
other governmental restriction of the United States or any state or political
subdivision thereof or of any foreign country or any department, province or
other political subdivision thereof.
"LC Application" means any application for a Letter of Credit
hereafter made by Borrowers to LC Issuer.
"LC Collateral" has the meaning given to such term in Section 2.16(a).
"LC Issuer" means BankBoston, N.A. in its capacity as the issuer of
Letters of Credit hereunder, and its successors in such capacity. Agent may,
with the consent of Borrowers and the Lender in question, appoint any Lender
hereunder as the LC Issuer in place of or in addition to BankBoston, N.A.
"LC Limit" means Five Million Dollars ($5,000,000) or such lesser
amount as shall be set pursuant to Section 2.7.
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"LC Obligations" means, at the time in question, the sum of all
Matured LC Obligations plus the maximum amounts which LC Issuer might then or
thereafter be called upon to advance under all Letters of Credit then
outstanding.
"Lender Affiliate" means, with respect to a Lender, any Person that
directly or indirectly (through one or more intermediaries or otherwise)
controls, is controlled by or is under the common control with such Lender;
control meaning the power to vote more than 50% of the securities having
ordinary voting power for election of directors.
"Lender Hedging Contracts" means Hedging Contracts entered into with a
Lender or Lender Affiliate.
"Lender Parties" means Agent, LC Issuer, and all Lenders.
"Lenders" means each signatory hereto (other than Borrowers and
Related Persons that are party hereto), including BankBoston, N.A. in its
capacity as a Lender hereunder rather than as Agent or LC Issuer, and the
successors of each such party as holder of a Note.
"Lending Office" means, with respect to any Lender, such Lender's
Domestic Lending Office or Eurodollar Lending Office, as applicable; with
respect to LC Issuer, the office, branch, or agency through which it issues
Letters of Credit; and, with respect to Agent, the office, branch, or agency
through which it administers this Agreement.
"Letter of Credit" means any letter of credit issued by LC Issuer
hereunder at the application of Borrowers.
"Letter of Credit Fee Rate" means, on any date the rate per annum set
forth below based on the Applicable Utilization Level on such date:
- - -------------------------------------------------------------------------------
Applicable Utilization Level Letter of Credit Fee Rate
- - -------------------------------------------------------------------------------
Level I 1.25%
- - -------------------------------------------------------------------------------
Level II 1.50%
- - -------------------------------------------------------------------------------
Level II 2.00%
- - -------------------------------------------------------------------------------
Level IV 2.50%
- - -------------------------------------------------------------------------------
"LIBOR Rate" means, with respect to each particular Eurodollar Loan
and the related Interest Period, the rate appearing on Page 3750 of the
Telerate Service (or on any successor or substitute page of such Service, or
any successor to or substitute for such Service, providing rate quotations
comparable to those currently provided on such page of such Service, as
determined by the Administrative Agent from time to time for purposes of
providing quotations of interest rates applicable to dollar deposits in the
London interbank market) at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period, as the rate for dollar
deposits with a maturity comparable to such Interest Period. In the event that
such rate
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is not available at such time for any reason, then the "LIBOR Rate" with
respect to such Eurodollar Loan for such Interest Period shall be the rate of
interest per annum (rounded upwards, if necessary, to the nearest 1/1000th of
1%) determined by Agent in accordance with its customary general practices to
be representative of the rates at which deposits of dollars are offered to
Agent at approximately 9:00 a.m. New York, New York time two Business Days
prior to the first day of such Interest Period (by prime banks in the interbank
eurocurrency market which have been selected by Agent in accordance with its
customary general practices) for delivery on the first day of such Interest
Period in an amount equal or comparable to the amount of the applicable
Eurodollar Loan and for a period of time equal or comparable to the length of
such Interest Period. The LIBOR Rate determined above with respect to a
particular Eurodollar Loan shall be fixed at such rate for the duration of the
associated Interest Period. If Agent is unable so to determine the LIBOR Rate
for any Eurodollar Loan, Borrowers shall be deemed not to have elected such
Eurodollar Loan.
"Lien" means, with respect to any property or assets, any right or
interest therein of a creditor to secure Debt owed to it or any other
arrangement with such creditor which provides for the payment of such Debt out
of such property or assets or which allows such creditor to have such Debt
satisfied out of such property or assets prior to the general creditors of any
owner thereof, including any lien, mortgage, security interest, pledge,
deposit, production payment, rights of a vendor under any title retention or
conditional sale agreement or lease substantially equivalent thereto, tax lien,
mechanic's or materialman's lien, or any other charge or encumbrance for
security purposes, whether arising by Law or agreement or otherwise, but
excluding any right of offset which arises without agreement in the ordinary
course of business. "Lien" also means any filed financing statement, any
registration of a pledge (such as with an issuer of uncertificated securities),
or any other arrangement or action which would serve to perfect a Lien
described in the preceding sentence, regardless of whether such financing
statement is filed, such registration is made, or such arrangement or action is
undertaken before or after such Lien exists.
"Loan" has the meaning given it in Section 2.1.
"Loan Documents" means this Agreement, the Notes, the Security
Documents, the Letters of Credit, the LC Applications, and all other
agreements, certificates, documents, instruments and writings at any time
delivered in connection herewith or therewith (exclusive of term sheets,
commitment letters, correspondence and similar documents used in the
negotiation hereof, except to the extent the same contain information about
Parent, Borrowers or their respective Affiliates, properties, business or
prospects).
"Material Adverse Change" means a material and adverse change, from
the state of affairs presented in the Initial Financial Statements or as
represented or warranted in any Loan Document, to (a) Related Persons'
Consolidated financial condition, (b) the operations or properties of Related
Persons, considered as a whole, (c) Borrowers' or any other Related Persons'
ability to timely pay the Obligations, or (d) the enforceability of the
material terms of any Loan Documents.
"Matured LC Obligations" means all amounts paid by LC Issuer on drafts
or demands for payment drawn or made under or purported to be under any Letter
of Credit and all other
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amounts due and owing to LC Issuer under any LC Application for any Letter of
Credit, to the extent the same have not been repaid to LC Issuer (with the
proceeds of Loans or otherwise).
"Maturity Date" means the date on which the last payment of the Loans
are due as provided in Section 2.7.
"Maximum Drawing Amount" means at the time in question the sum of the
maximum amounts which LC Issuer might then or thereafter be called upon to
advance under all Letters of Credit then outstanding.
"Maximum Loan Amount" means the amount of $55,000,000.
"Mortgaged Properties" means all properties subject to the Security
Documents.
"NGP" means, collectively, Natural Gas Partners II, L.P. and Natural
Gas Partners III, L.P., each a Delaware limited partnership.
"Note" has the meaning given it in Section 2.1.
"Obligations" means all Debt from time to time owing by any Related
Person to any Lender Party under or pursuant to any of the Loan Documents,
including all LC Obligations (including in respect of Supplemental Letters of
Credit) and Debt in respect of Lender Hedging Contracts. "Obligation" means any
part of the Obligations.
"Parent" has the meaning set forth in the introduction to this
Agreement.
"Percentage Share" means, with respect to any Lender (a) when used in
Sections 2.1 or 2.5, in any Borrowing Notice or when no Loans are outstanding
hereunder, the percentage set forth opposite such Lender's name on Lender
Schedule attached hereto as such percentage may be modified from time to time
by assignments pursuant to Section 10.5(c), and (b) when used otherwise, the
percentage obtained by dividing (i) the sum of the unpaid principal balance of
such Lender's Loans at the time in question plus the Matured LC Obligations
which such Lender has funded pursuant to Section 2.13(c) plus the portion of
the Maximum Drawing Amount which such Lender might be obligated to fund under
Section 2.13(c), by (ii) the sum of the aggregate unpaid principal balance of
all Loans at such time plus the aggregate amount of LC Obligations outstanding
at such time.
"Permitted Investments" means:
(i) Cash Equivalents,
(ii) Investments by any Related Person in any wholly owned Subsidiary
of such Related Person provided that such Subsidiary is a Guarantor,
(iii) the entry into operating agreements, joint ventures, processing
agreements, farm-out agreements, development agreements, area of mutual
interest agreements, contracts for the
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sale, transportation or exchange of oil and natural gas, unitization
agreements, pooling arrangements, joint bidding agreements, service contracts,
partnership agreements (whether general or limited) or other similar customary
agreements, transactions, properties, interests or arrangements, and
investments and expenditures in connection therewith or pursuant thereto, in
each case made or entered into in the ordinary course of the oil and gas
business,
(iv) Investments consisting of loans or credit extensions permitted
under Section 7.7, and
(v) Investments existing on the date hereof listed on Schedule 4
hereto.
"Permitted Liens" means: (i) Liens granted to Agent to secure the
Obligations, (ii) pledges or deposits made to secure payment of worker's
compensation insurance (or to participate in any fund in connection with
worker's compensation insurance), unemployment insurance, pensions or social
security programs and other types of social security, old age or other similar
obligations, (iii) Liens imposed by mandatory provisions of Law such as
carrier's, materialmen's, mechanics', warehousemen's, landlord's and other like
Liens arising in the ordinary course of business, securing Debt not yet due or
which qualifies as a Contested Claim, (iv) Liens for taxes, assessments or
other governmental charges or levies, if the same are not yet due and payable
or qualify as a Contested Claim, (v) Liens arising in the ordinary course of
business from pledges or deposits to secure public or statutory obligations,
deposits to secure (or in lieu of) surety, stay, appeal or customs bonds and
deposits to secure the payment of taxes, (vi) encumbrances consisting of zoning
restrictions, easements or other restrictions on the use of real property,
provided that such items do not materially impair the use of such property for
the purposes intended, and none of which are violated by existing or proposed
structures or land use, (vii) inchoate Liens arising under ERISA, (viii) Liens
reserved in customary oil, gas and/or mineral leases for bonus or rental
payments and for compliance with the terms of such leases, (ix) any obligations
or duties affecting any of the property of any Related Person to any
municipality or public authority with respect to any franchise, grant, license
or permit which do not materially impair the use of such property for the
purposes for which it is held, (x) defects, irregularities and deficiencies in
title of any rights of way or other property of any Related Person which in the
aggregate do not materially impair the use of such rights of way or other
property for the purposes for which such rights of way and other property are
held by any Related Person, and defects, irregularities and deficiencies in
title to any property of any Related Person which defects, irregularities or
deficiencies have been cured by possession under applicable statutes of
limitation, (xi) royalties, overriding royalties, revenue interests, net
revenue interests, production payments (other than production payments granted
or created by any Related Person in connection with the borrowing of money),
advance payment obligations (other than obligations in respect of advance
payment received by any Related Person in connection with the borrowing of
money) and other similar burdens now existing on oil and gas properties owned
as of the date of this Agreement or, as to properties hereafter acquired, at
the time of acquisition by any Related Person and to the extent burdening
property covered by a Reserve Report or a Security Document, which burdens are
reflected in the working interest and/or net revenue interest used in such
Reserve Report or represented and warranted in such Security Document, and
(xii) Liens arising out of all presently existing and future division and
transfer orders, processing contracts, gas processing plant agreements, joint
operating agreements, pooling, unitization or
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communitization agreements, pipeline, gathering or transportation agreements,
leases or rental agreements (but only as otherwise permitted by this
Agreement), farm-out and farm-in agreements, exploration and development
agreements, and any and all other contracts or agreements covering, arising out
of, used or useful in connection with or pertaining to the exploration,
development, operation, production, sale, use, purchase, exchange, storage,
separation, dehydration, treatment, compression, gathering, transportation,
processing, improvement, marketing, disposal or handling of any property of any
Related Person, provided such agreements are entered into in the ordinary
course of business and contain terms customary for such agreements in the
industry and the obligations are not delinquent (or are Contested Claims).
"Person" means an individual, corporation, partnership, limited
liability company, association, joint stock company, trust or trustee thereof,
estate or executor thereof, unincorporated organization or joint venture,
Tribunal, or any other legally recognizable entity.
"Prohibited Lien" means any Lien not expressly allowed under Section
7.2.
"Rating Agency" means either Standard & Poor's Ratings Group or
Moody's Investors Services, Inc. or their respective successors that are
nationally-recognized rating agencies.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect.
"Related Person" means Parent, Borrowers, and each Subsidiary of
Parent, (whether or not such Subsidiary is a Guarantor).
"Required Lenders" means Agent and Lenders whose aggregate Percentage
Shares equal or exceed sixty-six and two-thirds percent (662/3%).
"Reserve Percentage" means, on any day with respect to each particular
Eurodollar Loan, the maximum reserve requirement, as determined by Agent
(including without limitation any basic, supplemental, marginal, emergency or
similar reserves), expressed as a percentage and rounded to the next higher
0.01%, which would then apply under Regulation D with respect to "Eurocurrency
liabilities", as such term is defined in Regulation D, of $1,000,000 or more.
If such reserve requirement shall change after the date hereof, the Reserve
Percentage shall be automatically increased or decreased, as the case may
"Reserve Report" means the Initial Reserve Report and each reserve
report delivered pursuant to Section 6.2.
"Restricted Debt" of any Person means Debt (without duplication) in
any of the following categories:
(a) Debt for borrowed money,
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(b) Debt constituting an obligation to pay the deferred purchase price
of property or services,
(c) Debt evidenced by a bond, debenture, note or similar instrument,
(d) Debt which (i) would under GAAP be shown on such Person's balance
sheet as a liability, and (ii) is payable more than one year from the date of
creation thereof (other than reserves for taxes and reserves for contingent
obligations),
(e) Debt arising under Hedging Contracts,
(f) Debt constituting principal under leases capitalized in accordance
with GAAP,
(g) Debt arising under conditional sales or other title retention
agreements,
(h) Debt owing under any Guaranty,
(i) Debt (for example, repurchase agreements) consisting of an
obligation to purchase securities or other property, if such Debt arises out of
or in connection with the sale of the same or similar securities or property,
(j) Debt with respect to letters of credit or applications or
reimbursement agreements therefor,
(k) Debt with respect to payments received in consideration of oil,
gas, or other minerals yet to be acquired or produced at the time of payment
(including obligations under "take-or-pay" contracts to deliver gas in return
for payments already received and the undischarged balance of any production
payment created by such Person or for the creation of which such Person
directly or indirectly received payment),
(l) Debt with respect to other obligations to deliver goods or
services in consideration of advance payments therefor, or
(m) Debt in respect of banker's acceptances or similar instruments
issued or accepted by banks;
provided, however, that the "Restricted Debt" of any Person shall not include
Debt that was incurred and paid by such Person on ordinary trade terms to
vendors, suppliers, or other Persons providing goods or services for use by
such Person in the ordinary course of its business, unless and until such Debt
is both (i) outstanding beyond the earlier of (A) sixty days past the due date
thereof or (B) one hundred twenty (120) days past the original invoice or
billing date therefor and (ii) not a Contested Claim.
"SEC" means the Securities and Exchange Commission.
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"Security Documents" means the instruments listed in the Security
Schedule and all other security agreements, deeds of trust, mortgages, chattel
mortgages, pledges, guaranties, financing statements, continuation statements,
extension agreements and other agreements or instruments now, heretofore, or
hereafter delivered by any Related Person to Agent in connection with this
Agreement or any transaction contemplated hereby to secure or guarantee the
payment of any part of the Obligations or the performance of any Related
Person's other duties and obligations under the Loan Documents.
"Security Schedule" means Schedule 2 hereto.
"Special Determination" has the meaning given in Section 2.12.
"Subsidiary" means, with respect to any Person, any corporation,
association, partnership, joint venture, or other business or corporate entity,
enterprise or organization which is directly or indirectly (through one or more
intermediaries) controlled by or owned fifty percent or more by such Person.
"Termination Event" means (a) the occurrence with respect to any ERISA
Plan of (i) a reportable event described in Sections 4043(b)(5) or (6) of ERISA
or (ii) any other reportable event described in Section 4043(b) of ERISA other
than a reportable event not subject to the provision for 30-day notice to the
Pension Benefit Guaranty Corporation pursuant to a waiver by such corporation
under Section 4043(a) of ERISA, or (b) the withdrawal of any ERISA Affiliate
from an ERISA Plan during a plan year in which it was a "substantial employer"
as defined in Section 4001(a)(2) of ERISA, or (c) the filing of a notice of
intent to terminate any ERISA Plan or the treatment of any ERISA Plan amendment
as a termination under Section 4041 of ERISA, or (d) the institution of
proceedings to terminate any ERISA Plan by the Pension Benefit Guaranty
Corporation under Section 4042 of ERISA, or (e) any other event or condition
which might constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any ERISA Plan.
"Tribunal" means any government, any arbitration panel, any court or
any governmental department, commission, board, bureau, agency or
instrumentality of the United States of America or any state, province,
commonwealth, nation, territory, possession, county, parish, town, township,
village or municipality, whether now or hereafter constituted or existing.
"Type" means, with respect to any Loans, the characterization of such
Loans as either Base Rate Loans or Eurodollar Loans.
Section 1.2. Exhibits and Schedules; Additional Definitions. All
Exhibits and Schedules attached to this Agreement are a part hereof for all
purposes. Reference is hereby made to the Security Schedule for the meaning of
certain terms defined therein and used but not defined herein, which
definitions are incorporated herein by reference.
Section 1.3. Amendment of Defined Instruments. Unless the context
otherwise requires or unless otherwise provided herein the terms defined in
this Agreement which refer to a particular agreement, instrument or document
also refer to and include all renewals, extensions,
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modifications, amendments and restatements of such agreement, instrument or
document, provided that nothing contained in this section shall be construed to
authorize any such renewal, extension, modification, amendment or restatement.
Section 1.4. References and Titles. All references in this Agreement
to Exhibits, Schedules, articles, sections, subsections and other subdivisions
refer to the Exhibits, Schedules, articles, sections, subsections and other
subdivisions of this Agreement unless expressly provided otherwise. Titles
appearing at the beginning of any subdivisions are for convenience only and do
not constitute any part of such subdivisions and shall be disregarded in
construing the language contained in such subdivisions. The words "this
Agreement", "this instrument", "herein", "hereof", "hereby", "hereunder" and
words of similar import refer to this Agreement as a whole and not to any
particular subdivision unless expressly so limited. The phrases "this section"
and "this subsection" and similar phrases refer only to the sections or
subsections hereof in which such phrases occur. The word "or" is not exclusive,
and the word "including" (in its various forms) means "including without
limitation." Pronouns in masculine, feminine and neuter genders shall be
construed to include any other gender, and words in the singular form shall be
construed to include the plural and vice versa, unless the context otherwise
requires.
Section 1.5. Calculations and Determinations. All calculations under
the Loan Documents of fees and of interest shall be made on the basis of actual
days elapsed (including the first day but excluding the last) and a year of 360
days, except that interest computed by reference to the Base Rate at times when
the Base Rate is based on the "base rate" of BankBoston, N.A. shall be computed
on the basis of a year of 365 days (or 366 days in a leap year). Each
determination by a Lender Party of amounts to be paid under Sections 3.2
through 3.6 or any other matters which are to be determined hereunder by a
Lender Party (such as any Eurodollar Rate, LIBOR Rate, Business Day, Interest
Period, or Reserve Percentage) shall, in the absence of manifest error, be
conclusive and binding. Unless otherwise expressly provided herein or unless
Required Lenders otherwise consent all financial statements and reports
furnished to any Lender Party hereunder shall be prepared and all financial
computations and determinations pursuant hereto shall be made in accordance
with GAAP.
Section 1.6. Joint Preparation; Construction of Indemnities and
Releases. This Agreement and the other Loan Documents have been prepared
through the joint efforts of the various parties hereto and their counsel, and
all such parties shall equally be considered to be the drafters hereof and
thereof. All indemnification and release provisions of this Agreement shall be
construed broadly (and not narrowly) in favor of the Persons receiving
indemnification from or being released.
ARTICLE II - The Loans and Letters of Credit
Section 2.1. Commitments to Lend; Notes. Subject to the terms and
conditions hereof, each Lender agrees to make loans to Borrowers (herein called
such Lender's "Loans") upon Borrowers' request from time to time during the
Commitment Period, provided that (a) subject to Sections 3.3, 3.4 and 3.6, all
Lenders are requested to make Loans of the same Type in accordance with their
respective Percentage Shares and as part of the same Borrowing, (b) after
giving effect to such Loans, the Facility Usage does not exceed the Borrowing
Base in effect as
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of the date on which the requested Loans are to be made, and (c) after giving
effect to such Loans, the outstanding principal amount of each Lender's Loans,
plus such Lender's Percentage Share of LC Obligations does not exceed such
Lender's Percentage Share of the Borrowing Base in effect as of the date on
which the requested Loans are to be made. The aggregate amount of all Loans in
any Borrowing must be $250,000 or any greater integral multiple of $50,000. IT
IS EXPRESSLY UNDERSTOOD THAT LENDER'S COMMITMENT TO ADVANCE FUNDS HEREUNDER IS
DETERMINED ONLY BY REFERENCE TO THE BORROWING BASE FROM TIME TO TIME IN EFFECT,
AND THE FACE AMOUNT OF THE NOTE AND THE AMOUNT SPECIFIED IN THE SECURITY
DOCUMENTS ARE SPECIFIED AT A GREATER AMOUNT ONLY FOR THE CONVENIENCE OF THE
PARTIES TO AVOID THE NECESSITY OF PREPARING AND RECORDING SUPPLEMENTS TO THE
SECURITY DOCUMENTS. Borrowers may have no more than seven Borrowings of
Eurodollar Loans outstanding at any time. The obligation of Borrowers to repay
to each Lender the aggregate amount of all Loans made by such Lender, together
with interest accruing in connection therewith, shall be evidenced by a single
promissory note (herein called such Lender's "Note") made by Borrowers payable
to the order of such Lender in the form of Exhibit A with appropriate
insertions. The amount of principal owing on any Lender's Note at any given
time shall be the aggregate amount of all Loans theretofore made by such Lender
minus all payments of principal theretofore received by such Lender on such
Note. Interest on each Note shall accrue and be due and payable as provided
herein and therein, with Eurodollar Loans bearing interest at the Eurodollar
Rate and Base Rate Loans bearing interest at the Base Rate (subject to the
applicability of the Default Rate and limited by the provisions of Section
10.7). Subject to the terms and conditions hereof, Borrowers may borrow, repay,
and reborrow hereunder during the Commitment Period.
Section 2.2. Requests for New Loans. Borrowers must give to Agent
written notice (or telephonic notice promptly confirmed in writing) of any
requested Borrowing of new Loans to be advanced by Lenders. Each such notice
constitutes a "Borrowing Notice" hereunder and must:
(a) specify (i) the aggregate amount of any such Borrowing of
new Base Rate Loans and the date on which such Base Rate Loans are to
be advanced, or (ii) the aggregate amount of any such Borrowing of
new Eurodollar Loans, the date on which such Eurodollar Loans are to
be advanced (which shall be the first day of the Interest Period
which is to apply thereto), and the length of the applicable Interest
Period; and
(b) be received by Agent not later than 11:00 a.m., Boston,
Massachusetts time, on (i) the first Business Day preceding the day
on which any such Base Rate Loans are to be made, or (ii) the third
Business Day preceding the day on which any such Eurodollar Loans are
to be made.
