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EXHIBIT 10.5
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AMENDED AND RESTATED
CREDIT AGREEMENT
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VISTA RESOURCES PARTNERS, L.P.
and
UNION BANK OF CALIFORNIA, N.A.
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$50,000,000
AUGUST 15, 1997
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TABLE OF CONTENTS
Page
ARTICLE I -- Definitions and References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Exhibits and Schedules: Additional Definitions . . . . . . . . . . . . . . . . . . . . . . 12
Section 1.3. Amendment of Defined Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 1.4. References and Titles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 1.5. Calculations and Determinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE II -- The Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.1. Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.2. Requests for Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.3. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 2.4. Rate Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 2.5. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.6. Discretionary Extension of Commitment Period . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.7. Conversion: Regular Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.8. Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.9. Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.10. Payments to Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.11. Initial Borrowing Base . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.12. Subsequent Determinations of Borrowing Base . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.13. Borrower's Reduction of Borrowing Base . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.14. Capital Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.15. Increased Cost of Fixed Rate Portions . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.16. Availability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.17. Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.18. Reimbursable Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 2.19 Letter of Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE III -- Conditions Precedent to Lending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 3.1. Documents to be Delivered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 3.2. Additional Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE IV -- Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 4.1. Borrower's Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . 27
(a) No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(b) Organization and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(c) Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(d) No Conflicts or Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
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(e) Enforceable Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(f) Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(g) Other Obligations and Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(h) Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(i) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(j) ERISA Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(k) Environmental and Other Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(l) Names and Places of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(m) Borrower's Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(n) Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(o) Government Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(p) Insider . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(q) Material Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(r) Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(s) No Financing of Regulated Corporate Takeovers . . . . . . . . . . . . . . . . . . . . . . . 32
Section 4.2. Representation by Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE V -- Covenants of Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.1. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(a) Payment and Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(b) Books, Financial Statements and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(c) Other Information and Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(d) Notice of Material Events and Change of Address . . . . . . . . . . . . . . . . . . . . . . 35
(e) Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(f) Maintenance of Existence and Qualifications . . . . . . . . . . . . . . . . . . . . . . . . 36
(g) Payment of Trade Debt, Taxes, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(h) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(i) Payment of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(j) Performance on Borrower's Behalf . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(k) Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(l) Compliance with Agreements and Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(m) Environmental Matters; Environmental Reviews . . . . . . . . . . . . . . . . . . . . . . . 38
(n) Evidence of Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
(o) ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
(p) Subordination of Affiliate Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(q) Liens on Mortgaged Properties Acquired or Completed in the Future . . . . . . . . . . . . . 39
Section 5.2. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(a) Restricted Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(b) Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(c) Limitation on Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(d) Limitation on Sales of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(e) Limitation on Dividends and Redemptions . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(f) Limitation on Investments and New Businesses . . . . . . . . . . . . . . . . . . . . . . . 41
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(g) Limitation on Credit Extensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(h) Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(i) Certain Contracts; Amendments: Multiemployer ERISA Plans . . . . . . . . . . . . . . . . . 42
(j) Hedging Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(k) Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE VI -- Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 6.1. The Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 6.2. Agreement to Deliver Security Documents . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 6.3. Perfection and Protection of Security Interests and Liens . . . . . . . . . . . . . . . . . 43
Section 6.4. Bank Accounts: Offset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 6.5. Guaranties of Borrower's Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 6.6. Production Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE VII -- Events of Default and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 7.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 7.2. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 7.3. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE VIII -- Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 8.1. Waivers and Amendments: Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . 47
(a) Waivers and Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
(b) Acknowledgments and Admissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 8.2. Survival of Agreements; Cumulative Nature . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 8.3. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 8.4. Joint and Several Liability: Parties in Interest . . . . . . . . . . . . . . . . . . . . . 49
Section 8.5. GOVERNING LAW; SUBMISSION TO PROCESS . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 8.6. Limitation on Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 8.7. Termination: Limited Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 8.8. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 8.9. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 8.10. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Schedule 1 - Disclosure Schedule
Schedule 2 - Security Schedule
Schedule 3 - Title Opinions and Reports
Exhibit A - Promissory Note
Exhibit B - Request for Advance
Exhibit C - Rate Election
Exhibit D - Certificate Accompanying Financial Statements
Exhibit E - Form of Opinion of Messr. C. Xxxxxxx Xxxx
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CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT is made as of August 15,
1997, by and between VISTA RESOURCES PARTNERS, L.P., a Texas limited
partnership (herein called "Borrower"), and UNION BANK OF CALIFORNIA, N.A., a
national banking association and successor in interest to Union Bank (herein
called "Lender").