Each such written request or confirmation must be made in the form and
substance of the "Borrowing Notice" attached hereto as Exhibit B, duly
completed. Each such telephonic request shall be deemed a representation,
warranty, acknowledgment and agreement by Borrowers as to the matters which are
required to be set out in such written confirmation. Upon receipt of any such
Borrowing Notice, Agent shall give each Lender prompt notice of the terms
thereof. If all conditions precedent to such new Loans have been met, each
Lender will on the date requested
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promptly remit to Agent at Agent's office in Boston, Massachusetts the amount
of such Lender's new Loan in immediately available funds, and upon receipt of
such funds, unless to its actual knowledge any conditions precedent to such
Loans have been neither met nor waived as provided herein, Agent shall promptly
make such Loans available to Borrowers. Unless Agent shall have received prompt
notice from a Lender that such Lender will not make available to Agent such
Lender's new Loan, Agent may in its discretion assume that such Lender has made
such Loan available to Agent in accordance with this section and Agent may if
it chooses, in reliance upon such assumption, make such Loan available to
Borrowers. If and to the extent such Lender shall not so make its new Loan
available to Agent, such Lender and Borrowers severally agree to pay or repay
to Agent within three days after demand the amount of such Loan together with
interest thereon, for each day from the date such amount was made available to
Borrowers until the date such amount is paid or repaid to Agent, with interest
at (i) the Federal Funds Rate, if such Lender is making such payment and (ii)
the interest rate applicable at the time to the other new Loans made on such
date, if Borrowers are making such repayment. If neither such Lender nor
Borrowers pay or repay to Agent such amount within such three-day period, Agent
shall in addition to such amount be entitled to recover from such Lender and
from Borrowers, on demand, interest thereon at the Default Rate, calculated
from the date such amount was made available to Borrowers. The failure of any
Lender to make any new Loan to be made by it hereunder shall not relieve any
other Lender of its obligation hereunder, if any, to make its new Loan, but no
Lender shall be responsible for the failure of any other Lender to make any new
Loan to be made by such other Lender.
Section 2.3. Interest Rates; Continuations and Conversions of Existing
Loans.
(a) Interest Rates. Unless the Default Rate shall apply (a) Base Rate
Loans from time to time outstanding shall bear interest on each day outstanding
at the Base Rate in effect on such day and (b) each Eurodollar Loan shall bear
interest on each day during the related Interest Period at the related
Eurodollar Rate in effect on such day. Such interest shall be payable on the
dates specified in the Note. All past due principal of and past due interest on
the Loan shall bear interest on each day outstanding at the Default Rate in
effect on such day, and such interest shall be due and payable daily as it
accrues. On any day during which an Event of Default is continuing, upon notice
by Agent to Borrowers, all Loans shall bear interest on each such day
outstanding at the Default Rate.
(b) Continuations and Conversions. Borrowers may make the following
elections with respect to Loans already outstanding: to Convert Base Rate Loans
to Eurodollar Loans, to Convert Eurodollar Loans to Base Rate Loans on the last
day of the Interest Period applicable thereto, or to Continue Eurodollar Loans
beyond the expiration of such Interest Period by designating a new Interest
Period to take effect at the time of such expiration. In making such elections,
Borrowers may combine existing Loans made pursuant to separate Borrowings into
one new Borrowing or divide existing Loans made pursuant to one Borrowing into
separate new Borrowings, provided that Borrowers may have no more than seven
Borrowings of Eurodollar Loans outstanding at any time and each such Borrowing
must be $250,000 or any greater integral multiple of $50,000. To make any such
election, Borrowers must give to Agent written notice (or telephonic notice
promptly confirmed in writing) of any such Conversion or Continuation of
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existing Loans, with a separate notice given for each new Borrowing. Each such
notice constitutes a "Continuation/Conversion Notice" hereunder and must:
(i) specify the existing Loans which are to be Continued or
Converted;
(ii) specify (A) the aggregate amount of any Borrowing of Base
Rate Loans into which such existing Loans are to be Continued or
Converted and the date on which such Continuation or Conversion is to
occur, or (B) the aggregate amount of any Borrowing of Eurodollar
Loans into which such existing Loans are to be Continued or
Converted, the date on which such Continuation or Conversion is to
occur (which shall be the first day of the Interest Period which is
to apply to such Eurodollar Loans), and the length of the applicable
Interest Period; and
(iii) be received by Agent not later than 11:00 a.m., Boston,
Massachusetts time, on (A) the first Business Day preceding the day
on which any such Continuation or Conversion to Base Rate Loans is to
occur, or (B) the third Business Day preceding the day on which any
such Continuation or Conversion to Eurodollar Loans is to occur.
Each such written request or confirmation must be made in the form and
substance of the "Continuation/Conversion Notice" attached hereto as Exhibit C,
duly completed. Each such telephonic request shall be deemed a representation,
warranty, acknowledgment and agreement by Borrowers as to the matters which are
required to be set out in such written confirmation. Upon receipt of any such
Continuation/Conversion Notice, Agent shall give each Lender prompt notice of
the terms thereof. Each Continuation/Conversion Notice shall be irrevocable and
binding on Borrowers. During the continuance of any Default, Borrowers may not
make any election to Convert existing Loans into Eurodollar Loans or Continue
existing Loans as Eurodollar Loans. If (due to the existence of a Default or
for any other reason) Borrowers fail to timely and properly give any notice of
Continuation or Conversion with respect to a Borrowing of existing Eurodollar
Loans at least three days prior to the end of the Interest Period applicable
thereto, such Eurodollar Loans shall automatically be Converted into Base Rate
Loans at the end of such Interest Period. No new funds shall be repaid by
Borrowers or advanced by any Lender in connection with any Continuation or
Conversion of existing Loans pursuant to this section, and no such Continuation
or Conversion shall be deemed to be a new advance of funds for any purpose;
such Continuations and Conversions merely constitute a change in the interest
rate applicable to already outstanding Loans.
Section 2.4. Use of Proceeds. Each Borrower shall use any Loans (i)
to repay all Debt owing under the Existing Credit Facility, (ii) to pay the
purchase price for the Acquisition (iii) to refinance Matured LC Obligations,
(iv) provide working capital for its operations and (v) for other general
business purposes including acquisition of oil and gas properties and
development of oil and gas properties owned by it. Borrowers shall use all
Letters of Credit for its general corporate purposes. In no event shall the
funds from any Loan or any Letter of Credit be used directly or indirectly by
any Person for personal, family, household or agricultural purposes or for the
purpose, whether immediate, incidental or ultimate, of purchasing, acquiring or
carrying any "margin stock" (as such term is defined in Regulation U and
Regulation G promulgated by the Board of Governors of the Federal Reserve
System) or to extend credit to others directly or
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indirectly for the purpose of purchasing or carrying any such margin stock.
Parent and Borrowers represent and warrant that Parent and Borrowers are not
engaged principally, or as one of Parent's or Borrowers' important activities,
in the business of extending credit to others for the purpose of purchasing or
carrying such margin stock.
Section 2.5. Fees.
(a) Commitment Fees. In consideration of each Lender's commitment to
extend credit hereunder, Borrowers will pay to Agent for the account of each
Lender a commitment fee determined on a daily basis at the rate of (i)
one-fourth of one percent (.25%) per annum, if the Applicable Utilization Level
is Level I, and (ii) three-eighths of one percent (.375%) per annum if the
Applicable Utilization Level is any other level, in either case calculated by
multiplying such rate times such Lender's Percentage Share of (A) the unused
portion of the Borrowing Base on each day during the Commitment Period,
determined for each such day by deducting the Facility Usage from the amount of
the Borrowing Base at the end of such day or (B) the unused portion of the LC
Limit on each day from the end of the Commitment Period until the Maturity
Date. This commitment fee, to the extent accrued through the last day of each
Fiscal Quarter shall be due and payable in arrears on the fifteenth (15th) day
after the end of each Fiscal Quarter, on the last day of the Commitment Period
and on the Maturity Date.
(b) Agent's Fees. In addition to all other amounts due to Agent under
the Loan Documents, Borrowers will pay fees to Agent as described in a letter
agreement between Agent and Borrowers.
(c) Borrowing Base Fee. Borrowers will pay to Agent for the account of
each Lender a fee determined on the amount of each increase in the Borrowing
Base, such fee to be in an amount equal to three-eighths of one percent (.375%)
of such increase. Such fee shall be due and payable on the effective date of
such Borrowing Base increase and allocated to each Lender based upon such
Lender's Percentage Share of such increase.
Section 2.6. Discretionary Extension of Commitment Period. Not more
than sixty (60) days and not less than thirty (30) days prior to the end of the
Commitment Period, the Borrowers may request that Lenders extend the Commitment
Period. Lenders may, in their sole discretion, elect to grant any such request
and extension, in which event (a) the terms and conditions of this Agreement
will apply during any such extension period, (b) upon request by Lenders, the
Borrowers will, execute and deliver a renewal Note to each Lender and (c) the
Borrowers will execute and deliver such additional documents as Agent may deem
necessary to continue the perfection of the Liens covering the Collateral. In
the event any Lender determines not to grant any such extension, such Lender
shall promptly so notify Agent and Borrowers.
NOTWITHSTANDING THE FOREGOING, NO LENDER IS IN ANY WAY OBLIGATED AT ANY TIME TO
EXTEND THE COMMITMENT PERIOD OR OTHERWISE MODIFY THE TERMS OF THE LOANS, AND
ANY DETERMINATION BY LENDERS TO MAKE ANY SUCH EXTENSION SHALL IN NO WAY
OBLIGATE LENDERS TO MAKE ANY OTHER EXTENSIONS IN THE FUTURE.
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Section 2.7. Conversion: Regular Payments. At the end of the
Commitment Period, the Loans shall, unless an Event of Default shall have
occurred and be continuing, automatically convert to term loans upon the terms
and conditions set forth in this Section 2.7 (the "Term Conversion"). Upon the
Term Conversion, the Borrowers jointly and severally agree to immediately pay
Agent for the account of Lenders an amount equal to the sum of (a) the amount,
if any, by which the Facility Usage is in excess of the Borrowing Base then in
effect, plus (b) all accrued but unpaid interest on such excess. Upon the Term
Conversion, each of the Notes shall be repaid in twelve installments, due and
payable on the fifteenth (15th) day of March, June, September and December,
beginning March 15, 2002 (or the first day of the first month immediately
following the Term Conversion if the Commitment Period is extended by Lender
pursuant to Section 2.6) and continuing regularly thereafter until the Loans
are paid in full. Each payment shall be in an amount equal to one-twelfth
(1/12) of the outstanding principal balance of the Loans at the time of the
Term Conversion and shall be accompanied with all accrued but unpaid interest.
Notwithstanding the foregoing, Required Lenders may, in their sole discretion,
at the time of the Term Conversion notify the Borrowers of their election to
select a different amortization schedule for the Notes (which revised
amortization schedule will be for the three (3) year period following the date
of such Term Conversion) based upon Required Lenders' evaluation of oil and gas
reserves of Borrower at the time of the Term Conversion and such other credit
factors as Required Lenders deem appropriate in their sole discretion. In the
event Required Lenders elect a modified amortization schedule as provided in
the preceding sentence, the Borrowers will, upon request by Required Lenders,
execute and deliver to each Lender (i) renewal Notes and (ii) such additional
documents, in each case as Required Lenders may deem necessary to effect such
modification. Upon the Term Conversion, Borrowers may specify a lesser amount
for the LC Limit (but in no event less than the LC Obligations outstanding at
such time) which amount shall continue to be available for Letters of Credit
from the end of the Commitment Period to the Maturity Date as provided in
Section 2.13.
Section 2.8. Optional Prepayments. Borrowers may, upon three Business
Days' notice to each Lender, from time to time and without premium or penalty
(other than funding losses, if any, resulting from such prepayment being made
other than on the last day of an Interest Period with respect to any Eurodollar
Loan as provided in Section 3.6) prepay the Notes, in whole or in part, so long
as the aggregate amounts of all partial prepayments of principal on the Notes
equals $250,000 or any higher integral multiple of $50,000, so long as
Borrowers do not make any prepayments which would reduce the unpaid principal
balance of any Loan to less than $100,000 without first either (a) terminating
this Agreement or (b) providing assurance satisfactory to Agent in its
discretion that Lenders' legal rights under the Loan Documents are in no way
affected by such reduction. Each partial prepayment of principal made after the
end of the Commitment Period shall be applied to the regular installments of
principal due under the Notes in the inverse order of their maturities. Each
prepayment of principal under this section shall be accompanied by all interest
then accrued and unpaid on the principal so prepaid. Any principal or interest
prepaid pursuant to this section shall be in addition to, and not in lieu of,
all payments otherwise required to be paid under the Loan Documents at the time
of such prepayment.
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Section 2.9. Mandatory Prepayments.
(a) If at any time the Facility Usage exceeds the Borrowing Base (such
excess being herein called a "Borrowing Base Deficiency"), Borrower shall,
within ten (10) days following notice thereof from Agent, provide written
notice (the "Election Notice") to Agent stating the action which Borrower
proposes to take to remedy such Borrowing Base Deficiency, and Borrower shall
thereafter, at its option, either (a) within ten (10) days following the
delivery of such Election Notice, make a prepayment of principal on the Loan in
an amount sufficient to eliminate such Borrowing Base Deficiency, and if such
Borrowing Base Deficiency cannot be eliminated by prepaying the Loan in full
(as a result of outstanding Letter of Credit Exposure), Borrower shall also at
such time deposit with Agent sufficient funds to be held by Agent as security
for outstanding Letter of Credit Exposure in the manner contemplated by Section
2.18 as necessary to eliminate such Borrowing Base Deficiency, or (b) eliminate
such deficiency by making monthly mandatory prepayments of principal on the
Loan, each of which shall be in an amount, and for a term (which shall in any
event not exceed six (6) months) as determined by Agent and Required Lenders in
their sole discretion to eliminate such Borrowing Base Deficiency.
(b) Each prepayment of principal under this section shall be
accompanied by all interest then accrued and unpaid on the principal so
prepaid. Any principal or interest prepaid pursuant to this section shall be in
addition to, and not in lieu of, all payments otherwise required to be paid
under the Loan Documents at the time of such prepayment. Each partial
prepayment of principal made after the end of the Commitment Period shall be
applied to the regular installments of principal due under the Notes in the
inverse order of their maturities.
Section 2.10. Initial Borrowing Base. During the period from the date
hereof to the first Determination Date, the Borrowing Base shall be
$55,000,000.
Section 2.11. Subsequent Determinations of Borrowing Base.
(a) By February 28 and August 31 of each year commencing August 31,
1999, Borrowers shall furnish to each Lender all information, reports and data
which Agent has then requested concerning Related Persons' businesses and
properties (including their oil and gas properties and interests and the
reserves and production relating thereto), together with the Reserve Report
described in Section 6.2. Simultaneously with the delivery to Agent and each
Lender of each Reserve Report, Borrowers shall notify each Lender of the
Borrowing Base which Borrowers requests become effective for the period
commencing on the next Determination Date.
(b) Agent shall propose to Lenders and Lenders shall redetermine the
Borrowing Base on or prior to each Determination Date (or such date promptly
thereafter as reasonably possible). Any Borrowing Base which becomes effective
as a result of any Determination of the Borrowing Base shall be subject to the
following restrictions: (i) such Borrowing Base shall not exceed the Borrowing
Base requested by Borrowers pursuant to subsection (a), (ii) such Borrowing
Base shall not exceed the Maximum Loan Amount then in effect, (iii) to the
extent such Borrowing Base represents an increase from the Borrowing Base in
effect prior to such Determination, such Borrowing Base shall be approved by
all Lenders, and (iv) any Borrowing Base which represents
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a decrease in the Borrowing Base in effect prior to such Determination, or a
reaffirmation of such prior Borrowing Base, shall only require approval of
Required Lenders.
(c) Each Determination shall be made by Lenders in accordance with
their normal and customary procedures for evaluating oil and gas reserves and
other related assets as such exist at that particular time and will otherwise
be in their sole discretion. It is further acknowledged and agreed that each
Lender may consider such other credit factors as it deems appropriate including
without limitation the assets, liabilities, cash flow, hedged and unhedged
exposure to commodity prices, foreign exchange rate, and interest rate changes,
business, properties, prospects, management and ownership of Related Persons.
Promptly following any Determination of the Borrowing Base, Agent shall notify
Borrowers of the amount of the Borrowing Base as redetermined, which Borrowing
Base shall be effective as of the Determination Date specified in such notice,
and shall remain in effect for all purposes of this Agreement until the next
Determination. If Borrowers do not furnish all such information, reports and
data by the date specified in the first sentence of this section, Agent may
nonetheless designate the Borrowing Base at any amount which Required Lenders
determine and may redesignate the Borrowing Base from time to time thereafter
until each Lender receives all such information, reports and data, whereupon
Lenders shall designate a new Borrowing Base as described above. It is
expressly understood that Lenders and Agent have no obligation to agree upon or
designate the Borrowing Base at any particular amount, whether in relation to
the Maximum Loan Amount or otherwise, and that Lenders' commitments to advance
funds hereunder is determined by reference to the Borrowing Base from time to
time in effect, which Borrowing Base shall be used for calculating commitment
fees under Section 2.5 and, to the extent permitted by Law and regulatory
authorities, for the purposes of capital adequacy determination and
reimbursements under Section 3.2.
Section 2.12. Special Determination of Borrowing Base. In addition to
the redeterminations of the Borrowing Base pursuant to Section 2.11, Borrowers
and Required Lenders may each request additional determinations ("Special
Determinations") of the Borrowing Base from time to time; provided, that (a)
Borrowers may not request more than two (2) Special Determinations in any
Fiscal Year and may not request a Special Determination after the end of the
Commitment Period, and (b) Required Lenders may not request more than two (2)
Special Determinations in the Fiscal Year ending December 31, 1999, or more
than one (1) Special Determination in any Fiscal Year thereafter. In the event
Required Lenders request such a Special Determination, Agent shall promptly
deliver notice of such request to Borrowers and Borrowers shall, within twenty
(20) days following the date of such request, deliver to Lenders a Reserve
Report prepared as of the last day of the calendar month preceding the date of
such request and such other information which Agent shall have requested. In
the event Borrowers request a Special Determination, Borrowers shall deliver
written notice of such request to Lenders which shall include (i) a Reserve
Report prepared as of a date not more than thirty (30) days prior to the date
of such request, (ii) the amount of the Borrowing Base requested by Borrower
and to become effective on the Determination Date applicable to such Special
Determination and (iii) such other information which Agent shall have
requested. Upon receipt of such Reserve Report and other information, Agent
shall, subject to approval of Required Lenders, or all Lenders in the event of
a proposed increase in the Borrowing Base, redetermine the Borrowing Base in
accordance with the procedure set forth in Section 2.11 which Borrowing
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Base shall become effective on the Determination Date (or as soon thereafter as
Agent and Required Lenders, or all Lenders in the event of a proposed increase
in the Borrowing Base, approve such Borrowing Base and provide notice thereof
to Borrower).
Section 2.13. Letters of Credit. Subject to the terms and conditions
hereof, Borrowers may at any time before the ninth Business Day prior to the
Maturity Date request LC Issuer to issue one or more Letters of Credit,
provided that, after taking such Letter of Credit into account:
(a) the Facility Usage does not exceed the Borrowing Base at
such time;
(b) the aggregate amount of LC Obligations at such time does not
exceed the LC Limit;
(c) the expiration date of such Letter of Credit is prior to the
earlier of (i) fifteen months after the date of issuance of such
Letter of Credit or (ii) the Maturity Date;
(d) such Letter of Credit is to be used for general corporate
purposes of any Related Person that is a Guarantor;
(e) such Letter of Credit is not directly or indirectly used to
assure payment of or otherwise support any Restricted Debt of any
Person, except for Restricted Debt of any Related Person in respect
of Hedging Contracts permitted pursuant to Section 7.10;
(f) the issuance of such Letter of Credit will be in compliance
with all applicable governmental restrictions, policies, and
guidelines and will not subject LC Issuer to any cost which is not
reimbursable under Article III;
(g) the form and terms of such Letter of Credit are acceptable
to LC Issuer in its sole discretion; and
(h) all other conditions in this Agreement to the issuance of
such Letter of Credit have been satisfied.
LC Issuer will honor any such request if the foregoing conditions (a) through
(h) (in the following Section 2.14 called the "LC Conditions") have been met as
of the date of issuance of such Letter of Credit. LC Issuer may choose to honor
any such request for any other Letter of Credit but has no obligation to do so.
Section 2.14. Requesting Letters of Credit. Borrowers must make
written application for any Letter of Credit at least five Business Days before
the date on which Borrowers desire for LC Issuer to issue such Letter of
Credit. By making any such written application Borrowers shall be deemed to
have represented and warranted that the LC Conditions described in Section 2.14
will be met as of the date of issuance of such Letter of Credit. Each such
written application for a Letter of Credit must be made in writing on LC
Issuer's customary letter of credit application. Two Business Days after the LC
Conditions for a Letter of Credit have been met as described in
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Section 2.14 (or if LC Issuer otherwise desires to issue such Letter of
Credit), LC Issuer will issue such Letter of Credit at LC Issuer's office in
Boston, Massachusetts. If any provisions of any LC Application conflict with
any provisions of this Agreement, the provisions of this Agreement shall govern
and control.
Section 2.15. Reimbursement and Participations.
(a) Reimbursement by Borrowers. Each Matured LC Obligation shall
constitute a loan by LC Issuer to Borrowers. Borrowers promise to pay to LC
Issuer, or to LC Issuer's order, on demand, the full amount of each Matured LC
Obligation, together with interest thereon at the Base Rate from the date such
matured LC Obligation accrues until the third Business Day after demand, and
thereafter at the Default Rate until paid, but in no event in excess of the
Highest Lawful Rate.
(b) Letter of Credit Advances. If the beneficiary of any Letter of
Credit makes a draft or other demand for payment thereunder then Borrowers may,
during the interval between the making thereof and the honoring thereof by LC
Issuer, request Lenders to make Loans to Borrowers in the amount of such draft
or demand, which Loans shall be made concurrently with LC Issuer's payment of
such draft or demand and shall be immediately used by LC Issuer to repay the
amount of the resulting Matured LC Obligation. Such a request by Borrowers
shall be made in compliance with all of the provisions hereof, provided that
for the purposes of the first sentence of Section 2.1 the amount of such Loans
shall be considered but the amount of the Matured LC Obligation to be
concurrently paid by such Loans shall not be considered.
(c) Participation by Lenders. LC Issuer irrevocably agrees to grant
and hereby grants to each Lender, and -- to induce LC Issuer to issue Letters
of Credit hereunder -- each Lender irrevocably agrees to accept and purchase
and hereby accepts and purchases from LC Issuer, on the terms and conditions
hereinafter stated and for such Lender's own account and risk an undivided
interest equal to such Lender's Percentage Share of LC Issuer's obligations and
rights under each Letter of Credit issued hereunder and the amount of each
Matured LC Obligation paid by LC Issuer thereunder. Each Lender unconditionally
and irrevocably agrees with LC Issuer that, if a Matured LC Obligation is paid
under any Letter of Credit for which LC Issuer is not reimbursed in full by
Borrowers in accordance with the terms of this Agreement and the related LC
Application (including any reimbursement by means of concurrent Loans or by the
application of LC Collateral), such Lender shall (in all circumstances and
without set-off or counterclaim) pay to LC Issuer on demand, in immediately
available funds at LC Issuer's address for notices hereunder, such Lender's
Percentage Share of such Matured LC Obligation (or any portion thereof which
has not been reimbursed by Borrowers). Each Lender's obligation to pay LC
Issuer pursuant to the terms of this subsection is irrevocable and
unconditional. If any amount required to be paid by any Lender to LC Issuer
pursuant to this subsection is paid by such Lender to LC Issuer within three
Business Days after the date such payment is due, LC Issuer shall in addition
to such amount be entitled to recover from such Lender, on demand, interest
thereon calculated from such due date at the Federal Funds Rate. If any amount
required to be paid by any Lender to LC Issuer pursuant to this subsection is
not paid by such Lender to LC Issuer within three Business Days after the date
such payment is due, LC Issuer shall in addition
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to such amount be entitled to recover from such Lender, on demand, interest
thereon calculated from such due date at the Base Rate.
(d) Distributions to Participants. Whenever LC Issuer has in
accordance with this section received from any Lender payment of such Lender's
Percentage Share of any Matured LC Obligation, if LC Issuer thereafter receives
any payment of such Matured LC Obligation or any payment of interest thereon
(whether directly from Borrowers or by application of LC Collateral or
otherwise, and excluding only interest for any period prior to LC Issuer's
demand that such Lender make such payment of its Percentage Share), LC Issuer
will distribute to such Lender its Percentage Share of the amounts so received
by LC Issuer; provided, however, that if any such payment received by LC Issuer
must thereafter be returned by LC Issuer, such Lender shall return to LC Issuer
the portion thereof which LC Issuer has previously distributed to it.
(e) Calculations. A written advice setting forth in reasonable detail
the amounts owing under this section, submitted by LC Issuer to Borrowers or
any Lender from time to time, shall be conclusive, absent manifest error, as to
the amounts thereof.
Section 2.16. Letter of Credit Fees. In consideration of LC Issuer's
issuance of any Letter of Credit, Borrowers agree to pay (a) to Agent, for the
account of all Lenders, a letter of credit fee determined on a daily basis by
applying the Letter of Credit Fee Rate to such Lender's Percentage Share of the
face amount of the Letter of Credit (but in no event less than $500 per annum),
and (b) to LC Issuer for its own account, a letter of credit fronting fee at a
rate equal to one-eighth percent (.125%) per annum times the face amount of
such Letter of Credit (but in no event less than $125 per annum). The letter of
credit fee and the letter of credit fronting fee will be calculated on the face
amount of each Letter of Credit outstanding on each day at the above-applicable
rates and will be due and payable in arrears on the last day of each March,
June, September and December.
Section 2.17. No Duty to Inquire.
(a) Drafts and Demands. LC Issuer is authorized and instructed to
accept and pay drafts and demands for payment under any Letter of Credit
without requiring, and without responsibility for, any determination as to the
existence of any event giving rise to said draft, either at the time of
acceptance or payment or thereafter. LC Issuer is under no duty to determine
the proper identity of anyone presenting such a draft or making such a demand
(whether by tested telex or otherwise) as the officer, representative or agent
of any beneficiary under any Letter of Credit, and payment by LC Issuer to any
such beneficiary when requested by any such purported officer, representative
or agent is hereby authorized and approved. Borrowers agree to hold LC Issuer
and each other Lender Party harmless and indemnified against any liability or
claim in connection with or arising out of the subject matter of this section,
WHICH INDEMNITY SHALL APPLY WHETHER OR NOT ANY SUCH LIABILITY OR CLAIM IS IN
ANY WAY OR TO ANY EXTENT CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR
OMISSION BY ANY LENDER PARTY, provided only that no Lender Party shall be
entitled to indemnification for that portion, if any, of any liability or claim
which is proximately caused by its own individual gross negligence or willful
misconduct, as determined by a court of competent jurisdiction.
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(b) Extension of Maturity. If the maturity of any Letter of Credit is
extended by its terms or by Law or governmental action, if any extension of the
maturity or time for presentation of drafts or any other modification of the
terms of any Letter of Credit is made at the request of any Borrower, or if the
amount of any Letter of Credit is increased at the request of any Borrower,
this Agreement shall be binding upon Borrower with respect to such Letter of
Credit as so extended, increased or otherwise modified, with respect to drafts
and property covered thereby, and with respect to any action taken by LC
Issuer, LC Issuer's correspondents, or any Lender Party in accordance with such
extension, increase or other modification.
(c) Transferees of Letters of Credit. If any Letter of Credit provides
that it is transferable, LC Issuer shall have no duty to determine the proper
identity of anyone appearing as transferee of such Letter of Credit, nor shall
LC Issuer be charged with responsibility of any nature or character for the
validity or correctness of any transfer or successive transfers, and payment by
LC Issuer to any purported transferee or transferees as determined by LC Issuer
is hereby authorized and approved, and Borrowers further agree to hold LC
Issuer and each other Lender Party harmless and indemnified against any
liability or claim in connection with or arising out of the foregoing, WHICH
INDEMNITY SHALL APPLY WHETHER OR NOT ANY SUCH LIABILITY OR CLAIM IS IN ANY WAY
OR TO ANY EXTENT CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR OMISSION
BY ANY LENDER PARTY, provided only that no Lender Party shall be entitled to
indemnification for that portion, if any, of any liability or claim which is
proximately caused by its own individual gross negligence or willful
misconduct, as determined by a court of competent jurisdiction.
Section 2.18. LC Collateral.
(a) LC Obligations in Excess of Borrowing Base. If, after the making
of all mandatory prepayments required under Section 2.9, the principal balance
of the Loans is zero, but the outstanding LC Obligations will exceed the
Borrowing Base, then in addition to such prepayment of the entire principal
balance of the Loans Borrowers will immediately pay to LC Issuer an amount
equal to such excess. LC Issuer will hold such amount as security for the
remaining LC Obligations (all such amounts held as security for LC Obligations
being herein collectively called "LC Collateral") until (i) such LC Obligations
become Matured LC Obligations, at which time such LC Collateral may be applied
to such Matured LC Obligations or (ii) such LC Obligations expire at which time
any LC Collateral in excess of any remaining LC Obligations will be returned to
Borrowers. Neither this subsection nor the following subsection shall, however,
limit or impair any rights which LC Issuer may have under any other document or
agreement relating to any Letter of Credit, LC Collateral or LC Obligation,
including any LC Application, or any rights which any Lender Party may have to
otherwise apply any payments by Borrowers and any LC Collateral under Section
3.1.
(b) Acceleration of LC Obligations. If the Obligations or any part
thereof become immediately due and payable pursuant to Section 8.1 then, unless
Required Lenders otherwise specifically elect to the contrary (which election
may thereafter be retracted by Required Lenders at any time), all LC
Obligations shall become immediately due and payable without regard to whether
or not actual drawings or payments on the Letters of Credit have occurred, and
Borrowers shall be obligated to pay to LC Issuer immediately an amount equal to
the aggregate
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LC Obligations which are then outstanding. All amounts so paid shall first be
applied to Matured LC Obligations and then held by LC Issuer as LC Collateral
until such LC Obligations become Matured LC Obligations, at which time such LC
Collateral shall be applied to such Matured LC Obligations. To the extent a
Letter of Credit expires or is terminated without being drawn upon in whole or
in part, the portion of any LC Collateral which then exceeds the remaining
Obligations shall be promptly returned to Borrowers.
(c) Investment of LC Collateral. Pending application thereof, all LC
Collateral shall be invested by LC Issuer in Cash Equivalents as LC Issuer may
choose in its sole discretion. All interest on such investments shall be
reinvested or applied to Matured LC Obligations. When all Obligations have been
satisfied in full, including all LC Obligations, all Letters of Credit have
expired or been terminated, and all of Borrowers' reimbursement obligations in
connection therewith have been satisfied in full, LC Issuer shall release any
remaining LC Collateral. To the extent a Letter of Credit expires or is
terminated without being drawn upon in whole or in part, the portion of any LC
Collateral which then exceeds the remaining Obligations shall be promptly
returned to Borrowers. Each Borrower hereby assigns and grants to LC Issuer a
continuing security interest in all LC Collateral paid by it to LC Issuer, all
investments purchased with such LC Collateral, and all proceeds thereof to
secure its Matured LC Obligations and its Obligations under this Agreement,
each Note, and the other Loan Documents, and Each Borrower agrees that such LC
Collateral and investments shall be subject to applicable terms and provisions
of the Security Documents. Each Borrower further agrees that LC Issuer shall
have all of the rights and remedies of a secured party under the Uniform
Commercial Code as adopted in the State of New York with respect to such
security interest and that an Event of Default under this Agreement shall
constitute a default for purposes of such security interest.
(d) Payment of LC Collateral. When Borrowers are required to provide
LC Collateral for any reason and fail to do so on the day when required, LC
Issuer may without notice to Borrower or any other Related Person provide such
LC Collateral (whether by application of proceeds of other Collateral, by
transfers from other accounts maintained with LC Issuer, or otherwise) using
any available funds of Borrowers or any other Person also liable to make such
payments. Any such amounts which are required to be provided as LC Collateral
and which are not provided on the date required shall, for purposes of each
Security Document, be considered past due Obligations owing hereunder, and LC
Issuer is hereby authorized to exercise its respective rights under each
Security Document to obtain such amounts.
Section 2.19. Supplemental Letters of Credit. In addition to Letters
of Credit issued pursuant to Section 2.13, upon request from Borrowers from
time to time, BankBoston, N.A. may, in its sole discretion and without any
obligation to do so, issue Letters of Credit for the account of Borrowers
pursuant to this Section 2.19 which shall, except as expressly provided to the
contrary in this Section 2.19, be considered "Letters of Credit" for all
purposes of this Agreement. Any Letter of Credit issued pursuant to this
Section 2.19 is referred to herein as "Supplemental Letter of Credit".
Notwithstanding anything contained herein to the contrary, the Supplemental
Letters of Credit shall be subject to the following terms and conditions:
(i) the aggregate Letter of Credit Exposure outstanding with
respect to all Supplemental Letters of Credit shall not exceed
$3,000,000 at any time;
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(ii) Supplemental Letters of Credit shall be issued to the
sole account and risk of BankBoston, N.A., and no other Bank shall be
deemed to have any participation interest in such Supplemental Letters
of Credit or related LC Obligations or any reimbursement obligation or
other credit risk related thereto;
(iii) Any Request for Letter of Credit issued by Borrower
with respect to any Supplemental Letter of Credit shall clearly state
that the requested Letter of Credit is to be a Supplemental Letter of
Credit, and simultaneously with the issuance of any Supplemental Letter
of Credit, BankBoston, N.A. shall deliver written notice to each other
Bank of the issuance thereof and specifying the amount and terms of
such Letter of Credit and that such Letter of Credit is a Supplemental
Letter of Credit for purposes of this Agreement;
(iv) In consideration of BankBoston, N.A.'s issuance of any
Supplemental Letter of Credit, Borrowers agree to pay (a) to
BankBoston, N.A., a letter of credit fee equal to 1% per annum of the
face amount of such Supplemental Letter of Credit plus (b) to LC
issuer for its own account, a letter of credit fronting fee at a rate
equal to one-eighth percent (.125%) per annum times the face amount of
such letter of Credit (but in no event less than $125 per annum). The
letter of credit fee and letter of credit fronting fee will be
calculated on the face amount of each Supplemental Letter of Credit
outstanding on each day and will be due and payable in arrears on the
last day of each March, June, September and December.
(v) LC Obligations with respect to Supplemental Letters of
Credit will not be deemed to be outstanding solely for purposes of (a)
determining the amounts available to be borrowed pursuant to Section
2.1, (b) the limitations on the amounts of Letters of Credit issuable
to Borrowers pursuant to Section 2.13, (c) the existence of any
Borrowing Base Deficiency, or (d) the calculation of Facility Usage;
and
(vi) Supplemental Letters of Credit shall only be used to
secure a Related Party's obligations to a counterparty under Hedging
Contracts permitted by Section 7.10 and to satisfy operator bond
requirements of the State of Texas up to the amount of $250,000.
ARTICLE III - Payments to Lenders
Section 3.1. General Procedures. Borrower will make each payment which
it owes under the Loan Documents to Agent for the account of the Lender Parties
to whom such payment is owed. Each such payment must be received by Agent not
later than Noon, Boston Massachusetts time, on the date such payment becomes
due and payable, in lawful money of the United States of America, without
set-off, deduction or counterclaim, and in immediately available funds. Any
payment received by Agent after such time will be deemed to have been made on
the next following Business Day. Should any such payment become due and payable
on a day other than a Business Day, the maturity of such payment shall be
extended to the next succeeding Business Day, and, in the case of a payment of
principal or past due interest, interest
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shall accrue and be payable thereon for the period of such extension as
provided in the Loan Document under which such payment is due. Each payment
under a Loan Document shall be due and payable at the place provided therein
and, if no specific place of payment is provided, shall be due and payable at
the place of payment of Agent's Note. When Agent collects or receives money on
account of the Obligations, Agent shall distribute all money so collected or
received, and each Lender Party shall apply all such money so distributed, as
follows:
(a) first, for the payment of all Obligations which are then due
(and if such money is insufficient to pay all such Obligations, first
to any reimbursements due Agent under Section 6.9 or 10.4 and then to
the partial payment of all other Obligations then due in proportion
to the amounts thereof, or as Lender Parties shall otherwise agree);
(b) then for the prepayment of amounts owing under the Loan
Documents (other than principal on the Notes) if so specified by
Borrowers;
(c) then for the prepayment of principal on the Notes, together
with accrued and unpaid interest on the principal so prepaid;
(d) then, for the payment or prepayment of any other
Obligations;
(e) then, to provide LC Collateral as required pursuant to the
terms hereof; and
(f) last, returned to the Borrowers.
All payments applied to principal or interest on any Note shall be applied
first to any interest then due and payable, then to principal then due and
payable, and last to any prepayment of principal and interest in compliance
with Section 2.8. All distributions of amounts described in any of subsections
(b), (c) or (d) above shall be made by Agent pro rata to each Lender Party then
owed Obligations described in such subsection in proportion to all amounts owed
to all Lender Parties which are described in such subsection; provided that if
any Lender then owes payments to LC Issuer for the purchase of a participation
under Section 2.15(c) or to Agent under Article II or Section 9.4, any amounts
otherwise distributable under this section to such Lender shall be deemed to
belong to LC Issuer or Agent, respectively, to the extent of such unpaid
payments, and Agent shall apply such amounts to make such unpaid payments
rather than distribute such amounts to such Lender.
Section 3.2. Increased Cost and Reduced Return.
(a) If, after the date hereof, the adoption of any applicable Law,
rule, or regulation, or any change in any applicable Law, rule, or regulation,
or any change in the interpretation or administration thereof by any
governmental authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or its
Applicable Lending Office) with any request or directive (whether or not having
the force of Law) of any such governmental authority, central bank, or
comparable agency:
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(i) shall subject such Lender (or its Applicable Lending Office)
to any tax, duty, or other charge with respect to any Eurodollar
Loans, its Notes, or its obligation to make Eurodollar Loans, or
change the basis of taxation of any amounts payable to such Lender
(or its Applicable Lending Office) under this Agreement or its Notes
in respect of any Eurodollar Loans (other than taxes imposed on the
overall net income of such Lender by the jurisdiction in which such
Lender has its principal office or such Applicable Lending Office);
(ii) shall impose, modify, or deem applicable any reserve,
special deposit, assessment, or similar requirement (other than the
Reserve Requirement utilized in the determination of the Eurodollar
Rate) relating to any extensions of credit or other assets of, or any
deposits with or other liabilities or commitments of, such Lender (or
its Applicable Lending Office), including the Commitment of such
Lender hereunder; or
(iii) shall impose on such Lender (or its Applicable Lending
Office) or the London interbank market any other condition affecting
this Agreement or its Notes or any of such extensions of credit or
liabilities or commitments;
and the result of any of the foregoing is to increase the cost to such Lender
(or its Applicable Lending Office) of making, Converting into, Continuing, or
maintaining any Eurodollar Loans or to reduce any sum received or receivable by
such Lender (or its Applicable Lending Office) under this Agreement or its
Notes with respect to any Eurodollar Loans, then Borrowers shall pay to such
Lender on demand such amount or amounts as will compensate such Lender for such
increased cost or reduction. If any Lender requests compensation by Borrowers
under this Section 3.2(a), Borrowers may, by notice to such Lender (with a copy
to Agent), suspend the obligation of such Lender to make or Continue Loans of
the Type with respect to which such compensation is requested, or to Convert
Loans of any other Type into Loans of such Type, until the event or condition
giving rise to such request ceases to be in effect (in which case the
provisions of Section 3.5 shall be applicable); provided that such suspension
shall not affect the right of such Lender to receive the compensation so
requested.
(b) If, after the date hereof, any Lender shall have determined that
the adoption of any applicable law, rule, or regulation regarding capital
adequacy or any change therein or in the interpretation or administration
thereof by any governmental authority, central bank, or comparable agency
charged with the interpretation or administration thereof, or any request or
directive regarding capital adequacy (whether or not having the force of law)
of any such governmental authority, central bank, or comparable agency, has or
would have the effect of reducing the rate of return on the capital of such
Lender or any corporation controlling such Lender as a consequence of such
Lender's obligations hereunder to a level below that which such Lender or such
corporation could have achieved but for such adoption, change, request, or
directive (taking into consideration its policies with respect to capital
adequacy), then from time to time upon demand Borrowers shall pay to such
Lender such additional amount or amounts as will compensate such Lender for
such reduction but only to the extent that such Lender has not been compensated
therefor by an increase in the Eurodollar Rate.
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(c) Each Lender shall promptly notify Borrowers and Agent of any event
of which it has knowledge, occurring after the date hereof, which will entitle
such Lender to compensation pursuant to this Section and will designate a
different Applicable Lending Office if such designation will avoid the need
for, or reduce the amount of, such compensation and will not, in the judgment
of such Lender, be otherwise disadvantageous to it. Any Lender claiming
compensation under this Section shall furnish to Borrowers and Agent a
statement setting forth the additional amount or amounts to be paid to it
hereunder which shall be conclusive in the absence of manifest error. In
determining such amount, such Lender shall act in good faith and may use any
reasonable averaging and attribution methods.
Section 3.3. Limitation on Types of Loans. If on or prior to the first
day of any Interest Period for any Eurodollar Loan:
(a) Agent determines (which determination shall be conclusive) that by
reason of circumstances affecting the relevant market, adequate and reasonable
means do not exist for ascertaining the Eurodollar Rate for such Interest
Period; or
(b) the Required Lenders determine (which determination shall be
conclusive) and notify Agent that the Eurodollar Rate will not adequately and
fairly reflect the cost to Lenders of funding Eurodollar Loans for such
Interest Period;
then Agent shall give Borrowers prompt notice thereof specifying the relevant
Type of Loans and the relevant amounts or periods, and so long as such
condition remains in effect, Lenders shall be under no obligation to make
additional Loans of such Type, Continue Loans of such Type, or to Convert Loans
of any other Type into Loans of such Type and Borrowers shall, on the last
day(s) of the then current Interest Period(s) for the outstanding Loans of the
affected Type, either prepay such Loans or Convert such Loans into another Type
of Loan in accordance with the terms of this Agreement.
Section 3.4. Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to make, maintain, or fund Eurodollar Loans
hereunder, then such Lender shall promptly notify Borrowers thereof and such
Lender's obligation to make or Continue Eurodollar Loans and to Convert other
Types of Loans into Eurodollar Loans shall be suspended until such time as such
Lender may again make, maintain, and fund Eurodollar Loans (in which case the
provisions of Section 3.5 shall be applicable).
Section 3.5. Treatment of Affected Loans. If the obligation of any
Lender to make a particular Type of Eurodollar Loan or to continue, or to
Convert Loans of any other Type into, Loans of a particular Type shall be
suspended pursuant to Section 3.2 or 3.4 hereof (Loans of such Type being
herein called "Affected Loans" and such Type being herein called the "Affected
Type"), such Lender's Affected Loans shall be automatically Converted into Base
Rate Loans on the last day(s) of the then current Interest Period(s) for
Affected Loans (or, in the case of a Conversion required by Section 3.4 hereof,
on such earlier date as such Lender may specify to Borrowers with a copy to
Agent) and, unless and until such Lender gives notice as provided
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below that the circumstances specified in Section 3.2 or 3.4 hereof that gave
rise to such Conversion no longer exist:
(a) to the extent that such Lender's Affected Loans have been so
Converted, all payments and prepayments of principal that would otherwise be
applied to such Lender's Affected Loans shall be applied instead to its Base
Rate Loans; and
(b) all Loans that would otherwise be made or Continued by such Lender
as Loans of the Affected Type shall be made or Continued instead as Base Rate
Loans, and all Loans of such Lender that would otherwise be Converted into
Loans of the Affected Type shall be Converted instead into (or shall remain as)
Base Rate Loans.
If such Lender gives notice to Borrowers (with a copy to Agent) that the
circumstances specified in Section 3.2 or 3.4 hereof that gave rise to the
Conversion of such Lender's Affected Loans pursuant to this Section 3.5 no
longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Loans of the Affected Type made by other
Lenders are outstanding, such Lender's Base Rate Loans shall be automatically
Converted, on the first day(s) of the next succeeding Interest Period(s) for
such outstanding Loans of the Affected Type, to the extent necessary so that,
after giving effect thereto, all Loans held by Lenders holding Loans of the
Affected Type and by such Lender are held pro rata (as to principal amounts,
Types, and Interest Periods) in accordance with their Percentage Shares of the
Commitment.
Section 3.6. Compensation. Upon the request of any Lender, Borrowers
shall pay to such Lender such amount or amounts as shall be sufficient to
compensate it for any loss, cost, or expense (excluding loss of anticipated
profits) incurred by it as a result of:
(a) any payment, prepayment, or Conversion of a Eurodollar Loan for
any reason (including, without limitation, the acceleration of the Loans
pursuant to Section 8.1) on a date other than the last day of the Interest
Period for such Loan; or
(b) any failure by Borrowers for any reason (including, without
limitation, the failure of any condition precedent specified in Article IV to
be satisfied) to borrow, Convert, Continue, or prepay a Eurodollar Loan on the
date for such borrowing, Conversion, Continuation, or prepayment specified in
the relevant notice of borrowing, prepayment, Continuation, or Conversion under
this Agreement.
Section 3.7. Taxes.
(a) Any and all payments by Borrowers to or for the account of any
Lender or Agent hereunder or under any other Loan Document shall be made free
and clear of and without deduction for any and all present or future taxes,
duties, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each Lender and
Agent, taxes imposed on its income, and franchise taxes imposed on it, by the
jurisdiction under the Laws of which such Lender (or its Applicable Lending
Office) or Agent (as the case may be) is organized or any political subdivision
thereof (all such non-excluded taxes, duties, levies,
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imposts, deductions, charges, withholdings, and liabilities being hereinafter
referred to as "Taxes"). If Borrowers shall be required by Law to deduct any
Taxes from or in respect of any sum payable under this Agreement or any other
Loan Document to any Lender or Agent, (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 3.7) such Lender or
Agent receives an amount equal to the sum it would have received had no such
deductions been made, (ii) Borrowers shall make such deductions, and (iii)
Borrowers shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable Law.
(b) In addition, Borrowers agree to pay any and all present or future
stamp or documentary taxes and any other excise or property taxes or charges or
similar levies which arise from any payment made under this Agreement or any
other Loan Document or from the execution or delivery of, or otherwise with
respect to, this Agreement or any other Loan Document (hereinafter referred to
as "Other Taxes").
(c) Borrowers agree to indemnify each Lender and Agent for the full
amount of Taxes and Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed or asserted by any jurisdiction on amounts payable under
this Section 3.7) paid by such Lender or Agent (as the case may be) and any
liability (including penalties, interest, and expenses) arising therefrom or
with respect thereto.