A. The Borrower and the Lender are parties to the Credit Agreement
dated as of September 27, 1995, as amended by Amendment No. 1 dated as of May
30, 1996, by Amendment No. 2 dated as of July 31, 1996, by Amendment No. 3
dated as of September 3, 1996, and by Amendment No. 4 dated as of April 16,
1997 (as so amended, the "Existing Credit Agreement").
B. The Borrower and the Lender wish to amend and restate the Existing
Credit Agreement upon the terms and conditions set forth in this Agreement.
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:
"Advance" has the meaning given it in Section 2.1.
"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 bf NGP's investment in
such Person, or such Person's investment in, or control of, NGP.
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"Agreement" means this Credit Agreement.
"Base Rate" means the per annum rate of interest equal to the sum of
(a) 35/100 of one percent (0.35%), plus (b) the variable rate of interest per
annum established from time to time by Lender as its "reference rate" (which
rate of interest may not be the lowest rate charged by Lender on similar
loans). Each change in the Base Rate shall become effective without prior
notice to Borrower automatically as of the opening of business on the date of
such change in the Base Rate. The Base Rate shall in no event, however, exceed
the Highest Lawful Rate.
"Base Rate Portion" means that portion of the unpaid principal balance
of the Loan which is not made up of Fixed Rate Portions.
"Borrower" means Vista Resources Partners, L.P., a Texas limited
partnership.
"Borrowing Base" means, at the particular time in question, either the
amount provided for in Section 2.11 or the amount determined by Lender in
accordance with the provisions of Section 2.12, as reduced by Borrower pursuant
to Section 2.13.
"Borrowing Base Percentage" means, for any period, the percentage that
the aggregate outstanding principal amount of the Loans represents with respect
to Borrowing Base.
"Bond Letter of Credit" means the $250,000 irrevocable standby letter
of credit issued by the Lender for the account of the Borrower and for the
benefit of the Texas Railroad Commission.
"Business Day" means a day, other than a Saturday or Sunday, on which
commercial banks are open for business with the public in Dallas, Texas and Los
Angeles, California. Any Business Day in any way relating to Fixed Rate
Portions (such as the day on which an Interest Period begins or ends) must also
be a day on which, in the judgment of Lender, significant transactions in
dollars are carried out in the interbank eurocurrency market.
"Cash Flow" means, for any period, revenues from operations in the
ordinary course of business of Borrower during such period less (without
duplication) each of the following actually incurred by Borrower during such
period: direct operating expenses, general and administrative expenses,
production or severance taxes, landowner royalties on oil and gas leases,
principal and interest payments required under this Agreement and the Note, and
all workover, drilling, completion and development costs for new or existing
webs.
"Collateral" means all property of any kind which is subject to a Lien
in favor of Lender 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 March 31, 1999 (or, if earlier, the day on which the
Note first becomes due and payable
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in full); provided that Lender may, in its sole discretion, extend the
Commitment Period as provided in Section 2.6.
"Contested Claim" means any Tax, Debt or other claim or liability, (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
Borrower 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.
"Conversion" has the meaning given it in Section 2.7.
"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.
"Determination Date" has the meaning given it in Section 2.12.
"Disclosure Report" means either a notice given by Borrower under
Section 5.1(d) or a certificate given by Borrower's chief financial officer
under Section 5.l(b)(ii).
"Disclosure Schedule" means Schedule 1 hereto.
"Engineering Report" means the Initial Engineering Report and each
engineering report delivered pursuant to Sections 5.1(b)(iv) and (v).
"Environmental Laws" means any and all federal, state, local and
foreign Laws, grants, franchises, licenses or other governmental restrictions
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.
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"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 Plan" means any pension benefit plan subject to Title IV of
ERISA maintained by any Related Person or any Affiliate thereof with respect to
which any Related Person has a fixed or contingent liability.
"Eurodollar Rate" means, with respect to each particular Fixed Rate
Portion and the related Interest Period, the rate of interest per annum
determined by Lender in accordance with its customary general practices to be
representative of the rates at which deposits of dollars are offered to Lender
at approximately 9:00 a.m. Dallas, Texas time two (2) Business Days prior to
the first day of such Interest Period (by prime banks in the interbank
eurocurrency market which have been selected by Lender 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 such Fixed Rate
Portion and for a period of time equal or comparable to the length of such
Interest Period. The Eurodollar Rate determined by Lender with respect to a
particular Fixed Rate Portion shall be fixed at such rate for the duration of
the associated Interest Period. If Lender is unable so to determine the
Eurodollar Rate for any Fixed Rate Portion, or if the associated Fixed Rate
would exceed the Highest Lawful Rate, Borrower shall be deemed not to have
elected such Fixed Rate Portion.
"Evaluation Date" means March 31 and September 30 of each year,
beginning March 31, 1998.
"Event of Default" has the meaning given it in Section 7.1.