(d) Each Lender organized under the Laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Lender listed on the signature pages hereof and
on or prior to the date on which it becomes a Lender in the case of each other
Lender, and from time to time thereafter if requested in writing by Borrowers
or Agent (but only so long as such Lender remains lawfully able to do so),
shall provide Borrowers and Agent with (i) Internal Revenue Service Form 1001
or 4224, as appropriate, or any successor form prescribed by the Internal
Revenue Service, certifying that such Lender is entitled to benefits under an
income tax treaty to which the United States is a party which reduces the rate
of withholding tax on payments of interest or certifying that the income
receivable pursuant to this Agreement is effectively connected with the conduct
of a trade or business in the United States, (ii) Internal Revenue Service Form
W-8 or W-9, as appropriate, or any successor form prescribed by the Internal
Revenue Service, and (iii) any other form or certificate required by any taxing
authority (including any certificate required by Sections 871(h) and 881(c) of
the Internal Revenue Code), certifying that such Lender is entitled to an
exemption from or a reduced rate of tax on payments pursuant to this Agreement
or any of the other Loan Documents.
(e) For any period with respect to which a Lender has failed to
provide Borrowers and Agent with the appropriate form pursuant to Section
3.7(d) (unless such failure is due to a change in treaty, Law, or regulation
occurring subsequent to the date on which a form originally was required to be
provided), such Lender shall not be entitled to indemnification under Section
3.7(a) or 3.7(b) with respect to Taxes imposed by the United States; provided,
however, that should a Lender, which is otherwise exempt from or subject to a
reduced rate of withholding tax, become subject to Taxes because of its failure
to deliver a form required hereunder, Borrowers
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shall take such steps as such Lender shall reasonably request to assist such
Lender to recover such Taxes.
(f) If Borrowers are required to pay additional amounts to or for the
account of any Lender pursuant to this Section 3.7, then such Lender will agree
to use reasonable efforts to change the jurisdiction of its Applicable Lending
Office so as to eliminate or reduce any such additional payment which may
thereafter accrue if such change, in the judgment of such Lender, is not
otherwise disadvantageous to such Lender and in the event Lender is reimbursed
for an amount paid by Borrowers pursuant to this Section 3.7, it shall promptly
return such amount to Borrowers.
(g) Within thirty (30) days after the date of any payment of Taxes,
Borrowers shall furnish to Agent the original or a certified copy of a receipt
evidencing such payment.
(h) Without prejudice to the survival of any other agreement of
Borrowers hereunder, the agreements and obligations of Borrowers contained in
this Section 3.7 shall survive the termination of the Commitment and the
payment in full of the Notes.
Section 3.8. Compensation Procedure. Any Lender or LC Issuer notifying
Borrowers of the incurrence of additional costs under Sections 3.2 through 3.7
shall in such notice to Borrowers and Agent set forth in reasonable detail the
basis and amount of its request for compensation; provided, that the
determination of such amount shall be made in good faith. Determinations and
allocations by each Lender or LC Issuer for purposes of Sections 3.2 through
3.7 of the effect of any change in applicable laws, treaties, rules or
regulations or in the interpretation or administration thereof, any losses or
expenses incurred by reason of the liquidation or reemployment of deposits or
other funds, any Taxes imposed, or the effect of capital maintained on its
costs or rate of return of maintaining Loans or its obligation to make Loans,
or on amounts receivable by it in respect of Loans, and of the amounts required
to compensate such Lender under Sections 3.2 through 3.7, shall be conclusive
and binding for all purposes, absent manifest error. Any request for
compensation under this Section 3.8 shall be paid by Borrowers within thirty
(30) Business Days of the receipt by Borrowers of the notice described in this
Section 3.8. Notwithstanding the foregoing, the Borrowers shall not be
obligated to compensate any Lender pursuant to Sections 3.2 through 3.7 for any
amounts attributable to a period more than 180 days prior to the giving of
notice by such Lender to the Borrowers of its intention to seek compensation
under any such Section.
ARTICLE IV - Conditions Precedent to Lending
Section 4.1. Documents to be Delivered. No Lender has any obligation
to make its first Loan, and LC Issuer has no obligation to issue the first
Letter of Credit unless Agent shall have received all of the following, duly
executed and delivered and in form, substance and date satisfactory to Agent:
(a) This Agreement and any other documents that Lenders are to
execute in connection herewith.
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(b) Each Note.
(c) Each Security Document listed in the Security Schedule.
(d) Certain certificates of Related Persons including:
(i) An "Omnibus Certificate" of the Secretary of each
Related Person (other than Vista) which shall contain the names
and signatures of the officers of such Related Person authorized
to execute Loan Documents and which shall certify to the truth,
correctness and completeness of the following exhibits attached
thereto: (1) a copy of resolutions duly adopted by the Board of
Directors of such Related Person and in full force and effect at
the time this Agreement is entered into, authorizing the
execution of this Agreement and the other Loan Documents
delivered or to be delivered in connection herewith and the
consummation of the transactions contemplated herein and
therein, (2) a copy of the charter documents of such Related
Person and all amendments thereto, certified by the appropriate
official of such Related Person's state of organization, (3) a
copy of any bylaws of such Related Person, and (4) a copy of the
limited partnership agreement of Vista and all amendments
thereto and a copy of Vista's Certificate of Limited Partnership
certified by the Secretary of State of Texas; and
(ii) A "Compliance Certificate" of the Chairman of the
Board or President and of the chief financial officer of Parent,
Midland and General Partner, of even date with such Loan or such
Letter of Credit, in which such officers certify to the
satisfaction of the conditions set out in subsections (a), (b),
(c) and (d) of Section 4.2, after giving effect to the
Acquisition and such Loan or such Letter of Credit.
(e) A certificate (or certificates) of the due formation, valid
existence and good standing of each Related Person in its state of
organization, issued by the appropriate authorities of such
jurisdiction, and certificates of each Related Person's good standing
and due qualification to do business, issued by appropriate officials
in any states in which such Related Person owns property subject to
Security Documents.
(f) The following opinions: (i) a favorable opinion of Vinson &
Elkins L.L.P., counsel for Related Persons, substantially in the form
set forth in Exhibit F; (ii) to the extent an opinion is delivered by
counsel to IP in connection with the Acquisition, a letter from such
counsel permitting Agent, each Lender and their counsel to rely on
the opinions provided by such counsel in connection with the
consummation of the Acquisition; (iii) an opinion of Hinkle, Cox,
Eaton, Coffield, & Hensley, L.L.P., special New Mexico counsel to
Agent, favorably opining as to such matters as Agent may request.
(g) The Initial Reserve Report and the Initial Financial
Statements.
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(h) Payment of all commitment, facility, agency and other fees
required to be paid to any Lender Party pursuant to any Loan
Documents or any commitment agreement heretofore entered into.
(i) Title opinions in form, substance and authorship
satisfactory to Agent, concerning not less than 70% of the proved oil
and gas properties of Related Persons, including the properties to be
acquired in the Acquisition.
(j) Evidence satisfactory to Agent that each of the Borrowers is
in compliance with the insurance requirements of Section 6.8.
(k) Duly executed and delivered copies of the Acquisition
Documents and all conveyances, lien releases and other documents and
instruments executed in connection therewith.
(l) Evidence satisfactory to Agent that the Related Persons
shall have consummated the Acquisition as contemplated by the
Acquisition Documents.
(m) All representations and warranties made by any Person in any
Acquisition Document shall be true in all material respects on and as
of the date of such Loan or the date of issuance of such Letter of
Credit.
(n) Evidence satisfactory to Agent that the obligations under
the Existing Credit Agreement will be repaid with proceeds of the
initial Loan and that provision has been made for all Liens securing
the Debt owing to Union Bank of California, N.A., as agent, to either
be transferred to Agent or released to the satisfaction of Agent.
Section 4.2. Additional Conditions Precedent. No Lender has any
obligation to make any Loan (including its first), and LC Issuer has no
obligation to issue, extend or amend any Letter of Credit (including its
first), unless the following conditions precedent have been satisfied:
(a) All representations and warranties made by any Related
Person in any Loan Document shall be true on and as of the date of
such Loan or the date of issuance, extension or amendment of such
Letter of Credit (except to the extent that the facts upon which such
representations and warranties are based have been changed by the
extension of credit hereunder) as if such representations and
warranties had been made as of the date of such Loan or the date of
issuance, extension or amendment of such Letter of Credit, as
applicable (unless stated to relate solely to an earlier date, in
which case such representations and warranties shall be true and
correct as of such earlier date).
(b) No Default shall exist at the date of such Loan or the date
of issuance, extension or amendment of such Letter of Credit, as
applicable.
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(c) After giving effect to all Loans and Letters of Credit
requested to be issued, extended or amended on such day, the Facility
Usage does not exceed the Borrowing Base in effect on such day.
(d) No Material Adverse Change shall have occurred to, and no
event or circumstance shall have occurred that could reasonably be
expected to cause a Material Adverse Change to Parent's Consolidated
financial condition or businesses.
(e) Agent shall have received all documents and instruments
which Agent has then reasonably requested, in addition to those
described in Section 4.1 (including opinions of legal counsel for
Related Persons and Agent; corporate and partnership documents and
records; documents evidencing governmental authorizations, consents,
approvals, licenses and exemptions; and certificates of public
officials and of officers, partners and representatives of Related
Persons and other Persons), as to (i) the accuracy and validity of or
compliance with all representations, warranties and covenants made by
any Related Person in this Agreement and the other Loan Documents,
(ii) the satisfaction of all conditions contained herein or therein,
and (iii) all other matters pertaining hereto and thereto. All such
additional documents and instruments shall be reasonably satisfactory
to Agent in form, substance and date.
ARTICLE V - Representations and Warranties
To confirm each Lender Party's understanding concerning Related
Persons and Related Persons' businesses, properties and obligations and to
induce each Lender Party to enter into this Agreement and to extend credit
hereunder, Parent and Borrowers represent and warrant to each Lender Party
that:
Section 5.1. No Default. No Related Person is in default in the
performance of any of the covenants and agreements contained in any Loan
Document. No event has occurred and is continuing which constitutes a Default.
Section 5.2. Organization and Good Standing. Each Related Person is
duly organized, validly existing and in good standing under the Laws of its
jurisdiction of organization, having all powers required to carry on its
business and enter into and carry out the transactions contemplated hereby.
Each Related Person is duly qualified, in good standing, and authorized to do
business in all other jurisdictions within the United States wherein the
character of the properties owned or held by it or the nature of the business
transacted by it makes such qualification necessary except where a failure to
do so could not reasonably be expected to cause a Material Adverse Change. Each
Related Person has taken all actions and procedures customarily taken in order
to enter, for the purpose of conducting business or owning property, each
jurisdiction outside the United States wherein the character of the properties
owned or held by it or the nature of the business transacted by it makes such
actions and procedures desirable, except where a failure to do so could not
reasonably be expected to cause a Material Adverse Change.
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Section 5.3. Authorization. Each Related Person has duly taken all
action necessary to authorize the execution and delivery by it of the Loan
Documents to which it is a party and to authorize the consummation of the
transactions contemplated thereby and the performance of its obligations
thereunder. Each Borrower is duly authorized to borrow funds hereunder. Each
other Related Person is authorized to guaranty the Obligations.
Section 5.4. No Conflicts or Consents. The execution and delivery by
the various Related Persons of the Loan Documents to which each is a party, the
performance by each of its obligations under such Loan Documents, and the
consummation of the transactions contemplated by the various Loan Documents, do
not and will not (i) conflict with any provision of (1) any Law, (2) the
organizational documents of any Related Person, or (3) any material agreement,
judgment, license, order or permit applicable to or binding upon any Related
Person, (ii) result in the acceleration of any Debt owed by any Related Person,
(iii) result in or require the creation of any Lien upon any assets or
properties of any Related Person, or (iv) result in or require the creation of
any guaranty by any Related Person of any Debt of any other Person except for
the guaranties listed in the Security Schedule. Except as expressly
contemplated in the Loan Documents no consent, approval, authorization or order
of, and no notice to or filing with, any Tribunal or third party is required in
connection with the execution, delivery or performance by any Related Person of
any Loan Document or to consummate any transactions contemplated by the Loan
Documents.
Section 5.5. Enforceable Obligations. This Agreement is, and the other
Loan Documents when duly executed and delivered will be, legal, valid and
binding obligations of each Related Person which is a party hereto or thereto,
enforceable in accordance with their terms except as such enforcement may be
limited by bankruptcy, insolvency or similar Laws of general application
relating to the enforcement of creditors' rights.
Section 5.6. Initial Financial Statements. The Initial Financial
Statements fairly present Parent's Consolidated financial position at the
respective dates thereof and the Consolidated results of Parent's operations
and Parent's Consolidated cash flows for the respective periods thereof. Since
the date of the audited annual Initial Financial Statements, no Material
Adverse Change has occurred, except as reflected in the quarterly Initial
Financial Statements or in Disclosure Schedule. All Initial Financial
Statements were prepared in accordance with GAAP.
Section 5.7. Other Obligations and Restrictions. No Related Person has
any outstanding Debt of any kind (including contingent obligations, tax
assessments, and unusual forward or long-term commitments) which is, in the
aggregate, material to such Related Person or material with respect to Related
Persons' Consolidated financial condition and not shown in the Initial
Financial Statements or disclosed in the Disclosure Schedule or a Disclosure
Report. Except as shown in the Initial Financial Statements or disclosed in the
Disclosure Schedule or a Disclosure Report, no Related Person is subject to or
restricted by any franchise, contract, deed, charter restriction, or other
instrument or restriction which could reasonably be expected to cause a
Material Adverse Change.
Section 5.8. Full Disclosure. No certificate, statement or other
written information delivered herewith or heretofore by any Related Person to
any Lender Party in connection with
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the negotiation of this Agreement or in connection with any transaction
contemplated hereby (as modified or supplemented by other information so
furnished) when considered as a whole contains any untrue statement of a
material fact or omits to state any material fact known to any Related Person
(other than industry-wide risks normally associated with the types of
businesses conducted by Related Persons) necessary to make the statements
contained herein or therein not misleading as of the date made or deemed made.
There is no fact known to any Related Person (other than industry-wide risks
normally associated with the types of businesses conducted by Related Persons)
that has not been disclosed to each Lender Party in writing which could
reasonably be expected to cause a Material Adverse Change. There are no
statements or conclusions in any Reserve Report which are based upon or include
misleading information or fail to take into account material information known
to any Related Person regarding the matters reported therein, it being
understood that each Reserve Report is necessarily based upon professional
opinions, estimates and projections and that no Related Person warrants that
such opinions, estimates and projections will ultimately prove to have been
accurate. Borrowers have heretofore delivered to each Lender Party true,
correct and complete copies of the Initial Financial Statements and the Initial
Reserve Report.
Section 5.9. Litigation. Except as disclosed in the Initial Financial
Statements or in the Disclosure Schedule: (i) there are no actions, suits or
legal, equitable, arbitrative or administrative proceedings pending, or to the
knowledge of any Related Person threatened, against any Related Person before
any Tribunal which could reasonably be expected to cause a Material Adverse
Change, and (ii) there are no outstanding judgments, injunctions, writs,
rulings or orders by any such Tribunal against any Related Person or any
Related Person's stockholders, partners, directors or officers which could
reasonably be expected to cause a Material Adverse Change.
Section 5.10. Labor Disputes and Acts of God. Except as disclosed in
the Disclosure Schedule or a Disclosure Report, neither the business nor the
properties of any Related Person has been affected by any fire, explosion,
accident, strike, lockout or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance), which could reasonably be expected to
cause a Material Adverse Change.
Section 5.11. ERISA Plans and Liabilities. All currently existing
ERISA Plans are listed in the Disclosure Schedule or a Disclosure Report.
Except as disclosed in the Initial Financial Statements or in the Disclosure
Schedule or a Disclosure Report, no Termination Event has occurred with respect
to any ERISA Plan and all ERISA Affiliates are in compliance with ERISA in all
material respects. No ERISA Affiliate is required to contribute to, or has any
other absolute or contingent liability in respect of, any "multiemployer plan"
as defined in Section 4001 of ERISA. Except as set forth in the Disclosure
Schedule or a Disclosure Report: (i) no "accumulated funding deficiency" (as
defined in Section 412(a) of the Internal Revenue Code of 1986, as amended)
exists with respect to any ERISA Plan, whether or not waived by the Secretary
of the Treasury or his delegate, and (ii) the current value of each ERISA
Plan's benefits does not exceed the current value of such ERISA Plan's assets
available for the payment of such benefits by more than $10,000.
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Section 5.12. Environmental and Other Laws. Related Persons are
conducting their businesses in compliance with all applicable Laws, including
without limitation all applicable Environmental Laws, and have and are in
compliance with all licenses and permits required under any such Laws, except
where a failure to do so could not reasonably be expected to cause a Material
Adverse Change. Except as disclosed in the Disclosure Schedule, (a) none of the
operations or properties of any Related Person is the subject of federal, state
or local investigation evaluating whether any material remedial action is
needed to respond to a release of any Hazardous Materials into the environment
or to the improper storage or disposal (including storage or disposal at
offsite locations) of any Hazardous Materials; (b) no Related Person (and to
the knowledge of Borrowers, no other Person) has filed any notice under any Law
indicating that any Related Person is responsible for the improper release into
the environment, or the improper storage or disposal, of any material amount of
any Hazardous Materials or that any Hazardous Materials have been improperly
released, or are improperly stored or disposed of, upon any property of any
Related Person, except where such release, storage or disposal could not
reasonably be expected to cause a Material Adverse Change; (c) no Related
Person has transported or arranged for the transportation of any Hazardous
Material to any location which is (i) listed on the National Priorities List
under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended, listed for possible inclusion on such National Priorities
List by the Environmental Protection Agency in its Comprehensive Environmental
Response, Compensation and Liability Information System List, or listed on any
similar state list or (ii) the subject of federal, state or local enforcement
actions or other investigations which may lead to material claims against any
Related Person for clean-up costs, remedial work, damages to natural resources
or for personal injury claims (whether under Environmental Laws or otherwise);
and (e) no Related Person otherwise has any known material contingent liability
under any Environmental Laws or in connection with the release into the
environment, or the storage or disposal, of any Hazardous Materials.
Section 5.13. Names and Places of Business. No Related Person has,
during the preceding five (5) years, had, been known by, or used any other
corporate, partnership, trade or fictitious name, except as disclosed in the
Disclosure Schedule. Except as otherwise indicated in the Disclosure Schedule
or a Disclosure Report, the chief executive office and principal place of
business of each Related Person are (and for the preceding five years have
been) located at the address of Vista set forth on the signature pages hereto.
Except as indicated in the Disclosure Schedule or a Disclosure Report, no
Related Person has any other office or place of business.
Section 5.14. Subsidiaries. None of Borrowers or Parent presently has
any Subsidiary or owns any stock in any other corporation or association except
those listed in the Disclosure Schedule or a Disclosure Report. No Related
Person is a member of any general or limited partnership, joint venture or
association of any type whatsoever except those listed in the Disclosure
Schedule or a Disclosure Report. Except as otherwise revealed in a Disclosure
Report, Parent and each Borrower owns, directly or indirectly, the equity
interest in each of its Subsidiaries which is indicated in the Disclosure
Schedule.
Section 5.15. Title to Properties; Licenses. Each Related Person has
good and defensible title to all of its material properties and assets, free
and clear of all Prohibited Liens and of all impediments to the use of such
properties and assets in such Related Person's business, except
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that no representation or warranty is made with respect to any oil, gas or
mineral property or interest to which no proved oil or gas reserves are
properly attributed. Other than Liens permitted under Section 7.02, each
Related Person will respectively own in the aggregate, in all material
respects, the net interests in production attributable to the wells and units
evaluated in the Initial Reserve Reports. The ownership of such Properties
shall not in the aggregate in any material respect obligate such Related Person
to bear the costs and expenses relating to the maintenance, development and
operations of such Properties in an amount materially in excess of the working
interest of such Properties set forth in the Initial Reserve Reports. Each
Related Person has paid all royalties payable under the oil and gas leases to
which it is operator, except those contested in accordance with the terms of
the applicable joint operating agreement or otherwise contested in good faith
by appropriate proceedings. Upon delivery of each Reserve Report furnished to
the Lenders pursuant to Section 6.02, the statements made in the preceding
sentences of this Section 5.15 shall be true with respect to such Reserve
Reports. Each Related Person possesses all licenses, permits, franchises,
patents, copyrights, trademarks and trade names, and other intellectual
property (or otherwise possesses the right to use such intellectual property
without violation of the rights of any other Person) which are necessary to
carry out its business as presently conducted and as presently proposed to be
conducted hereafter, and no Related Person is in violation in any material
respect of the terms under which it possesses such intellectual property or the
right to use such intellectual property.
Section 5.16. Government Regulation. Neither of the Borrowers nor any
other Related Person owing Obligations is subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power Act, the
Investment Company Act of 1940 (as any of the preceding acts have been amended)
or any other Law which regulates the incurring by such Person of Debt,
including Laws relating to common contract carriers or the sale of electricity,
gas, steam, water or other public utility services.
Section 5.17. Insider. No Related Person, nor any Person having
"control" (as that term is defined in 12 U.S.C. Section 375b(9) or in
regulations promulgated pursuant thereto) of any Related Person, is a "director"
or an "executive officer" or "principal shareholder" (as those terms are defined
in 12 U.S.C. Section 375b(8) or (9) or in regulations promulgated pursuant
thereto) of any Lender Party, of a bank holding company of which any Lender
Party is a Subsidiary or of any Subsidiary of a bank holding company of which
any Lender Party is a Subsidiary.
Section 5.18. Material Agreements. No Related Person is in default in
any material respect under any material partnership agreement, indenture,
promissory note, contract, lease, loan agreement, mortgage, deed of trust,
security agreement, license, permit, franchise or other agreement or obligation
to which it is a party or by which any of its properties is bound, and such
Related Person is not a party to or bound by any material contracts or
agreements other than those disclosed on the Disclosure Schedule.
Section 5.19. Solvency. Upon giving effect to the issuance of the
Notes, the execution of the Loan Documents by each Related Person and the
consummation of the transactions contemplated hereby, each Related Person will
be "solvent" on the date hereof (as such term is used in applicable bankruptcy,
liquidation, receivership, insolvency or similar Laws). Each Related Person's
capital is adequate for the businesses in which such Related Person is engaged
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and intends to be engaged. No Related Person has incurred (whether hereby or
otherwise), nor does any Related Person intend to incur or believe that it will
incur, debts which will be beyond its ability to pay as such debts mature.
Section 5.20. No Financing of Regulated Corporate Takeovers. No
proceeds of any Loans will be used to acquire any security in any transaction
which is subject to Sections 13 or 14 of the Securities Exchange Act of 1934,
including particularly (but without limitation) Sections 13(d) and 14(d)
thereof.
ARTICLE VI - Affirmative Covenants
To conform with the terms and conditions under which each Lender Party
is willing to have credit outstanding to Borrowers, and to induce each Lender
Party to enter into this Agreement and extend credit hereunder, Parent and
Borrowers warrant, covenant and agree that until the full and final payment of
the Obligations and the termination of this Agreement, unless Required Lenders
have previously agreed otherwise:
Section 6.1. Payment and Performance. Each Related Person will pay all
amounts due under the Loan Documents in accordance with the terms thereof and
will observe, perform and comply with every covenant, term and condition
expressed or implied in the Loan Documents. such Related Person will cause each
other Related Person to observe, perform and comply with every such term,
covenant and condition.