"Financial Statements" means (i) the audited annual Consolidated
financial statements of Borrower dated as of December 31, 1996 and (ii) the
unaudited quarterly Consolidated financial statements of Borrower dated as of
June 30, 1997.
"Fiscal Quarter" means a three-month period ending on March 31, June
30, September 30 or December 31 of any year.
"Fiscal Year" means a twelve-month period ending on December 31 of any
year.
"Fixed Rate" means, with respect to each particular Fixed Rate Portion
and the associated Eurodollar Rate and Reserve Percentage, the rate per annum
calculated by Lender (rounded upwards, If necessary, to the next higher 0.01%)
determined on a daily basis pursuant to the following formula:
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Fixed Rate =
Eurodollar Rate + A
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100.0% - Reserve Percentage
where A means 1.50% if the Borrowing Base Percentage is less than or equal to
50%, and 1.75% if the Borrowing Base Percentage is greater than 50%. The
Lender may adjust the Borrowing Base Percentage on each Determination Date in
its sole reasonable discretion and any such adjustment shall be effective with
respect to all Advances (whether existing or future Advances) on the date of
such adjustment and continue until the next such modification of the Borrowing
Base Percentage. If the Reserve Percentage changes during the Interest Period
for a Fixed Rate Portion, Lender may, at its option, either change the Fixed
Rate for such Fixed Rate Portion or leave it unchanged for the duration of such
Interest Period. The Fixed Rate shall in no event, however, exceed the Highest
Lawful Rate.
"Fixed Rate Portion" means any portion of the unpaid principal balance
of the Loan which Borrower designates as such in a Rate Election.
"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
Borrower 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 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 Borrower or
with respect to Borrower 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 Lender and Lender agrees to such change insofar as it
affects the accounting of Borrower or of Borrower and its Consolidated
Subsidiaries.
"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 delivered and accepted concurrently herewith
or any other Person who has guaranteed some or all of the Obligations and who
has been accepted by Lender as a Guarantor or any Subsidiary of Borrower which
now or hereafter executes and delivers a guaranty to Lender pursuant to Section
6.5.
"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 (the "primary obligor") in any
manner, whether directly or indirectly, including without limitation:
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(a) agreements to purchase such Debt or any property
constituting security therefor;
(b) 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;
(c) 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;
(d) letters or agreements commonly known as "comfort" or
"keepwell" letters or agreements; or
(e) 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 Borrower 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 any futures transaction, swap agreement, cap,
floor, collar, exchange transaction, forward agreement or other exchange or
protections agreements, whether relating to Hydrocarbons, interest rates,
currencies or other commodity, price or index, or any option with respect to
any such transaction now or hereafter entered into by Borrower.
"Highest Lawful Rate" means the maximum nonusurious rate of interest
that Lender is permitted under applicable Law to contract for, take, charge, or
receive with respect to the Loan.
"Hydrocarbons" means crude oil, natural gas or other hydrocarbons.
"Interest Period" means, with respect to each particular Fixed Rate
Portion, a period of 1,2,3 or 6 months, beginning on and including the date
specified in such Rate Election (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 extend past the date on which the Note is due and payable in full.
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"Late Payment Rate" means, at the time in question, four percent
(4.0%) per annum plus the Base Rate then in effect; provided that, with respect
to any Fixed Rate Portion with an interest Period extending beyond the date
such Fixed Rate Portion becomes due and payable, "Late Payment Rate" shall mean
four percent (4.0%) per annum plus the related Fixed Rate. The Late Payment
Rate shall in no event, however, exceed the Highest Lawful Rate.
"Laws" means all applicable statutes, laws, ordinances, regulations,
orders, judgments, writs, injunctions or decrees of any state, commonwealth,
nation, territory, possession, province, county, parish, town, township,
village, municipality or Tribunal; and "Law" means each of the foregoing.
"Lender" means Union Bank of California, N.A., a national banking
association, and its successors and assigns.
"Letter of Credit" means any standby letter of credit issued by the
Lender for the account of the Borrower pursuant to the terms of this Agreement,
including any letter of credit issued pursuant to Section 5.2(j) of this
Agreement.
"Letter of Credit Application" means the Lender's standard form letter
of credit application for standby letters of credit which has been executed by
the Borrower and accepted by the Lender in connection with the issuance of a
Letter of Credit.
"Letter of Credit Application Amendment" means the Lender's standard
form application to amend letter of credit for standby letters of credit which
has been executed by the Borrower and accepted by the Lender in connection with
the increase or extension of a Letter of Credit.
"Letter of Credit Collateral Account" means a special noninterest
bearing cash collateral account pledged to the Lender containing cash deposited
pursuant to this Agreement and to be maintained at the Lender in accordance
with Section 2.19(h).