Section 6.2. Books, Financial Statements and Reports. Each Related
Person will at all times maintain full and accurate books of account and
records. Parent will maintain and will cause its Subsidiaries to maintain a
standard system of accounting, will maintain its Fiscal Year, and will furnish
the following statements and reports to each Lender Party at Parent's expense:
(a) As soon as available, and in any event within ninety (90)
days after the end of each Fiscal Year, complete Consolidated and
consolidating financial statements of Parent together with all notes
thereto, prepared in reasonable detail in accordance with GAAP,
together with an opinion, based on an audit using generally accepted
auditing standards, by Arthur Anderson & Co. or another of the five
nationally recognized firms of, or other independent certified public
accountants selected by Parent and acceptable to Agent, stating that
such Consolidated financial statements have been so prepared. These
financial statements shall contain a Consolidated and consolidating
balance sheet as of the end of such Fiscal Year and Consolidated and
consolidating statements of earnings, of cash flows, and of changes
in owners' equity or partner's capital, as applicable, for such
Fiscal Year, each setting forth in comparative form the corresponding
figures for the preceding Fiscal Year.
(b) As soon as available, and in any event within sixty (60)
days after the end of each of the first three (3) Fiscal Quarters in
each Fiscal Quarter, Parent's Consolidated and consolidating balance
sheet as of the end of such Fiscal Quarter and Consolidated and
consolidating statements of Parent's earnings and cash flows for the
period from the
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beginning of the then current Fiscal Year to the end of such Fiscal
Quarter, all in reasonable detail and prepared in accordance with
GAAP, subject to changes resulting from normal year-end adjustments.
In addition, Parent will, together with each such set of financial
statements furnished under this subsection (b) and each set of
financial statements furnished under subsection (a) of this section,
furnish a certificate in the form of Exhibit D signed by the chief
financial officer of Parent stating that such financial statements
fairly present Parent's Consolidated financial position at the date
thereof and Consolidated results of operation for the period thereof
(subject to normal year-end adjustments), stating that he has
reviewed the Loan Documents, containing calculations showing
compliance (or non-compliance) at the end of such Fiscal Quarter with
the requirements of Sections 7.11 and 7.12 and stating that no
Default exists at the end of such Fiscal Quarter or at the time of
such certificate or specifying the nature and period of existence of
any such Default.
(c) Promptly upon their becoming available, copies of all
financial statements, reports, notices and proxy statements sent by
any Related Person to its stockholders and all registration
statements, periodic reports and other statements and schedules filed
by any Related Person with any securities exchange, the SEC or any
similar governmental authority.
(d) By February 28 of each year, an Reserve Report prepared as
of the preceding December 31 by independent petroleum engineers
chosen by Related Persons and acceptable to Required Lenders,
concerning all oil and gas properties and interests owned by any
Related Person which are located in or offshore of the United States
and which have attributable to them proved oil or gas reserves. This
report shall be reasonably satisfactory to Agent, shall contain
sufficient information to enable Borrowers to meet the reporting
requirements concerning oil and gas reserves contained in Regulations
S-K and S-X promulgated by the SEC, shall take into account any
"over-produced" status under gas balancing arrangements, and shall
contain information and analysis comparable in scope to that
contained in the Initial Reserve Report. Accompanying such report,
Borrowers shall deliver a report reflecting, since the date reflected
in the most recent report delivered pursuant to this clause (d) or
pursuant to the following clause (e), the following (i) all property
sales and pending property sales identifying the property and sale
price therefor, (ii) all property purchases and pending property
purchases identifying the property and the purchase price therefor,
and (iii) additional changes in properties in each category from such
previous report (i.e.: proven undeveloped, proven developed
non-producing, or proven producing). This report shall distinguish
(or shall be delivered together with a certificate from an
appropriate officer of Related Persons which distinguishes) those
properties treated in the report which are Collateral from those
properties treated in the report which are not Collateral.
(e) By August 31 of each year, an engineering report prepared as
of the preceding June 30 by petroleum engineers who are employees of
Related Persons, together with an accompanying report on property
sales, property purchases and changes in categories, both in the same
form and scope as the reports in (d) above.
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(f) As soon as available, and in any event within ninety (90)
days after the end of each Fiscal Year, a business and financial plan
for Related Persons (in form reasonably satisfactory to Agent),
prepared by the chief financial officer of Parent, setting forth for
the first year thereof, quarterly financial projections and budgets
for Related Persons, and thereafter yearly financial projections and
budgets during period through the Maturity Date.
(g) As soon as available, and in any event within fifteen (15)
Business Days after the end of each Fiscal Quarter, a report
describing by lease or unit the gross volume of production and sales
attributable to production during such month from the properties
described in subsection (d) above and describing the related
severance taxes, other taxes, leasehold operating expenses and
capital costs attributable thereto and incurred during such month.
(h) As soon as available, and in any event within sixty (60)
days after the end of each Fiscal Quarter, a report setting forth
volumes, prices and margins for all marketing activities of Borrowers
and the other Related Persons and a report of all Hedging Contracts
in such detail as Agent may request.
(i) Within fifteen (15) days after any material adverse change
occurs in insurance coverage by such Related Person, a report
describing such change, and, within ninety (90) days after the end of
each Fiscal Year, a new insurance certificate, naming Agent as an
additional insured or loss payee, as appropriate.
Section 6.3. Other Information and Inspections. Each Related Person
will furnish to each Lender Party any information which Agent may from time to
time reasonably request concerning any covenant, provision or condition of the
Loan Documents or any matter in connection with Related Persons' businesses and
operations. Each Related Person will permit representatives appointed by Agent
(including independent accountants, auditors, agents, attorneys, appraisers and
any other Persons) to visit and inspect any of such Related Person's property,
including its books of account, other books and records, and any facilities or
other business assets, and to make extra copies therefrom and photocopies and
photographs thereof, and to write down and record any information such
representatives obtain, and each Related Person shall permit Agent or its
representatives to investigate and verify the accuracy of the information
furnished to Agent or any Lender in connection with the Loan Documents and to
discuss all such matters with its officers, partners, employees and
representatives.
Section 6.4. Notice of Material Events and Change of Address.
Borrowers will promptly notify each Lender Party in writing of:
(a) the occurrence of any Material Adverse Change,
(b) the occurrence of any Default,
(c) the acceleration of the maturity of any Debt owed by any
Related Person or of any default by any Related Person under any
indenture, mortgage, agreement,
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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
acceleration or default could cause a Material Adverse Change,
(d) the occurrence of any Termination Event,
(e) any claim of $50,000 or more, any notice of potential
liability under any Environmental Laws which might exceed such
amount, or any other material adverse claim asserted against any
Related Person or with respect to any Related Person's properties,
and
(f) the filing of any suit or proceeding against any Related
Person in which an adverse decision could cause a Material Adverse
Change.
Upon the occurrence of any of the foregoing, Related Persons will take all
necessary or appropriate steps to remedy promptly any such Material Adverse
Change, Default, acceleration, default or Termination Event, to protect against
any such adverse claim, to defend any such suit or proceeding, and to resolve
all controversies on account of any of the foregoing. Borrowers will also
notify Agent and Agent's counsel in writing at least twenty Business Days prior
to the date that any Related Person changes its name or the location of its
chief executive office or principal place of business or the place where it
keeps its books and records concerning the Collateral, furnishing with such
notice any necessary financing statement amendments or requesting Agent and its
counsel to prepare the same.
Section 6.5. Maintenance of Properties.
(a) Each Related Person will (i) do or cause to be done all things
reasonably necessary to preserve and keep in good repair, working order and
efficiency (ordinary wear and tear excepted) all of the properties owned by
each Related Person, including without limitation, all equipment, machinery and
facilities, and (ii) make all the reasonably necessary repairs, renewals and
replacements so that at all times the state and condition of the properties
owned by each Related Person will be fully preserved and maintained (ordinary
wear and tear excepted), except to the extent a portion of such properties are
oil and gas properties no longer capable of producing hydrocarbons in
economically reasonable amounts.
(b) Each Related Person will promptly pay and discharge or cause to
be paid and discharged all delay rentals, royalties, expenses and indebtedness
accruing under, and perform or cause to be performed each and every act, matter
or thing required by, each and all of the assignments, deeds, leases,
sub-leases, contracts and agreements affecting its interests in its properties
and will do all other things necessary to keep unimpaired (other than
impairments resulting from Permitted Liens) each Related Person's rights with
respect thereto and prevent any forfeiture thereof or a default thereunder,
except to the extent a portion of oil and gas properties is no longer capable
of producing hydrocarbons in economically reasonable amounts.
(c) Each Related Person will operate its properties or cause or use
commercially reasonable efforts to cause such properties to be operated in a
prudent and efficient manner in
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accordance with the practices of the industry and in compliance in all material
respects with all applicable contracts and agreements and in compliance in all
material respects with all laws.
Section 6.6. Maintenance of Existence and Qualifications. Each Related
Person will maintain and preserve its existence and its rights and franchises
in full force and effect and will qualify to do business in all states or
jurisdictions where required by applicable Law, except (i) for any Related
Person which ceases to exist as a result of a merger, consolidation or other
transaction permitted under Section 7.4 or (ii) where the failure so to qualify
will not cause a Material Adverse Change.
Section 6.7. Payment of Trade Debt, Taxes, etc. Each Related Person
will (a) timely file all required tax returns; (b) timely pay all taxes,
assessments, and other governmental charges or levies imposed upon it or upon
its income, profits or property; (c) no later than the earlier of (i) 60 days
after the due date thereof or (ii) one hundred twenty (120) days after the
original invoice or billing date therefor, pay all Debt owed by it on ordinary
trade terms to vendors, suppliers and other Persons providing goods and
services used by it in the ordinary course of its business; (d) pay and
discharge when due all other Debt now or hereafter owed by it; and (e) maintain
appropriate accruals and reserves for all of the foregoing in accordance with
GAAP. Each Related Person may, however, delay paying or discharging any of the
foregoing so long as it is a Contested Claim.
Section 6.8. Insurance. Each Related Person will keep or cause to be
kept insured by financially sound and reputable insurers its property in
accordance with the Insurance Schedule. Upon demand by Agent any insurance
policies covering Collateral shall be endorsed (a) to provide for payment of
losses to Agent as its interests may appear, (b) to provide that such policies
may not be canceled or reduced or affected in any material manner for any
reason without fifteen days prior notice to Agent, (c) to provide for any other
matters specified in any applicable Security Document or which Agent may
reasonably require; and (d) to provide for insurance against fire, casualty and
any other hazards normally insured against, in the amount of the full value
(less a reasonable deductible not to exceed amounts customary in the industry
for similarly situated businesses and properties) of the property insured. Each
Related Person shall at all times maintain insurance against its liability for
injury to persons or property in accordance with the Insurance Schedule, which
insurance shall be by financially sound and reputable insurers.
Section 6.9. Performance on Related Persons' Behalf. If any Related
Person fails to pay any taxes, insurance premiums, expenses, attorneys' fees or
other amounts it is required to pay under any Loan Document, then, unless the
same is a Contested Claim, Agent may pay the same. Borrowers shall immediately
reimburse Agent for any such payments and each amount paid by Agent shall
constitute an Obligation owed hereunder which is due and payable on the date
such amount is paid by Agent.
Section 6.10. Interest. Parent and Borrowers hereby jointly and
severally promise to each Lender Party to pay interest at the Default Rate on
all Obligations (including Obligations to pay fees or to reimburse or indemnify
any Lender Party) which any Related Person has in this
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Agreement promised to pay to such Lender Party and which are not paid when due.
Such interest shall accrue from the date such Obligations become due until they
are paid.
Section 6.11. Compliance with Agreements and Law. Each Related Person
will perform all material obligations it is required to perform under the terms
of each indenture, mortgage, deed of trust, security agreement, lease,
franchise, agreement, contract or other instrument or obligation to which it is
a party or by which it or any of its properties is bound. Each Related Person
will conduct its business and affairs in compliance in all material respects
with all Laws applicable thereto.
Section 6.12. Environmental Matters; Environmental Reviews.
(a) Except where a failure to do so could not reasonably be expected
to cause a Material Adverse Change, each Related Person will comply with all
Environmental Laws now or hereafter applicable to such Related Person, as well
as all contractual obligations and agreements with respect to environmental
remediation or other environmental matters and shall obtain, at or prior to the
time required by applicable Environmental Laws, all environmental, health and
safety permits, licenses and other authorizations necessary for its operations
and will maintain such authorizations in full force and effect.
(b) Each Related Person will promptly furnish to Agent all written
notices of violation, orders, claims, citations, complaints, penalty
assessments, suits or other proceedings received by any Related Person, or of
which it has notice, pending or threatened against any Related Person, by any
governmental authority with respect to any alleged material violation of or
material non-compliance with any Environmental Laws or any permits, licenses or
authorizations in connection with its ownership or use of its properties or the
operation of its business.
(c) Each Related Person will promptly furnish to Agent all requests
for information, notices of claim, demand letters, and other notifications,
received by any Related Person in connection with its ownership or use of its
properties or the conduct of its business, relating to potential responsibility
with respect to any investigation or clean-up of Hazardous Material in any
material amount at any location.
Section 6.13. ERISA Compliance. Each Related Person will (i) make
prompt payment of all contributions required under its ERISA Plans and required
to meet the minimum funding standard set forth in ERISA with respect to its
ERISA Plans, (ii) within 30 days after the filing thereof, furnish to Lender
each annual report/return (Form 5500 Series), as well as all schedules and
attachments required to be filed with the Department of Labor and/or the
Internal Revenue Service pursuant to ERISA, and the regulations promulgated
thereunder, in connection with each of its ERISA Plans for each ERISA Plan
year, and (iii) notify Lender immediately of any fact, including, but not
limited to, any Reportable Event arising in connection with any of its ERISA
Plans, which might constitute grounds for termination thereof by the Pension
Benefit Guaranty Corporation or for the appointment by the appropriate United
States District Court of a trustee to administer such ERISA Plans, together
with a statement, if requested by Lender, as to the reason therefor and the
action, if any, proposed to be taken with respect thereto.
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Section 6.14. Subordination of Affiliate Obligations. Parent and
Borrowers agree and covenant that until such time as (i) Lenders have received
full and final payment of the Notes and (ii) all Obligations have been
performed in their entirety, all indebtedness, liability and obligations of any
type (the "Affiliate Obligations") of such Related Person to any other Related
Person or any Affiliate of such Related Person, shall be, and hereby are made,
subordinate and inferior to all Debt, Obligations and liability of any Related
Person to Lenders. Upon the occurrence and continuation of an Event of Default,
no Affiliate Obligation may be paid by such Related Person until the
Obligations have been repaid in full in cash. If, after the occurrence and
during the continuation of an Event of Default, any Related Person or any
Affiliate of such Related Person receives payment of any Affiliate Obligations,
such Related Person or Affiliate shall hold such proceeds in trust for Lenders
and shall immediately remit same to Agent for the account of the Lenders for
application against the Obligations.
Section 6.15. Agreement to Deliver Security Documents. Parent and
Borrowers agree to deliver and to cause each other Related Person to deliver,
to further secure the Obligations whenever requested by Agent in its sole and
absolute discretion, exercised in good faith, deeds of trust, mortgages,
chattel mortgages, security agreements, financing statements and other Security
Documents in form and substance reasonably satisfactory to Agent for the
purpose of granting, confirming, and perfecting first and prior liens or
security interests in any properties or assets now owned or hereafter acquired
by any Related Person as may be necessary to provide coverage of not less than
80% of the aggregate and discounted net present value (based on the most recent
Reserve Report) of proved oil and gas properties of Related Persons. Borrower
also agrees to deliver, whenever requested by Agent in its sole and absolute
discretion, exercised in good faith, favorable title opinions from legal
counsel acceptable to Agent with respect to any Related Person's properties and
interests designated by Agent, as may be necessary to provide to the coverage
of not less than seventy percent (70%) of the aggregate value of proved oil and
gas properties owned by Borrowers collectively, based upon abstract or record
examinations to dates acceptable to Agent and (i) stating that such Related
Person has good and defensible title to such properties and interests, free and
clear of all Liens other than Permitted Liens, (ii) confirming that such
properties and interests are subject to Security Documents securing the
Obligations that constitute and create legal, valid and duly perfected first
deed of trust or mortgage liens in such properties and interests and first
priority assignments of and security interests in the oil and gas attributable
to such properties and interests and the proceeds thereof, and (iii) covering
such other matters as Agent may reasonably request. Without limiting the
foregoing, Parent and Borrowers agree to furnish and to cause each Related
Person to furnish to Agent supplemental title opinions in form, substance and
authorship satisfactory to Agent within 45 days after closing supplementing the
title opinions referenced on Schedule 5 hereto.
Section 6.16. Perfection and Protection of Security Interests and
Liens. Parent and Borrowers will from time to time deliver, and will cause each
other Related Person from time to time to deliver, to Agent any financing
statements, continuation statements, extension agreements and other documents,
properly completed and executed (and acknowledged when required) by Related
Persons in form and substance reasonably satisfactory to Agent, which Agent
reasonably requests for the purpose of perfecting, confirming, or protecting
any Liens or other rights in Collateral securing any Obligations.
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Section 6.17. Bank Accounts; Offset. To secure the repayment of the
Obligations, Parent and Borrowers hereby grant to each Lender Party a security
interest, a lien, and a right of offset, each of which shall be in addition to
all other interests, liens, and rights of any Lender Party at common law, under
the Loan Documents, or otherwise, and each of which shall be upon and against
(a) any and all moneys, securities or other property (and the proceeds
therefrom) of Parent or either Borrower now or hereafter held or received by or
in transit to any Lender Party from or for the account of Parent or either
Borrower, whether for safekeeping, custody, pledge, transmission, collection or
otherwise, (b) any and all deposits (general or special, time or demand,
provisional or final) of Parent or either Borrower with any Lender Party, and
(c) any other credits and claims of Parent or either Borrower at any time
existing against any Lender Party, including claims under certificates of
deposit. At any time and from time to time after the occurrence of any Event of
Default, each Lender Party is hereby authorized to foreclose upon, or to offset
against the Obligations then due and payable (in either case without notice to
Parent or either Borrower), any and all items hereinabove referred to. The
remedies of foreclosure and offset are separate and cumulative, and either may
be exercised independently of the other without regard to procedures or
restrictions applicable to the other.
Section 6.18. Guaranties of Subsidiaries. Each Subsidiary of Parent,
other than Borrowers, now existing or created, acquired or coming into
existence after the date hereof shall, promptly upon request by Agent, execute
and deliver to Agent an absolute and unconditional guaranty of the timely
repayment of the Obligations and the due and punctual performance of the
obligations of Borrowers hereunder, which guaranty shall be reasonably
satisfactory to Agent in form and substance. Parent will cause each such
Subsidiary to deliver to Agent, simultaneously with its delivery of such a
guaranty, written evidence satisfactory to Agent and its counsel that such
Subsidiary has taken all corporate or partnership action necessary to duly
approve and authorize its execution, delivery and performance of such guaranty
and any other documents which it is required to execute.
Section 6.19. Production Proceeds. Notwithstanding that, by the terms
of the various Security Documents, Related Persons are and will be assigning to
Agent and Lenders all of the "Production Proceeds" (as defined therein)
accruing to the property covered thereby, so long as no Event of Default has
occurred Related Persons may continue to receive from the purchasers of
production all such Production Proceeds, subject, however, to the Liens created
under the Security Documents, which Liens are hereby affirmed and ratified.
Upon the occurrence of an Event of Default, Agent and Lenders may exercise all
rights and remedies granted under the Security Documents, including the right
to obtain possession of all Production Proceeds then held by Related Persons or
to receive directly from the purchasers of production all other Production
Proceeds. In no case shall any failure, whether purposed or inadvertent, by
Agent or Lenders to collect directly any such Production Proceeds constitute in
any way a waiver, remission or release of any of their rights under the
Security Documents, nor shall any release of any Production Proceeds by Agent
or Lenders to Related Persons constitute a waiver, remission, or release of any
other Production Proceeds or of any rights of Agent or Lenders to collect other
Production Proceeds thereafter.
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ARTICLE VII - Negative Covenants
To conform with the terms and conditions under which each Lender Party
is willing to have credit outstanding to Borrowers, and to induce each Lender
Party to enter into this Agreement and make the Loans, Parent and Borrowers
warrant, covenant and agree that until the full and final payment of the
Obligations and the termination of this Agreement, unless Required Lenders have
previously agreed otherwise:
Section 7.1. Restricted Debt. No Related Person will in any manner owe
or be liable for Restricted Debt except:
(a) the Obligations.
(b) guaranties of Debt which is owed by the Borrowers to Lenders.
(c) Debt in respect of Hedging Contracts permitted under Section 7.10.
(d) Debt in respect of letters of credit, and applications and
reimbursement agreements related thereto, issued for the account of any Related
Person as security for an operator bond.
(e) unsecured Debt among the Related Persons arising in the ordinary
course of business.
(f) Debt owing to Deas H. Warley in connection with the Warley
Settlement Agreement dated effective as of March 27, 1998 (and any amendment,
modification or renewal thereof, provided that the amount of such Debt shall
not increase as a result thereof).
(g) miscellaneous items of Restricted Debt not described in
subsections (a), (b), (c), (d), (e) or (f) of this Section 7.1 which do not in
the aggregate (taking into account all such Restricted Debt of all Related
Persons) exceed $250,000 at any one time outstanding.
Section 7.2. Limitations on Liens. No Related Person will create,
assume or permit to exist any Lien upon any of the properties or assets which
it now owns or hereafter acquires except:
(i) as to property which is Collateral, any Liens expressly
permitted under the Security Documents.
(ii) as to property which is not Collateral, Permitted Liens.
Section 7.3. Limitation on Mergers, Issuances of Securities. Except as
expressly provided in this subsection, no Related Person will merge or
consolidate with or into any other business entity or acquire by lease or
merger all or any part of (i) the assets of any Person, other than assets of
another Related Person or assets which do not have substantial value or (ii)
the capital stock of any Person, other than capital stock of another Related
Person. For purposes of this section, the term "substantial value" means
property or assets which have a fair market value
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in excess of fifty percent (50%) of the fair market value of all the assets of
the Parent and its Subsidiaries on a consolidated bases prior to including the
assets then being acquired. Any Subsidiary of Parent may, however, be merged
into or consolidated with (i) another Subsidiary of Parent (other than a
Borrowers), so long as a Guarantor is the surviving business entity, (ii) a
Borrower, so long as such Borrower is the surviving business entity, or (iii)
Parent, so long as Parent is the surviving business entity and Borrower shall
not be a party to such merger or consolidation. Parent will not issue any
securities or any option, warrant or other right to acquire shares or other
securities other than shares of its common stock and any options or warrants
giving the holders thereof only the right to acquire such shares. No Subsidiary
of Parent will issue any additional shares of its capital stock or other
securities or any options, warrants or other rights to acquire such additional
shares or other securities except to Parent and only to the extent not
otherwise forbidden under the terms hereof. No Subsidiary of Parent or a
Borrower which is a partnership will allow any diminution of Parent's or such
Borrower's interest (direct or indirect) therein.
Section 7.4. Limitation on Sales of Property. No Related Person will
sell, transfer, lease, exchange, alienate or dispose of any of its assets or
properties or any material interest therein except, to the extent not otherwise
forbidden under the Security Documents:
(a) equipment which is worthless or obsolete or which is replaced by
equipment of equal suitability and value.
(b) inventory (including oil and gas sold as produced and seismic
data) which is sold in the ordinary course of business on ordinary trade terms.
(c) oil and gas sold pursuant to contracts for the future sale of
fixed quantities of oil and gas at fixed prices, so long as the contracting
party and duration of the contract are acceptable to Required Lenders.
(d) oil and gas sold pursuant to Hedging Contracts pursuant to Section
7.10.
(e) other property which is sold for fair consideration not in the
aggregate in excess of $500,000 during any period between successive Borrowing
Base redeterminations, the sale of which will not materially impair or diminish
either Borrower's financial condition, business or operations.
No Related Person will sell, transfer or otherwise dispose of capital stock of
any of Parent's Subsidiaries. No Related Person will discount, sell, pledge or
assign any notes payable to it, accounts receivable or future income except to
the extent expressly permitted under the Loan Documents.
Section 7.5. Limitation on Dividends and Redemptions. No Related
Person will declare or pay any dividends on, or make any other distribution in
respect of, any class of its capital stock or any partnership or other interest
in it, nor will any Related Person directly or indirectly make any capital
contribution to or purchase, redeem, acquire or retire any shares of the
capital stock of or partnership interests in any Related Person (whether such
interests are now or hereafter issued,
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outstanding or created), or cause or permit any reduction or retirement of the
capital stock of any Related Person, except that each Related Person (other
than the Parent) may make dividends or distributions to any of its shareholders
or partners which are Related Persons.
Section 7.6. Limitation on Investments and New Businesses. No Related
Person will (i) make any expenditure or commitment or incur any obligation or
enter into or engage in any transaction except in the ordinary course of
business, (ii) engage directly or indirectly in any business or conduct any
operations except in connection with or incidental to its present businesses
and operations, (iii) make any acquisitions of or capital contributions to or
other investments in any Person, other than Permitted Investments, or (iv) make
any significant acquisitions or investments in any properties or assets other
than oil and gas properties.
Section 7.7. Limitation on Credit Extensions. Except for Permitted
Investments, no Related Person will extend credit, make advances or make loans
other than normal and prudent extensions of credit to customers buying goods
and services in the ordinary course of business, which extensions shall not be
for longer periods than those extended by similar businesses operated in a
normal and prudent manner.
Section 7.8. Transactions with Affiliates. No Related Person will
engage in any material transaction with any of its Affiliates on terms which
are less favorable to it than those which would have been obtainable at the
time in arm's-length dealing with Persons other than such Affiliates, provided
that such restriction shall not apply to transactions among Parent and its
wholly-owned subsidiaries.
Section 7.9. Certain Contracts; Amendments; Multiemployer ERISA Plans.
Except as expressly provided for in the Loan Documents, no Related Person will,
directly or indirectly, enter into, create, or otherwise allow to exist any
contract or other consensual restriction on the ability of any Related Person
to: (i) pay dividends or make other distributions to either Borrower, (ii) to
redeem equity interests held in it by either Borrower, (iii) to repay loans and
other indebtedness owing by it to either Borrower, (iv) to place Liens on any
of its assets, or (v) to transfer any of its assets to either Borrower. No
Related Person will enter into any "take or pay" contracts or other contract or
arrangement for the purchase of goods or services which obligates it to pay for
such goods or service regardless of whether they are delivered or furnished to
it. No Related Person will amend or permit any amendment to any contract or
lease which releases, qualifies, limits, makes contingent or otherwise
detrimentally affects the rights and benefits of Agent or any Lender under or
acquired pursuant to any Security Documents. No ERISA Affiliate will incur any
obligation to contribute to any "multiemployer plan" as defined in Section 4001
of ERISA.
Section 7.10. Hedging Contracts. No Related Person will be a party to
or in any manner be liable on any Hedging Contract, except:
(a) Hedging Contracts entered into with the purpose and effect of
fixing prices on oil or gas expected to be produced by Related Persons,
provided that at all times: (1) the aggregate monthly production covered by all
such contracts (determined, in the case of contracts that are not settled on a
monthly basis, by a monthly proration acceptable to Agent) for any single month
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does not in the aggregate exceed eighty-five percent (85%) of Related Persons'
aggregate Projected Oil and Gas Production anticipated to be sold in the
ordinary course of Related Persons' businesses for such month, and (2) each
such contract is with a counterparty or has a guarantor of the obligation of
the counterparty who (unless such counterparty is a Lender Party or one of its
Affiliates) at the time the contract is made is an investment grade-rated
industry participant. As used in this subsection, the term "Projected Oil and
Gas Production" means the projected production of oil or gas (measured by
volume unit or BTU equivalent, not sales price) for the term of the contracts
or a particular month, as applicable, from properties and interests owned by
any Related Person which are located in or offshore of the United States and
which have attributable to them proved oil or gas reserves, as such production
is projected in the most recent report delivered pursuant to Section 6.2(d),
after deducting projected production from any properties or interests sold or
under contract for sale that had been included in such report and after adding
projected production from any properties or interests that had not been
reflected in such report but that are reflected in a separate or supplemental
reports meeting the requirements of such Section 6.3(d) above and otherwise are
satisfactory to Agent.
(b) Hedging Contracts entered into by a Related Person with the
purpose and effect of fixing interest rates on a principal amount of
indebtedness of such Related Person that is accruing interest at a variable
rate, provided that the aggregate notional amount of such contracts never
exceeds seventy-five percent (75%) of the anticipated outstanding principal
balance of the indebtedness to be hedged by such contracts or an average of
such principal balances calculated using a generally accepted method of
matching interest swap contracts to declining principal balances, and the
floating rate index of each such contract generally matches the index used to
determine the floating rates of interest on the corresponding indebtedness to
be hedged by such contract, provided that each such contract is with a
counterparty or has a guarantor of the obligation of the counterparty who
(unless such counterparty is a Lender Party or one of its Affiliates) at the
time the contract is made has long-term obligations rated AA or Aa2 or better,
respectively, by either Rating Agency.
Section 7.11. Current Ratio. The ratio of (i) the sum of Consolidated
current assets of Parent and the other Related Persons plus the portion, if
any, of the Borrowing Base which exceeds the Facility Usage to (ii)
Consolidated current liabilities of Parent and the other Related Persons will
never be less than 1.0 to 1.0. For purposes of this section, all LC Obligations
(other than unfunded LC Obligations with respect to Supplemental Letters of
Credit) shall be included as current liabilities, regardless of whether or not
contingent (but without duplication) and current liabilities shall exclude
current maturities of the Loans and other long term Debt.
Section 7.12. Coverage Ratio. At the end of any Fiscal Quarter,
beginning with the Fiscal Quarter ending December 31, 1998, the ratio of
Consolidated EBITDA for the four-Fiscal Quarter period ending with such Fiscal
Quarter to Consolidated Interest Expense for such period will never be less
than (a) 2.0 to 1.0 for the four-Fiscal Quarter period ending December 31,
1998, (b) 2.25 to 1.0 for the four-Fiscal Quarter period ending March 31, 1999
and (c) 2.5 to 1.0 for each four-Fiscal Quarter period thereafter.
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ARTICLE VIII - Events of Default and Remedies
Section 8.1. Events of Default. Each of the following events
constitutes an Event of Default under this Agreement:
(a) Any Related Person fails to pay any Obligation for the payment of
principal when due and payable and any Obligation for the payment of interest,
fees or other amounts, within three Business Days of when due, whether at a
date for the payment of a fixed installment or as a contingent or other payment
becomes due and payable or as a result of acceleration or otherwise;
(b) Any "default" or "event of default" occurs under any Loan Document
which defines either such term, and the same is not remedied within the
applicable period of grace (if any) provided in such Loan Document;
(c) Any Related Person fails to duly observe, perform or comply with
any covenant, agreement or provision of Section 6.4 or Article VII;
(d) Any Related Person fails (other than as referred to in subsections
(a), (b) or (c) above) to duly observe, perform or comply with any covenant,
agreement, condition or provision of any Loan Document, and such failure
remains unremedied for a period of thirty (30) days after notice of such
failure is given by Agent to either Borrower;
(e) Any representation or warranty previously, presently or hereafter
made in writing by or on behalf of any Related Person in connection with any
Loan Document shall prove to have been false or incorrect in any material
respect on any date on or as of which made, or any Loan Document at any time
ceases to be valid, binding and enforceable as warranted in Section 5.5 for any
reason other than its release or subordination by Agent;
(f) Any Related Person fails to duly observe, perform or comply with
any agreement with any Person or any term or condition of any instrument,
except where a failure to do so could not reasonably be expected to cause a
Material Adverse Change, and such failure is not remedied within the applicable
period of grace (if any) provided in such agreement or instrument;
(g) Any Related Person (i) fails to pay any portion, when such portion
is due, of any of its Debt (excluding Contested Claims otherwise permitted by
Section 6.7) in excess of $50,000, or (ii) breaches or defaults in the
performance of any agreement or instrument by which any such Debt is issued,
evidenced, governed, or secured, and any such failure, breach or default
continues beyond any applicable period of grace provided therefor;
(h) Any Related Person:
(i) suffers the entry against it of a judgment, decree or order
for relief by a Tribunal of competent jurisdiction in an involuntary
proceeding commenced under any applicable bankruptcy, insolvency or
other similar Law of any jurisdiction now or hereafter in effect,
including the federal Bankruptcy Code, as from time to time amended,
or has any such proceeding commenced against it which remains
undismissed for a period of sixty days; or
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(ii) commences a voluntary case under any applicable bankruptcy,
insolvency or similar Law now or hereafter in effect, including the
federal Bankruptcy Code, as from time to time amended; or applies for
or consents to the entry of an order for relief in an involuntary
case under any such Law; or makes a general assignment for the
benefit of creditors; or fails generally to pay (or admits in writing
its inability to pay) its debts as such debts become due; or takes
corporate or other action to authorize any of the foregoing; or
(iii) suffers the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of all or a substantial part of its assets or of any
part of the Collateral in a proceeding brought against or initiated
by it, and such appointment or taking possession is neither made
ineffective nor discharged within sixty days after the making
thereof, or such appointment or taking possession is at any time
consented to, requested by, or acquiesced to by it; or
(iv) suffers the entry against it of a final judgment for the
payment of money in excess of $50,000, unless the same is discharged
within forty-five days after the date of entry thereof or an appeal
or appropriate proceeding for review thereof is taken within such
period and a stay of execution pending such appeal is obtained; or
(v) suffers a writ or warrant of attachment or any similar
process to be issued by any Tribunal against all or any substantial
part of its assets or any part of the Collateral, and such writ or
warrant of attachment or any similar process is not stayed or
released within thirty days after the entry or levy thereof or after
any stay is vacated or set aside;
(i) Either (i) any "accumulated funding deficiency" (as defined in
Section 412(a) of the Internal Revenue Code of 1986, as amended) in excess of
$50,000 exists with respect to any ERISA Plan, whether or not waived by the
Secretary of the Treasury or his delegate, or (ii) any Termination Event occurs
with respect to any ERISA Plan and the then current value of such ERISA Plan's
benefit liabilities exceeds the then current value of such ERISA Plan's assets
available for the payment of such benefit liabilities by more than $50,000 (or
in the case of a Termination Event involving the withdrawal of a substantial
employer, the withdrawing employer's proportionate share of such excess exceeds
such amount);
(j) Any of the guaranty provisions in any of the Guaranties executed
by the Guarantors shall for any reason cease to be valid and binding on Parent
or the other Guarantors or any of Parent or such other Guarantors shall so
state in writing;
(k) Agent shall fail to have a first priority perfected security
interest in the Mortgaged Properties (as defined in the Mortgages) or the
Pledged Collateral (as defined in the Pledge Agreements) or (ii) any material
provision of any Security Document shall for any reason cease to be valid and
binding on any of the Related Persons executing such Security Document, or any
such Person shall so state in writing; and
(l) Any Change in Control occurs.
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Upon the occurrence of an Event of Default described in subsection (h)(i) or
(h)(ii) of this section with respect to any Related Person, all of the
Obligations shall thereupon be immediately due and payable, without demand,
presentment, notice of demand or of dishonor and nonpayment, protest, notice of
protest, notice of intention to accelerate, declaration or notice of
acceleration, or any other notice or declaration of any kind, all of which are
hereby expressly waived by each Borrower and each Guarantor who at any time
ratifies or approves this Agreement. Upon any such acceleration, any obligation
of any Lender to make any further Loans and any obligation of LC Issuer to
issue Letters of Credit hereunder shall be permanently terminated. During the
continuance of any other Event of Default, Agent at any time and from time to
time may (and upon written instructions from Required Lenders, Agent shall),
without notice to Borrowers or any Guarantor, do either or both of the
following: (1) terminate any obligation of Lenders to make Loans hereunder and
any obligation of LC Issuer to issue Letters of Credit hereunder, and (2)
declare any or all of the Obligations immediately due and payable, and all such
Obligations shall thereupon be immediately due and payable, without demand,
presentment, notice of demand or of dishonor and nonpayment, protest, notice of
protest, notice of intention to accelerate, declaration or notice of
acceleration, or any other notice or declaration of any kind, all of which are
hereby expressly waived by Borrowers and each Guarantor who at any time
ratifies or approves this Agreement.
Section 8.2. Remedies. If any Event of Default shall occur and be
continuing, each Lender Party may protect and enforce its rights under the Loan
Documents by any appropriate proceedings, including proceedings for specific
performance of any covenant or agreement contained in any Loan Document, and
each Lender Party may enforce the payment of any Obligations due it or enforce
any other legal or equitable right which it may have. All rights, remedies and
powers conferred upon Lender Parties under the Loan Documents shall be deemed
cumulative and not exclusive of any other rights, remedies or powers available
under the Loan Documents or at law or in equity.
ARTICLE IX - Agent
Section 9.1. Appointment and Authority. Each Lender Party hereby
irrevocably authorizes Agent, and Agent hereby undertakes, to receive payments
of principal, interest and other amounts due hereunder as specified herein and
to take all other actions and to exercise such powers under the Loan Documents
as are specifically delegated to Agent by the terms hereof or thereof, together
with all other powers reasonably incidental thereto. The relationship of Agent
to the other Lender Parties is only that of one commercial lender acting as
administrative agent for others, and nothing in the Loan Documents shall be
construed to constitute Agent a trustee or other fiduciary for any holder of
any of the Notes or of any participation therein nor to impose on Agent duties
and obligations other than those expressly provided for in the Loan Documents.
With respect to any matters not expressly provided for in the Loan Documents
and any matters which the Loan Documents place within the discretion of Agent,
Agent shall not be required to exercise any discretion or take any action, and
it may request instructions from Lenders with respect to any such matter, in
which case it shall be required to act or to refrain from acting (and shall be
fully protected and free from liability to all Lenders in so acting or
refraining from acting) upon the instructions of Required Lenders (including
itself), provided, however, that
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Agent shall not be required to take any action which exposes it to a risk of
personal liability that it considers unreasonable or which is contrary to the
Loan Documents or to applicable Law. Upon receipt by Agent from Borrowers of
any communication calling for action on the part of Lenders or upon notice from
any other Lender Party to Agent of any Default or Event of Default, Agent shall
promptly notify each other Lender Party thereof.
Section 9.2. Exculpation, Agent's Reliance, Etc. Neither Agent nor any
of its directors, officers, agents, attorneys, or employees shall be liable for
any action taken or omitted to be taken by any of them under or in connection
with the Loan Documents, INCLUDING THEIR NEGLIGENCE OF ANY KIND, except that
each shall be liable for its own gross negligence or willful misconduct.
Without limiting the generality of the foregoing, Agent (a) may treat the payee
of any Note as the holder thereof until Agent receives written notice of the
assignment or transfer thereof in accordance with this Agreement, signed by
such payee and in form satisfactory to Agent; (b) may consult with legal
counsel (including counsel for Borrowers), independent public accountants and
other experts selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants or experts; (c) makes no warranty or representation to any
other Lender Party and shall not be responsible to any other Lender Party for
any statements, warranties or representations made in or in connection with the
Loan Documents; (d) shall not have any duty to ascertain or to inquire as to
the performance or observance of any of the terms, covenants or conditions of
the Loan Documents on the part of any Related Person or to inspect the property
(including the books and records) of any Related Person; (e) shall not be
responsible to any other Lender Party for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of any Loan
Document or any instrument or document furnished in connection therewith; (f)
may rely upon the representations and warranties of each Related Person and the
Lenders in exercising its powers hereunder; and (g) shall incur no liability
under or in respect of the Loan Documents by acting upon any notice, consent,
certificate or other instrument or writing (including any facsimile, telegram,
cable or telex) believed by it to be genuine and signed or sent by the proper
Person or Persons.
Section 9.3. Credit Decisions. Each Lender Party acknowledges that it
has, independently and without reliance upon any other Lender Party, made its
own analysis of Borrowers and the transactions contemplated hereby and its own
independent decision to enter into this Agreement and the other Loan Documents.
Each Lender Party also acknowledges that it will, independently and without
reliance upon any other Lender Party and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Loan Documents.
Section 9.4. Indemnification. Each Lender agrees to indemnify Agent
(to the extent not reimbursed by Borrowers within ten (10) days after demand)
from and against such Lender's Percentage Share of any and all liabilities,
obligations, claims, losses, damages, penalties, fines, actions, judgments,
suits, settlements, costs, expenses or disbursements (including reasonable fees
of attorneys, accountants, experts and advisors) of any kind or nature
whatsoever (in this section collectively called "liabilities and costs") which
to any extent (in whole or in part) may be imposed on, incurred by, or asserted
against Agent growing out of, resulting from or in any other way associated
with any of the Collateral, the Loan Documents and the transactions and events
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(including the enforcement thereof) at any time associated therewith or
contemplated therein (whether arising in contract or in tort or otherwise and
including any violation or noncompliance with any Environmental Laws by any
Person or any liabilities or duties of any Person with respect to Hazardous
Materials found in or released into the environment).
THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND
COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY
CLAIM OR THEORY OF STRICT LIABILITY, OR ARE CAUSED, IN WHOLE OR IN PART, BY ANY
NEGLIGENT ACT OR OMISSION OF ANY KIND BY AGENT,
provided only that no Lender shall be obligated under this section to indemnify
Agent for that portion, if any, of any liabilities and costs which is
proximately caused by Agent's own individual gross negligence or willful
misconduct, as determined in a final judgment. Cumulative of the foregoing,
each Lender agrees to reimburse Agent promptly upon demand for such Lender's
Percentage Share of any costs and expenses to be paid to Agent by Borrowers
under Section 10.4(a) to the extent that Agent is not timely reimbursed for
such expenses by Borrowers as provided in such section. As used in this section
the term "Agent" shall refer not only to the Person designated as such in
Section 1.1 but also to each director, officer, agent, attorney, employee,
representative and Affiliate of such Person.
Section 9.5. Rights as Lender. In its capacity as a Lender, Agent
shall have the same rights and obligations as any Lender and may exercise such
rights as though it were not Agent. Agent may accept deposits from, lend money
to, act as Trustee under indentures of, and generally engage in any kind of
business with any Related Person or their Affiliates, all as if it were not
Agent hereunder and without any duty to account therefor to any other Lender.
Section 9.6. Sharing of Set-Offs and Other Payments. Each Lender Party
agrees that if it shall, whether through the exercise of rights under Security
Documents or rights of banker's lien, set off, or counterclaim against Any
Related Person or otherwise, obtain payment of a portion of the aggregate
Obligations owed to it which, taking into account all distributions made by
Agent under Section 3.1, causes such Lender Party to have received more than it
would have received had such payment been received by Agent and distributed
pursuant to Section 3.1, then (a) it shall be deemed to have simultaneously
purchased and shall be obligated to purchase interests in the Obligations as
necessary to cause all Lender Parties to share all payments as provided for in
Section 3.1, and (b) such other adjustments shall be made from time to time as
shall be equitable to ensure that Agent and all Lenders share all payments of
Obligations as provided in Section 3.1; provided, however, that nothing herein
contained shall in any way affect the right of any Lender Party to obtain
payment (whether by exercise of rights of banker's lien, set-off or
counterclaim or otherwise) of indebtedness other than the Obligations. Parent
and each Borrower expressly consents to the foregoing arrangements and agrees
that any holder of any such interest or other participation in the Obligations,
whether or not acquired pursuant to the foregoing arrangements, may to the
fullest extent permitted by Law exercise any and all rights of banker's lien,
set-off, or counterclaim as fully as if such holder were a holder of the
Obligations in the amount of such interest or other participation. If all or
any part of any funds transferred pursuant to this section is thereafter
recovered from the seller under this section which received the same, the
purchase provided for in this section shall be deemed to have been rescinded to
the
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extent of such recovery, together with interest, if any, if interest is
required pursuant to the order of a Tribunal to be paid on account of the
possession of such funds prior to such recovery.
Section 9.7. Investments. Whenever Agent in good faith determines that
it is uncertain about how to distribute to Lenders any funds which it has
received, or whenever Agent in good faith determines that there is any dispute
among Lenders about how such funds should be distributed, Agent may choose to
defer distribution of the funds which are the subject of such uncertainty or
dispute. If Agent in good faith believes that the uncertainty or dispute will
not be promptly resolved, or if Agent is otherwise required to invest funds
pending distribution to Lenders, Agent shall invest such funds pending
distribution; all interest on any such investment shall be distributed upon the
distribution of such investment and in the same proportion and to the same
Persons as such investment. All moneys received by Agent for distribution to
Lenders (other than to the Person who is Agent in its separate capacity as a
Lender) shall be held by Agent pending such distribution solely as Agent for
such Lenders, and Agent shall have no equitable title to any portion thereof.
Section 9.8. Benefit of Article IX. The provisions of this Article
(other than the following Section 9.9) are intended solely for the benefit of
Lender Parties, and no Related Person shall be entitled to rely on any such
provision or assert any such provision in a claim or defense against any Lender
Party. Lender Parties may waive or amend such provisions as they desire without
any notice to or consent of Borrowers or any Related Person.
Section 9.9. Resignation. Agent may resign at any time by giving
written notice thereof to Lenders and Borrowers. Each such notice shall set
forth the date of such resignation. Upon any such resignation, Required Lenders
shall have the right to appoint a successor Agent, subject, so long as no Event
of Default has occurred and is continuing, to the approval of Borrowers, which
approval will not be unreasonably withheld. A successor must be appointed for
any retiring Agent, and such Agent's resignation shall become effective when
such successor accepts such appointment. If, within thirty days after the date
of the retiring Agent's resignation, no successor Agent has been appointed and
has accepted such appointment, then the retiring Agent may appoint a successor
Agent, which shall be a commercial bank organized or licensed to conduct a
banking or trust business under the Laws of the United States of America or of
any state thereof. Upon the acceptance of any appointment as Agent hereunder by
a successor Agent, the retiring Agent shall be discharged from its duties and
obligations under this Agreement and the other Loan Documents. After any
retiring Agent's resignation hereunder the provisions of this Article IX shall
continue to inure to its benefit as to any actions taken or omitted to be taken
by it while it was Agent under the Loan Documents.
ARTICLE X - Miscellaneous
Section 10.1. Waivers and Amendments; Acknowledgments.
(a) Waivers and Amendments. No failure or delay (whether by course of
conduct or otherwise) by any Lender Party in exercising any right, power or
remedy which such Lender Party may have under any of the Loan Documents shall
operate as a waiver thereof or of any
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other right, power or remedy, nor shall any single or partial exercise by any
Lender Party of any such right, power or remedy preclude any other or further
exercise thereof or of any other right, power or remedy. No waiver of any
provision of any Loan Document and no consent to any departure therefrom shall
ever be effective unless it is in writing and signed as provided below in this
section, and then such waiver or consent shall be effective only in the
specific instances and for the purposes for which given and to the extent
specified in such writing. No notice to or demand on any Related Person shall
in any case of itself entitle any Related Person to any other or further notice
or demand in similar or other circumstances. This Agreement and the other Loan
Documents set forth the entire understanding between the parties hereto with
respect to the transactions contemplated herein and therein and supersede all
prior discussions and understandings with respect to the subject matter hereof
and thereof. Neither this Agreement nor any other Loan Document, nor any terms
hereof or thereof, may be amended, supplemented or modified except in
accordance with the provisions of this Section. The Required Lenders may, or,
with the written consent of the Required Lenders, the Agent shall (which
consent has already been given as to the termination of the Loan Documents as
provided in Section 10.9), from time to time, (x) enter into with the
Borrowers, written amendments, supplements or modifications hereto and to the
other Loan Documents or changing in any manner the rights or obligations of the
Lenders or the Borrowers hereunder or thereunder or (y) waive at the Borrowers'
request, on such terms and conditions as the Required Lenders or the Agent, as
the case may be, may specify in such instrument, any of the requirements of
this Agreement or the other Loan Documents or any Default and its consequences;
provided, however, that no such waiver and no such amendment, supplement or
modification shall:
(i) reduce the amount or extend the scheduled date of maturity
of any Loan or any Matured LC Obligation or of any scheduled
installment thereof or reduce the stated rate of any interest or fee
payable hereunder or extend the scheduled date of any payment thereof
or modify any provision that provides for the ratable sharing by the
Lenders of any payment or prepayment of the Obligations to provide
for a non-ratable sharing thereof or increase the Maximum Loan Amount
or extend the Commitment Period, in each case without the prior
written consent of each Lender directly affected thereby;
(ii) increase the Borrowing Base, change the currency in which
any Loan or LC Obligation is payable or amend, modify or waive any
provision of this Section 10.1 or reduce the percentage specified in
the definition of Required Lenders, in each case without the written
consent of all of the Lenders;
(iii) release any Guarantor from its guarantee obligations, or
all or substantially all of the Collateral, without the written
consent of all of the Lenders, except as expressly permitted hereby,
provided, that the Agent shall and may release (without consent from
the Lenders) any Collateral sold, transferred or otherwise disposed
of as permitted by Section 7.4;
(iv) amend, modify or waive any provision of Article 9 without
the written consent of the Agent; or
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(v) amend, modify or waive any LC Obligation without the written
consent of the LC Issuer, or in the case of Supplemental Letters of
Credit of BankBoston, N.A., or any Letter of Credit other than a
Supplement Letter of Credit without the consent of each Lender if
such Letter of Credit, after giving effect to such amendment,
modification or waiver, would no longer satisfy the requirements
hereof if such Letter of Credit was being issued ab initio at such
time; provided, that in all other cases, only the consent of the LC
Issuer shall be required to amend, modify or waive any Letter of
Credit other than a Supplemental Letter of Credit, and in the case of
a Supplemental Letter of Credit, only the consent of BankBoston, N.A.
shall be so required.
Any waiver and any amendment, supplement or modification pursuant to this
Section 10.1 shall apply to each of the Lenders and shall be binding upon the
Borrowers, the Lenders, the Agent and all future holders of the Loans. In the
case of any waiver, the Borrowers, the Lenders, the Agent, the LC Issuer and
BankBoston, N.A. shall be restored to their former position and rights
hereunder and under the other Loan Documents, and any Default waived shall be
deemed to be cured and not continuing; but no such waiver shall extend to any
subsequent or other Default, or impair any right consequent thereon.
(b) Acknowledgments and Admissions. Each Borrower hereby represents,
warrants, acknowledges and admits that (i) it has been advised by counsel in
the negotiation, execution and delivery of the Loan Documents to which it is a
party, (ii) it has made an independent decision to enter into this Agreement
and the other Loan Documents to which it is a party, without reliance on any
representation, warranty, covenant or undertaking by Agent or any Lender,
whether written, oral or implicit, other than as expressly set out in this
Agreement or in another Loan Document delivered on or after the date hereof,
(iii) there are no representations, warranties, covenants, undertakings or
agreements by any Lender Party as to the Loan Documents except as expressly set
out in this Agreement or in another Loan Document delivered on or after the
date hereof, (iv) no Lender Party has any fiduciary obligation toward Borrowers
with respect to any Loan Document or the transactions contemplated thereby, (v)
the relationship pursuant to the Loan Documents between each Related Person, on
one hand, and each Lender Party, on the other hand, is and shall be solely that
of debtor and creditor, respectively, (vi) no partnership or joint venture
exists with respect to the Loan Documents between any Related Person and any
Lender Party, (vii) Agent is not Borrowers' Agent, but Agent for Lenders,
(viii) should an Event of Default or Default occur or exist, each Lender Party
will determine in its sole discretion and for its own reasons what remedies and
actions it will or will not exercise or take at that time, (ix) without
limiting any of the foregoing, no Related Person is relying upon any
representation or covenant by any Lender Party, or any representative thereof,
and no such representation or covenant has been made, that any Lender Party
will, at the time of an Event of Default or Default, or at any other time,
waive, negotiate, discuss, or take or refrain from taking any action permitted
under the Loan Documents with respect to any such Event of Default or Default
or any other provision of the Loan Documents, and (x) all Lender Parties have
relied upon the truthfulness of the acknowledgments in this section in deciding
to execute and deliver this Agreement and to become obligated hereunder.
(c) Representation by Lenders. Each Lender hereby represents that it
will acquire its Note for its own account in the ordinary course of its
commercial lending business; however, the
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disposition of such Lender's property shall at all times be and remain within
its control and, in particular and without limitation, such Lender may sell or
otherwise transfer its Note, any participation interest or other interest in
its Note, or any of its other rights and obligations under the Loan Documents,
subject, however, to the provisions of Section 10.5.
(d) Joint Acknowledgment. THIS WRITTEN AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Section 10.2. Survival of Agreements; Cumulative Nature. All of
Related Persons' various representations, warranties, covenants and agreements
in the Loan Documents shall survive the execution and delivery of this
Agreement and the other Loan Documents and the performance hereof and thereof,
including the making or granting of the Loans and the delivery of the Notes and
the other Loan Documents, and shall further survive until all of the
Obligations are paid in full to each Lender Party and all of Lender Parties'
obligations to Borrowers are terminated. All statements and agreements
contained in any certificate or other instrument delivered by any Related
Person to any Lender Party under any Loan Document shall be deemed
representations and warranties by Borrowers or agreements and covenants of
Borrowers under this Agreement. The representations, warranties, indemnities,
and covenants made by Related Persons in the Loan Documents, and the rights,
powers, and privileges granted to Lender Parties in the Loan Documents, are
cumulative, and, except for expressly specified waivers and consents, no Loan
Document shall be construed in the context of another to diminish, nullify, or
otherwise reduce the benefit to any Lender Party of any such representation,
warranty, indemnity, covenant, right, power or privilege. In particular and
without limitation, no exception set out in this Agreement to any
representation, warranty, indemnity, or covenant herein contained shall apply
to any similar representation, warranty, indemnity, or covenant contained in
any other Loan Document, and each such similar representation, warranty,
indemnity, or covenant shall be subject only to those exceptions which are
expressly made applicable to it by the terms of the various Loan Documents.
Section 10.3. Notices. All notices, requests, consents, demands and
other communications required or permitted under any Loan Document shall be in
writing, unless otherwise specifically provided in such Loan Document (provided
that Agent may give telephonic notices to the other Lender Parties), and shall
be deemed sufficiently given or furnished if delivered by personal delivery, by
facsimile or other electronic transmission, by delivery service with proof of
delivery, or by registered or certified United States mail, postage prepaid, to
Borrowers and Related Persons at the address of Vista specified on the
signature pages hereto and to each Lender Party at its address specified on the
signature pages hereto (unless changed by similar notice in writing given by
the particular Person whose address is to be changed). Any such notice or
communication shall be deemed to have been given (a) in the case of personal
delivery or delivery service, as of the date of first attempted delivery during
normal business hours at the address provided herein, (b) in the case of
facsimile or other electronic transmission, upon receipt, or (c) in the case of
registered or certified United States mail, three
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days after deposit in the mail; provided, however, that no Borrowing Notice
shall become effective until actually received by Agent.
Section 10.4. Payment of Expenses; Indemnity.
(a) Payment of Expenses. Whether or not the transactions contemplated
by this Agreement are consummated, Borrowers will promptly (and in any event,
within 30 days after any invoice or other statement or notice) pay all
reasonable costs and expenses incurred by or on behalf of Agent (including
attorneys' fees, consultants' fees and engineering fees, travel costs and
miscellaneous expenses) in connection with (1) the negotiation, preparation,
execution and delivery of the Loan Documents, and any and all consents, waivers
or other documents or instruments relating thereto, (2) the filing, recording,
refiling and re-recording of any Loan Documents and any other documents or
instruments or further assurances required to be filed or recorded or refiled
or re-recorded by the terms of any Loan Document, (3) the borrowings hereunder
and other action reasonably required in the course of administration hereof,
(4) monitoring or confirming (or preparation or negotiation of any document
related to) Borrowers' compliance with any covenants or conditions contained in
this Agreement or in any Loan Document, and (i) all reasonable costs and
expenses incurred by or on behalf of any Lender Party (including attorneys'
fees, consultants' fees and accounting fees) in connection with the defense or
enforcement of any of the Loan Documents (including this section) or the
defense of any Lender Party' exercise of its rights thereunder. In addition to
the foregoing, until and all Obligations have been paid in full, Borrowers will
also pay or reimburse Agent for all reasonable out-of-pocket costs and expenses
of Agent or its agents or employees in connection with the continuing
administration of the Loans and the related due diligence of Agent, including
travel and miscellaneous expenses and fees and expenses of Agent's outside
counsel, reserve engineers and consultants engaged in connection with the Loan
Documents.
(b) Indemnity. Borrowers agree to indemnify each Lender Party, upon
demand, from and against any and all liabilities, obligations, claims, losses,
damages, penalties, fines, actions, judgments, suits, settlements, costs,
expenses or disbursements (including reasonable fees of attorneys, accountants,
experts and advisors) of any kind or nature whatsoever (in this section
collectively called "liabilities and costs") which to any extent (in whole or
in part) may be imposed on, incurred by, or asserted against such Lender Party
growing out of, resulting from or in any other way associated with any of the
Collateral, the Loan Documents and the transactions and events (including the
enforcement or defense thereof) at any time associated therewith or
contemplated therein (whether arising in contract or in tort or otherwise and
including any violation or noncompliance with any Environmental Laws by any
Related Person or any liabilities or duties of any Related Person or any Lender
Party with respect to Hazardous Materials found in or released into the
environment).
THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND
COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY
CLAIM OR THEORY OF STRICT LIABILITY, OR ARE CAUSED, IN WHOLE OR IN PART, BY ANY
NEGLIGENT ACT OR OMISSION BY ANY LENDER PARTY,
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provided only that no Lender Party shall be entitled under this section to
receive indemnification for that portion, if any, of any liabilities and costs
which is proximately caused by its own individual gross negligence or willful
misconduct, as determined by a court of competent jurisdiction. If any Person
(including Any Related Person or any of its Affiliates) ever alleges such gross
negligence or willful misconduct by any Lender Party, the indemnification
provided for in this section shall nonetheless be paid upon demand, subject to
later adjustment or reimbursement, until such time as a court of competent
jurisdiction enters a judgment as to the extent and effect of the alleged gross
negligence or willful misconduct. As used in this section the term "Lender
Party" shall refer not only to the Persons designated as such in Section 1.1
but also to each director, officer, agent, attorney, employee, representative
and Affiliate of such Persons.
Section 10.5. Joint and Several Liability; Parties in Interest;
Assignments. All Obligations which are incurred by two or more Related Persons
shall be their joint and several obligations and liabilities. All grants,
covenants and agreements contained in the Loan Documents shall bind and inure
to the benefit of the parties thereto and their respective successors and
assigns; provided, however, that no Related Person may assign or transfer any
of its rights or delegate any of its duties or obligations under any Loan
Document without the prior consent of all of the Lenders. Neither of Borrowers
nor any Affiliates of Borrowers shall directly or indirectly purchase or
otherwise retire any Obligations owed to any Lender nor will any Lender accept
any offer to do so, unless each Lender shall have received substantially the
same offer with respect to the same Percentage Share of the Obligations owed to
it. If Any Related Person or any Affiliate of Any Related Person at any time
purchases some but less than all of the Obligations owed to all Lender Parties,
such purchaser shall not be entitled to any rights of any Lender Party under
the Loan Documents unless and until Any Related Person or its Affiliates have
purchased all of the Obligations.
(b) No Lender shall sell any participation interest in its commitment
hereunder or any of its rights under its Loans or under the Loan Documents to
any Person only if the agreement between such Lender and such participant at
all times provides: (i) that such participation exists only as a result of the
agreement between such participant and such Lender and that such transfer does
not give such participant any right to vote as a Lender or any other direct
claims or rights against any Person other than such Lender, (ii) that such
participant is not entitled to payment from any Borrower or Guarantor under
Sections 3.2 through 3.7 of amounts in excess of those payable to such Lender
under such sections (determined without regard to the sale of such
participation), and (iii) unless such participant is an Affiliate of such
Lender, that such participant shall not be entitled to require such Lender to
take any action under any Loan Document or to obtain the consent of such
participant prior to taking any action under any Loan Document, except for
actions which would require the consent of all such Lenders of subsections (a)
(i), (ii) and (iii) of Section 10.1. No Lender selling such a participation
shall, as between the other parties hereto and such Lender, be relieved of any
of its obligations hereunder as a result of the sale of such participation.
Each Lender which sells any such participation to any Person (other than an
Affiliate of such Lender) shall give prompt notice thereof to Agent and
Borrowers.
(c) Except for sales of participations under the immediately preceding
subsection (b), no Lender shall make any assignment or transfer of any kind of
its commitments or any of its
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rights under its Loans or under the Loan Documents, except for assignments to
an Eligible Transferee, and then only if such assignment is made in accordance
with the following requirements:
(i) Each such assignment shall apply to all Obligations owing to
the assignor Lender hereunder and to the unused portion of the
assignor Lender's commitments, so that after such assignment is made
the assignor Lender shall have a fixed (and not a varying) Percentage
Share in its Loans and Note and be committed to make that Percentage
Share of all future Loans, the assignee shall have a fixed Percentage
Share in such Loans and Note and be committed to make that Percentage
Share of all future Loans, and the Percentage Share of the Maximum
Loan Amount of both the assignor and assignee shall equal or exceed
$5,000,000.
(ii) The parties to each such assignment shall execute and
deliver to Agent, for its acceptance and recording in the "Register"
(as defined below in this section), an Assignment and Acceptance in
the form of Exhibit G, appropriately completed, together with the
Note subject to such assignment and a processing fee payable to Agent
of $3,500. Upon such execution, delivery, and payment and upon the
satisfaction of the conditions set out in such Assignment and
Acceptance, then (i) Borrowers shall issue new Notes to such assignor
and assignee upon return of the old Notes to Borrowers, and (ii) as
of the "Settlement Date" specified in such Assignment and Acceptance
the assignee thereunder shall be a party hereto and a Lender
hereunder and Agent shall thereupon deliver to Borrowers and each
Lender a schedule showing the revised Percentage Shares of such
assignor Lender and such assignee Lender and the Percentage Shares of
all other Lenders.
(iii) Each assignee Lender which is not a United States person
(as such term is defined in Section 7701(a)(30) of the Internal
Revenue Code of 1986, as amended) for Federal income tax purposes,
shall (to the extent it has not already done so) provide Agent and
Borrowers with the "Prescribed Forms" referred to in Section 3.6(d).
(d) Nothing contained in this section shall prevent or prohibit any
Lender from assigning or pledging all or any portion of its Loans and Note to
any Federal Reserve Bank as collateral security pursuant to Regulation A of the
Board of Governors of the Federal Reserve System and any Operating Circular
issued by such Federal Reserve Bank; provided that no such assignment or pledge
shall relieve such Lender from its obligations hereunder.
(e) By executing and delivering an Assignment and Acceptance, each
assignee Lender thereunder will be confirming to and agreeing with Borrowers,
Agent and each other Lender hereunder that such assignee understands and agrees
to the terms hereof, including Article IX hereof.
(f) Agent shall maintain a copy of each Assignment and Acceptance and
a register for the recordation of the names and addresses of Lenders and the
Percentage Shares of, and principal amount of the Loans owing to, each Lender
from time to time (in this section called the
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"Register"). The entries in the Register shall be conclusive, in the absence of
manifest error, and Borrowers and each Lender Party may treat each Person whose
name is recorded in the Register as a Lender hereunder for all purposes. The
Register shall be available for inspection by Borrowers or any Lender Party at
any reasonable time and from time to time upon reasonable prior notice.
Section 10.6. Confidentiality. Each Lender Party agrees that it will
take all reasonable steps to keep confidential any proprietary information
given to it by any Related Person, provided, however, that this restriction
shall not apply to a disclosure (i) of information which has at the time in
question entered the public domain, (ii) required by Law (whether valid or
invalid) or any Tribunal, (iii) to any Lender Party' Affiliates, auditors,
attorneys, or agents, (iv) to any other Lender Party, (v) to any purchaser or
prospective purchaser of participations or other interests in any Loan or Loan
Document in a manner which conspicuously states that the disclosure contains
confidential or proprietary information, or (vi) in the course of enforcing its
rights and remedies during the existence of an Event of Default.
Section 10.7. Governing Law; Submission to Process.
EXCEPT TO THE EXTENT THAT THE LAW OF ANOTHER JURISDICTION IS EXPRESSLY ELECTED
IN A LOAN DOCUMENT, THE LOAN DOCUMENTS SHALL BE DEEMED CONTRACTS AND
INSTRUMENTS MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK AND THE LAWS OF THE UNITED STATES OF AMERICA. EACH BORROWER AND EACH
GUARANTOR HEREBY IRREVOCABLY SUBMITS ITSELF TO THE JURISDICTION OF THE STATE
AND FEDERAL COURTS SITTING IN THE STATE OF NEW YORK AND AGREES AND CONSENTS
THAT SERVICE OF PROCESS MAY BE MADE UPON IT IN ANY LEGAL PROCEEDING RELATING TO
THE LOAN DOCUMENTS OR THE OBLIGATIONS BY ANY MEANS ALLOWED UNDER NEW YORK OR
FEDERAL LAW. ANY LEGAL PROCEEDING ARISING OUT OF OR IN ANY WAY RELATED TO ANY
OF THE LOAN DOCUMENTS SHALL BE BROUGHT AND LITIGATED EXCLUSIVELY IN THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, TO THE EXTENT IT
HAS SUBJECT MATTER JURISDICTION, AND OTHERWISE IN THE NEW YORK STATE COURT
SITTING IN NEW YORK CITY. THE PARTIES HERETO HEREBY WAIVE AND AGREE NOT TO
ASSERT, BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, THAT ANY SUCH PROCEEDING
IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE THEREOF IS IMPROPER, AND
FURTHER AGREE TO A TRANSFER OF ANY SUCH PROCEEDING TO A FEDERAL COURT SITTING
IN THE STATE OF NEW YORK TO THE EXTENT THAT IT HAS SUBJECT MATTER JURISDICTION,
AND OTHERWISE TO A NEW YORK STATE COURT IN NEW YORK CITY. IN FURTHERANCE
THEREOF, BORROWERS AND LENDER PARTY EACH HEREBY ACKNOWLEDGE AND AGREE THAT IT
WILL BE NEITHER INCONVENIENT NOR UNFAIR TO LITIGATE OR OTHERWISE RESOLVE ANY
DISPUTES OR CLAIMS IN A COURT SITTING IN SUCH JURISDICTION.
Section 10.8. Limitation on Interest.
Lender Party, Borrowers, Guarantors and any other parties to the Loan Documents
intend to contract in strict compliance with applicable usury Law from time to
time in effect. In
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furtherance thereof such Persons stipulate and agree that none of the terms and
provisions contained in the Loan Documents shall ever be construed to create a
contract to pay, for the use, forbearance or detention of money, interest in
excess of the maximum amount of interest permitted to be charged by applicable
Law from time to time in effect. Neither any Borrower or Guarantors nor any
present or future guarantors, endorsers, or other Persons hereafter becoming
liable for payment of any Obligation shall ever be liable for unearned interest
thereon or shall ever be required to pay interest thereon in excess of the
maximum amount that may be lawfully charged under applicable Law from time to
time in effect, and the provisions of this section shall control over all other
provisions of the Loan Documents which may be in conflict or apparent conflict
herewith. Lender Party expressly disavow any intention to charge or collect
excessive unearned interest or finance charges in the event the maturity of any
Obligation is accelerated. If (a) the maturity of any Obligation is accelerated
for any reason, (b) any Obligation is prepaid and as a result any amounts held
to constitute interest are determined to be in excess of the legal maximum, or
(c) any Lender Party or any other holder of any or all of the Obligations shall
otherwise collect moneys which are determined to constitute interest which
would otherwise increase the interest on any or all of the Obligations to an
amount in excess of that permitted to be charged by applicable Law then in
effect, then all sums determined to constitute interest in excess of such legal
limit shall, without penalty, be promptly applied to reduce the then
outstanding principal of the related Obligations or, at such Lender Party' or
holder's option, promptly returned to Borrowers or the other payor thereof upon
such determination. In determining whether or not the interest paid or payable,
under any specific circumstance, exceeds the maximum amount permitted under
applicable Law, Lender Parties and Borrowers and Guarantors (and any other
payors thereof) shall to the greatest extent permitted under applicable Law,
(i) characterize any non-principal payment as an expense, fee or premium rather
than as interest, (ii) exclude voluntary prepayments and the effects thereof,
and (iii) amortize, prorate, allocate, and spread the total amount of interest
throughout the entire contemplated term of the instruments evidencing the
Obligations in accordance with the amounts outstanding from time to time
thereunder and the maximum legal rate of interest from time to time in effect
under applicable Law in order to lawfully charge the maximum amount of interest
permitted under applicable Law.
Section 10.9. Termination; Limited Survival. In their sole and
absolute discretion Borrowers may jointly at any time that no Obligations are
owing elect in a written notice delivered to Agent to terminate this Agreement.
Upon receipt by Agent of such a notice, if no Obligations are then owing, this
Agreement and all other Loan Documents shall thereupon be terminated and the
parties thereto released from all prospective obligations thereunder.
Notwithstanding the foregoing or anything herein to the contrary, any waivers
or admissions made by any Related Person in any Loan Document, any Obligations
under Sections 3.2 through 3.6, and any obligations which any Person may have
to indemnify or compensate any Lender Party shall survive any termination of
this Agreement or any other Loan Document. At the request and expense of
Borrowers, Agent shall prepare and execute all necessary instruments to reflect
and effect such termination of the Loan Documents. Agent is hereby authorized
to execute all such instruments on behalf of all Lenders, without the joinder
of or further action by any Lender.
70
76
Section 10.10. Severability. If any term or provision of any Loan
Document shall be determined to be illegal or unenforceable all other terms and
provisions of the Loan Documents shall nevertheless remain effective and shall
be enforced to the fullest extent permitted by applicable Law.
Section 10.11. Counterparts. This Agreement may be separately executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to constitute one
and the same Agreement.
Section 10.12. Waiver of Jury Trial, Punitive Damages, etc.
BORROWERS AND EACH LENDER PARTY HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY,
AND IRREVOCABLY (A) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON,
OR DIRECTLY OR INDIRECTLY AT ANY TIME ARISING OUT OF, UNDER OR IN CONNECTION
WITH THE LOAN DOCUMENTS OR ANY TRANSACTION CONTEMPLATED THEREBY OR ASSOCIATED
THEREWITH, BEFORE OR AFTER MATURITY; (B) WAIVES, TO THE MAXIMUM EXTENT NOT
PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH
LITIGATION ANY "SPECIAL DAMAGES", AS DEFINED BELOW, (C) CERTIFIES THAT NO PARTY
HERETO NOR ANY REPRESENTATIVE OR AGENT OR COUNSEL FOR ANY PARTY HERETO HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (D)
ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE OTHER
LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION.
AS USED IN THIS SECTION, "SPECIAL DAMAGES" INCLUDES ALL SPECIAL, CONSEQUENTIAL,
EXEMPLARY, OR PUNITIVE DAMAGES (REGARDLESS OF HOW NAMED), BUT DOES NOT INCLUDE
ANY PAYMENTS OR FUNDS WHICH ANY PARTY HERETO HAS EXPRESSLY PROMISED TO PAY OR
DELIVER TO ANY OTHER PARTY HERETO.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
71
77
IN WITNESS WHEREOF, this Agreement is executed as of the date first
written above.
VISTA RESOURCES PARTNERS, L.P.
By: Vista Resources I, Inc.,
its General Partner
By: /s/ C. RANDALL HILL
----------------------------------
C. Randall Hill
Chief Executive Officer
Address:
550 West Texas Avenue
Suite 700
Midland, Texas 79701
Attention: C. Randall Hill
Telephone: (915) 570-5045
Telecopy: (915) 688-0589
MIDLAND RESOURCES, INC.
By: /s/ C. RANDALL HILL
--------------------------------------
C. Randall Hill
Chief Executive Officer
Address:
550 West Texas Avenue
Suite 700
Midland, Texas 79701
Attention: C. Randall Hill
Telephone: (915) 570-5045
Telecopy: (915) 688-0589
78
VISTA ENERGY RESOURCES, INC.
By: /s/ C. RANDALL HILL
--------------------------------------
C. Randall Hill
Chief Executive Officer
Address:
550 West Texas Avenue
Suite 700
Midland, Texas 79701
Attention: C. Randall Hill
Telephone: (915) 570-5045
Telecopy: (915) 688-0589
79
BANKBOSTON, N.A., as Administrative Agent,
LC Issuer and Lender
By: /s/ GEORGE W. PASSELA
--------------------------------------
George W. Passela
Managing Director
Address:
100 Federal Street
Boston, Massachusetts 02110
Attention: Allison Rossi
Mail Code: 01-08-04
Telephone: (617) 434-9061
Telecopy: (617) 434-3652
80
SCHEDULE 1
DISCLOSURE SCHEDULE
To supplement the following sections of the Agreement of which this
Schedule is a part, Parent and Borrowers hereby make the following disclosures:
1. Initial Financial Statements:
2. Other Obligations:
3. Litigation:
4. ERISA Liabilities:
5. Names and Places of Business:
6. Parent Subsidiaries and Stockholdings:
81
SCHEDULE 2
SECURITY SCHEDULE
1. Deed of Trust, Mortgage, Line of Credit Mortgage, Assignment, Fixture
Filing and Financing Statement from Vista in favor of Agent (the
"Mortgage").
2. Deed of Trust, Mortgage, Line of Credit Mortgage, Assignment, Fixture
Filing and Financing Statement from Midland in favor of Agent (the
"Mortgage").
3. Guaranty of Parent.
4. Guaranty of Vista LLC (the "Limited Partner"), General Partner, and Vista
Resources, Inc. dated as of December __, 1998.
5. Pledge Agreement of Parent (the "Parent Pledge").
6. Pledge Agreement of the Limited Partner and General Partner (the
"Partnership Pledge").
7. UCC-1 Financing Statement relating to the Vista Mortgage.
8. UCC-1 Financing Statement relating to the Midland Mortgage.
9. UCC-1 Financing Statement relating to the Parent Pledge.
10. UCC-1 Financing Statements relating to the Partnership Pledge.
82
SCHEDULE 3
INSURANCE SCHEDULE
83
SCHEDULE 4
EXISTING INVESTMENTS
84
EXHIBIT A
PROMISSORY NOTE
$_________________ New York, New York December ___, 1998
FOR VALUE RECEIVED, the undersigned, Vista Resources Partners, L.P., a
Texas limited partnership ("Vista"), and Midland Resources, Inc., a Texas
corporation ("Midland"; Vista and Midland are collectively referred to herein
as "Borrowers"), hereby promise to pay to the order of _______________________,
(herein called "Lender"), the principal sum of _______________________________
Dollars ($ __________), or, if greater or less, the aggregate unpaid principal
amount of the Loan made under this Note by Lender to Borrowers pursuant to the
terms of the Credit Agreement (as hereinafter defined), together with interest
on the unpaid principal balance thereof as hereinafter set forth, both
principal and interest payable as herein provided in lawful money of the United
States of America at the offices of Administrative Agent under the Credit
Agreement, 100 Federal Street, Boston Massachusetts 02110 or at such other
place in Boston, Massachusetts, as from time to time may be designated by the
holder of this Note.
This Note (a) is issued and delivered under that certain Credit
Agreement of even date herewith among Borrowers, Vista Energy Resources, Inc.
and Bank Boston, N.A., as Administrative Agent ("Administrative Agent"), and
the lenders (including Lender) referred to therein (herein, as from time to
time supplemented, amended or restated, called the "Credit Agreement"), and is
a "Note" as defined therein, (b) is subject to the terms and provisions of the
Credit Agreement, which contains provisions for payments and prepayments
hereunder and acceleration of the maturity hereof upon the happening of certain
stated events, and (c) is secured by and entitled to the benefits of certain
Security Documents (as identified and defined in the Credit Agreement).
Payments on this Note shall be made and applied as provided herein and in the
Credit Agreement. Reference is hereby made to the Credit Agreement for a
description of certain rights, limitations of rights, obligations and duties of
the parties hereto and for the meanings assigned to terms used and not defined
herein and to the Security Documents for a description of the nature and extent
of the security thereby provided and the rights of the parties thereto.
For the purposes of this Note, the following terms have the meanings
assigned to them below:
"Base Rate Payment Date" means (i) the 15th day of each
March, June, September and December, beginning March 15, 1999, and
(ii) any day on which past due interest or principal is owed hereunder
and is unpaid. If the terms hereof or of the Credit Agreement
85
provide that payments of interest or principal hereon shall be
deferred from one Base Rate Payment Date to another day, such other
day shall also be a Base Rate Payment Date.
"Eurodollar Rate Payment Date" means, with respect to any
Eurodollar Loan: (i) the day on which the related Interest Period ends
(and, if such Interest Period is three months or longer, the
three-month anniversary of the first day of such Interest Period), and
(ii) any day on which past due interest or past due principal is owed
hereunder with respect to such Eurodollar Loan and is unpaid. If the
terms hereof or of the Credit Agreement provide that payments of
interest or principal with respect to such Eurodollar Loan shall be
deferred from one Eurodollar Rate Payment Date to another day, such
other day shall also be a Eurodollar Rate Payment Date.
So long as no Event of Default has occurred and is continuing, all
Base Rate Loans (exclusive of any past due principal or interest) from time to
time outstanding shall bear interest on each day outstanding at the Base Rate
in effect on such day. If an Event of Default has occurred and is continuing,
all Base Rate Loans from time to time outstanding shall bear interest on each
day outstanding at the Default Rate in effect on such day. On each Base Rate
Payment Date Borrowers shall pay to the holder hereof all unpaid interest which
has accrued on the Base Rate Loans to but not including such Base Rate Payment
Date. So long as no Event of Default has occurred and is continuing, each
Eurodollar Loan (exclusive of any past principal or interest) shall bear
interest on each day during the related Interest Period at the related
Eurodollar Rate in effect on such day. If an Event of Default has occurred and
is continuing, all Eurodollar Loans from time to time outstanding shall bear
interest on each day outstanding at the Default Rate in effect on such day. On
each Eurodollar Rate Payment Date relating to such Eurodollar Loan, Borrowers
shall pay to the holder hereof all unpaid interest which has accrued on such
Eurodollar Loan to but not including such Eurodollar Rate Payment Date. All
past due principal of and past due interest on the Loan shall bear interest on
each day outstanding at the Default Rate in effect on such day, and such
interest shall be due and payable daily as it accrues.
Notwithstanding the foregoing paragraph and all other provisions of
this Note, in no event shall the interest payable hereon, whether before or
after maturity, exceed the maximum interest which, under applicable Law, may be
charged on this Note, and this Note is expressly made subject to the provisions
of the Credit Agreement which more fully set out the limitations on how
interest accrues hereon.
If this Note is placed in the hands of an attorney for collection
after default, or if all or any part of the indebtedness represented hereby is
proved, established or collected in any court or in any bankruptcy,
receivership, debtor relief, probate or other court proceedings, Borrowers and
all endorsers, sureties and guarantors of this Note jointly and severally agree
to pay reasonable attorneys' fees and collection costs to the holder hereof in
addition to the principal and interest payable hereunder.
86
Borrowers and all endorsers, sureties and guarantors of this Note
hereby severally waive demand, presentment, notice of demand and of dishonor
and nonpayment of this Note, protest, notice of protest, notice of intention to
accelerate the maturity of this Note, declaration or notice of acceleration of
the maturity of this Note, diligence in collecting, the bringing of any suit
against any party and any notice of or defense on account of any extensions,
renewals, partial payments or changes in any manner of or in this Note or in
any of its terms, provisions and covenants, or any releases or substitutions of
any security, or any delay, indulgence or other act of any trustee or any
holder hereof, whether before or after maturity.
THIS NOTE AND THE RIGHTS AND DUTIES OF THE PARTIES HERETO SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW), EXCEPT TO THE EXTENT THE SAME ARE GOVERNED BY APPLICABLE
FEDERAL LAW.
VISTA RESOURCES PARTNERS, L.P.
By: VISTA RESOURCES I, INC.,
its General Partner
By:
--------------------------------
Name:
Title:
MIDLAND RESOURCES, INC.
By:
------------------------------------
Name:
Title:
87
EXHIBIT B
BORROWING NOTICE
Reference is made to that certain Credit Agreement dated as of
December 18, 1998 (as from time to time amended, the "Agreement"), by and among
Vista Resources, L.P., a Texas limited partnership ("Vista"), Midland
Resources, Inc. ("Midland; Vista and Midland are collectively referred to
herein as "Borrowers" and individually as a "Borrower"), Vista Energy
Resources, Inc., BankBoston, N.A., as Administrative Agent, and certain
financial institutions. Terms which are defined in the Agreement are used
herein with the meanings given them in the Agreement. Pursuant to the terms of
the Agreement (i) Borrowers hereby request Lenders to make Loans to Borrowers
in the aggregate principal amount of $ __________ and specifies ____________,
19__, as the date Borrowers desire for Lenders to make such Loans and for Agent
to deliver to Borrowers the proceeds thereof and (ii) Borrowers hereby elect
that such Loans shall be:
Eurodollar Loans in the amount of $ ___________ for an Interest Period
beginning on _______, and continuing _______ months.
Base Loans in the amount of the balance.
To induce Lenders to make such Loans, Parent and each Borrower hereby
represents, warrants, acknowledges, and agrees to and with Agent and each
Lender Party that:
(a) Each officer of Parent, General Partner or Midland
signing this instrument is the duly elected, qualified and acting
officer of Parent, General Partner or Midland as indicated below such
officer's signature hereto having all necessary authority to act for
Parent, Vista or Midland, respectively, in making the request herein
contained.
(b) The representations and warranties of Parent and each
Borrower set forth in the Agreement and the other Loan Documents are
true and correct on and as of the date hereof (except to the extent
that the facts on which such representations and warranties are based
have been changed by the extension of credit under the Agreement),
with the same effect as though such representations and warranties had
been made on and as of the date hereof.
(c) There does not exist on the date hereof any condition or
event which constitutes a Default which has not been waived in writing
as provided in Section 10.1(a) of the Agreement; nor will any such
Default exist upon any Borrowers' receipt and application of the Loans
requested hereby. Each Borrower will use the Loans hereby requested in
compliance with Section 2.4 of the Agreement.
88
(d) Except to the extent waived in writing as provided in
Section 10.1(a) of the Agreement, Parent and each Borrower has
performed and complied with all agreements and conditions in the
Agreement required to be performed or complied with by Parent and such
Borrower on or prior to the date hereof, and each of the conditions
precedent to Loans contained in the Agreement remains satisfied.
(e) The Facility Usage, after the making of the Loans
requested hereby, will not be in excess of the Borrowing Base on the
date requested for the making of such Loans.
(f) The Loan Documents have not been modified, amended or
supplemented by any unwritten representations or promises, by any
course of dealing, or by any other means not provided for in Section
10.1(a) of the Agreement. The Agreement and the other Loan Documents
are hereby ratified, approved, and confirmed in all respects.
Each officer of Parent, General Partner or Midland signing this
instrument hereby certifies that, to the best of his knowledge after due
inquiry, the above representations, warranties, acknowledgments, and agreements
of Parent and/or Borrowers are true, correct and complete.
IN WITNESS WHEREOF, this instrument is executed as of _________,_____.
VISTA ENERGY RESOURCES, INC.
By:
-----------------------------------
Name:
Title:
VISTA RESOURCES PARTNERS, L.P.
By: VISTA RESOURCES I, INC.,
its General Partner
By:
-------------------------------
Name:
Title:
89
MIDLAND RESOURCES, INC.
By:
-----------------------------------
Name:
Title:
90
EXHIBIT C
CONTINUATION/CONVERSION NOTICE
Reference is made to that certain Credit Agreement dated as of
December 18, 1998 (as from time to time amended, the "Agreement"), by and among
Vista Resources, L.P., a Texas limited partnership ("Vista"), Midland
Resources, Inc. ("Midland; Vista and Midland are collectively referred to
herein as "Borrowers" and individually as a "Borrower"), Vista Energy
Resources, Inc., Bank Boston, N.A., as Administrative Agent and certain
financial institutions. Terms which are defined in the Agreement and which are
used but not defined herein are used herein with the meanings given them in the
Agreement. Pursuant to the terms of the Agreement, Borrowers hereby elect
Eurodollar Loans in the aggregate amount of $ __________ with an Interest
Period beginning on __________________ and continuing for a period of
__________________.
To meet the conditions set out in the Agreement for the making of such
election, Parent and each Borrower hereby represents, warrants, acknowledges
and agrees that:
(a) The officer of Parent, General Partner or Midland signing
this instrument is a duly elected, qualified and acting [chief
financial officer] of such Person, having all necessary authority to
act for Parent, Vista or Midland, respectively, in making the election
herein contained.
(b) There does not exist on the date hereof any condition or
event which constitutes a Default which has not been waived in writing
as provided in Section 10.1(a) of the Agreement.
(c) The Loan Documents have not been modified, amended or
supplemented by any unwritten representations or promises, by any
course of dealing, or by any other means not provided for in Section
10.1(a) of the Agreement. The Agreement and the other Loan Documents
are hereby ratified, approved, and confirmed in all respects.
Each officer of Parent, General Partner or Midland signing this
instrument hereby certifies that, to the best of his knowledge after due
inquiry, the above representations, warranties, acknowledgments, and agreements
of Parent and/or Borrowers are true, correct and complete.
91
IN WITNESS WHEREOF this instrument is executed as of ________________.
VISTA ENERGY RESOURCES, INC.
By:
--------------------------------------
Name:
Title:
VISTA RESOURCES PARTNERS, L.P.
By: VISTA RESOURCES I, INC.,
its General Partner
By:
----------------------------------
Name:
Title:
MIDLAND RESOURCES, INC.
By:
--------------------------------------
Name:
Title:
92
EXHIBIT D
CERTIFICATE ACCOMPANYING
FINANCIAL STATEMENTS
Reference is made to that certain Credit Agreement dated as of
December 18, 1998 (as from time to time amended, the "Agreement"), by and among
Vista Resources, L.P., a Texas limited partnership ("Vista"), Midland
Resources, Inc. ("Midland; Vista and Midland are collectively referred to
herein as "Borrowers" and individually as a "Borrower"), Vista Energy
Resources, Inc., BankBoston, N.A., as Administrative Agent, and certain
financial institutions, which Agreement is in full force and effect on the date
hereof. Terms which are defined in the Agreement are used herein with the
meanings given them in the Agreement.
This Certificate is furnished pursuant to Section 6.1(b) of the
Agreement. Together herewith Parent is furnishing to Agent and each Lender
Party Parent's *[audited/unaudited] financial statements (the "Financial
Statements") as at ____________ (the "Reporting Date"). Parent hereby
represents, warrants, and acknowledges to Agent and each Lender Party that:
(a) the officer of Parent signing this instrument is the duly
elected, qualified and acting [chief financial officer] of such
Person;
(b) the Financial Statements are accurate and complete and
satisfy the requirements of the Agreement;
(c) attached hereto is a schedule of calculations showing
Parent's compliance as of the Reporting Date with the requirements of
Sections 7.11 and 7.12 of the Agreement;
(d) on the Reporting Date Parent and Borrowers were, and on
the date hereof Parent and Borrowers are, in full compliance with the
disclosure requirements of Section 6.4 of the Agreement, and no
Default otherwise existed on the Reporting Date or otherwise exists on
the date of this instrument *[except for Default(s) under Section(s)
____________ of the Agreement, which *[is/are] more fully described on
a schedule attached hereto].
(e) *[Unless otherwise disclosed on a schedule attached
hereto,] The representations and warranties of Parent and each
Borrower set forth in the Agreement and the other Loan Documents are
true and correct on and as of the date hereof (except to the extent
that the facts on which such representations and warranties are based
have been changed by the extension of credit under the Agreement),
with the same effect as though such representations and warranties had
been made on and as of the date hereof.
93
Each officer of Parent, General Partner or Midland signing this
instrument hereby certifies that he has reviewed the Loan Documents and the
Financial Statements and has otherwise undertaken such inquiry as is in his
opinion necessary to enable him to express an informed opinion with respect to
the above representations, warranties and acknowledgments of Parent and/or
Borrowers and, to the best of his knowledge, such representations, warranties,
and acknowledgments are true, correct and complete.
IN WITNESS WHEREOF, this instrument is executed as of _________, 19__.
VISTA ENERGY RESOURCES, INC.
By:
---------------------------------------
Name:
Title:
VISTA RESOURCES PARTNERS, L.P.
By: VISTA RESOURCES I, INC.,
its General Partner
By:
-----------------------------------
Name:
Title:
MIDLAND RESOURCES, INC.
By:
---------------------------------------
Name:
Title:
94
EXHIBIT E
OPINION OF COUNSEL FOR RELATED PERSONS
95
EXHIBIT F
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement dated as of December 18,
1998 (as from time to time amended the "Credit Agreement") by and among Vista
Resources, L.P., a Texas limited partnership ("Vista"), Midland Resources, Inc.
("Midland; Vista and Midland are collectively referred to herein as "Borrowers"
and individually as a "Borrower"), Vista Energy Resources, Inc., Bank Boston,
N.A., as Administrative Agent, and certain financial institutions. Terms
defined in the Credit Agreement are used herein with the same meaning.
The "Assignor" and the "Assignee" referred to on Schedule 1 agree as
follows:
1. The Assignor hereby sells and assigns to the Assignee, without
recourse and without representation or warranty except as expressly set forth
herein, and the Assignee hereby purchases and assumes from the Assignor, an
interest in and to the Assignor's rights and obligations under the Credit
Agreement and the other Loan Documents as of the date hereof equal to the
percentage interest specified on Schedule 1 of all outstanding rights and
obligations under the Credit Agreement and the other Loan Documents. After
giving effect to such sale and assignment, the Assignee's Commitment and the
amount of the Loans owing to the Assignee will be as set forth on Schedule 1.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Loan Documents
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Loan Documents or any other instrument or document furnished
pursuant thereto; (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Restricted Person
or the performance or observance by any Restricted Person of any of its
obligations under the Loan Documents or any other instrument or document
furnished pursuant thereto; and (iv) attaches the Note held by the Assignor and
requests that Agent exchange such Note for new Notes payable to the order of
the Assignee in an amount equal to the Commitment assumed by the Assignee
pursuant hereto and to the Assignor in an amount equal to the Commitment
retained by the Assignor, if any, as specified on Schedule 1.
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to in
Section 6.2 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (ii) agrees that it will, independently and without
reliance upon Agent, the Assignor or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Credit
Agreement; (iii) confirms that it is an Eligible
96
Transferee; (iv) appoints and authorizes Agent to take such action as agent on
its behalf and to exercise such powers and discretion under the Credit
Agreement as are delegated to Agent by the terms thereof, together with such
powers and discretion as are reasonably incidental thereto; (v) agrees that it
will perform in accordance with their terms all of the obligations that by the
terms of the Credit Agreement are required to be performed by it as a Lender;
and (vi) attaches any U.S. Internal Revenue Service or other forms required
under Section 3.7(d) of the Credit Agreement.
4. Following the execution of this Assignment and Acceptance, it will
be delivered to Agent for acceptance and recording by Agent. The effective date
for this Assignment and Acceptance (the "Effective Date") shall be the date of
acceptance hereof by Agent, unless otherwise specified on Schedule 1.
5. Upon such acceptance and recording by Agent, as of the Effective
Date, (i) the Assignee shall be a party to the Credit Agreement and, to the
extent provided in this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.
6. Upon such acceptance and recording by Agent, from and after the
Effective Date, Agent shall make all payments under the Credit Agreement and
the Notes in respect of the interest assigned hereby (including, without
limitation, all payments of principal, interest and commitment fees with
respect thereto) to the Assignee. The Assignor and Assignee shall make all
appropriate adjustments in payments under the Credit Agreement and the Notes
for periods prior to the Effective Date directly between themselves.
7. This Assignment and Acceptance shall be governed by, and construed
in accordance with, the Laws of the State of New York.
8. This Assignment and Acceptance may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of Schedule 1 to this Assignment and Acceptance by telecopier shall
be effective as delivery of a manually executed counterpart of this Assignment
and Acceptance.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule
1 to this Assignment and Acceptance to be executed by their officers thereunto
duly authorized as of the date specified thereon.
97
SCHEDULE 1
to
ASSIGNMENT AND ACCEPTANCE
Percentage interest assigned: %
---------
Assignee's Commitment: $
---------
Aggregate outstanding principal amount
of Loans assigned: $
---------
Principal amount of Note payable to Assignee: $
---------
Principal amount of Note payable to Assignor: $
---------
Effective Date (if other than date
of acceptance by Agent): *_______, 19__
[NAME OF ASSIGNOR], as Assignor
By:
----------------------------------------
Name:
Title:
Dated: ___________, 19 _
[NAME OF ASSIGNEE], as Assignee
By:
----------------------------------------
Name:
Title:
Domestic Lending Office:
Eurodollar Lending Office:
* This date should be no earlier than five Business Days after the
delivery of this Assignment and Acceptance to Agent.
98
Accepted [and Approved] **
this ___ day of ___________, 19 _
BANKBOSTON, N.A.
By:
-------------------------------
Name:
Title:
[Approved this ____ day
of ____________, 19__**
By: VISTA ENERGY RESOURCES, INC.
By:
--------------------------
Name:
Title:
VISTA RESOURCES PARTNERS, L.P.
By: VISTA RESOURCES I, INC.,
its General Partner
By:
--------------------------
Name:
Title:
MIDLAND RESOURCES, INC.
By:
-------------------------------
Name:
Title:
** Required if the Assignee is an Eligible Assignee solely by reason of
subsection (iii) of the definition of "Eligible Assignee"