"Letter of Credit Documents" means all Letters of Credit, Letter of
Credit Application Amendments, Letter of Credit Applications, and agreements,
documents, and instruments entered into in connection with or relating thereto.
"Letter of Credit Exposure" means, as of any date of its
determination, the aggregate outstanding undrawn amount of Letters of Credit
(other than the Bond Letter of Credit and Letters of Credit issued pursuant to
Section 5.2(j)) plus the aggregate of the Borrower's reimbursement obligations
under the Letter of Credit Applications (including reimbursement obligations
owing in connection with the Bond Letter of Credit and Letters of Credit issued
pursuant to Section 5.2(j)).
"Lien" means, with respect to any property or assets, any right or
interest therein of a creditor to secure Debt owed to him or any other
arrangement with such creditor which provides for the payment of such Debt out
of such property or assets or which allows him to have such Debt satisfied
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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 unregistered 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 Note, the Security
Documents, the Letter of Credit Documents, 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 Borrower or its Affiliates,
properties, business or prospects).
"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 the sum of (a) all Debt from time to time owing by
any of the Related Persons to Lender under or pursuant to any of the Loan
Documents, plus (b) all other Debt from time to time owing by any of the
Related Persons to Lender. "Obligation" means any part of the Obligations.
"Operator" means Vista Resources, Inc., a Texas corporation.
"Permitted Distribution" means (a) any cash Distributions made by
Borrower to its partners each Fiscal Year in a total aggregate amount equal to
the federal or state income taxes payable (assuming the highest marginal
federal and state tax rates) by reason of each partner's being required to take
into account its pro rata share of Borrower's taxable income and/or items
thereof, reduced by its pro rata share of any items of loss, deduction or
credit and (b) in any Fiscal Quarter, any cash Distributions to Borrower's
partners that, in the aggregate, do not exceed (i) prior to Conversion,
twenty-five percent (25%) of Borrower's Cash Flow for the prior Fiscal Quarter,
and (ii) after Conversion, fifty percent (50%) of Borrower's Cash Flow for the
prior Fiscal Quarter. As used in the foregoing definition "Distributions"
means cash distributions or any other distributions on, or in respect of, any
general or limited partnership interest of Borrower.
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"Permitted Investments" means investments:
(a) in open market commercial paper, maturing within 270
days after acquisition thereof, which has the highest credit rating
given by either Standard & Poor's Ratings Group (a division of
XxXxxx-Xxxx, Inc.) or Xxxxx'x Investors Service, Inc.;
(b) in 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) in demand deposits, and time deposits (including
certificates of deposit) maturing within 12 months from the date of
deposit thereof, with any office of 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 Standard & Poor's Ratings
Group (a division of XxXxxx-Xxxx, Inc.) or Xxxxx'x Investors Service,
Inc.; and
(d) in money market funds acceptable to Lender in its
sole and absolute discretion.
"Permitted Liens" means: (i) Liens granted to Lender 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, (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, 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, and (vii) Liens arising under
operating agreements governing operation of the oil and gas leases and fee
properties owned by Borrower.
"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
5.2(b).
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"Rate Election" has the meaning given it in Section 2.4.
"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 any of Borrower, each Subsidiary of Borrower,
General Partner, each Subsidiary of General Partner, Operator, each Subsidiary
of Operator and each Guarantor.
"Request for Advance" means a written or telephonic request, or a
written confirmation, made by Borrower which meets the requirements of Section
2.2.
"Reserve Percentage" means, on any day with respect to each particular
Fixed Rate Portion, the maximum reserve requirement, as determined by Lender
(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 to Lender under Regulation D with respect to
"Eurocurrency liabilities" (as such term is defined in Regulation D) equal in
amount to such Fixed Rate Portion, were Lender to have any such "Eurocurrency
liabilities." If such reserve requirement shall change after the date hereof,
the Reserve Percentage shall be automatically increased or decreased, as the
case may be, from time to time as of the effective time of each such change in
such reserve requirement.
"Restricted Debt" of any Person means Debt in any of the following
categories:
(a) Debt for borrowed money,
(b) Debt constituting an obligation to pay the deferred
purchase price of property,
(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,
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(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), or
(l) Debt with respect to other obligations to deliver
goods or services in consideration of advance payments therefor;
provided, however, that the "Restricted Debt" of any Person shall not include
Debt that was incurred by such Person on ordinary trade terms to vendors,
suppliers, or other Persons providing goods and services for use by such Person
in the ordinary course of its business, unless and until such Debt is
outstanding more than ninety (90) days past the original invoice or billing
date therefor.
"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 Lender 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.
"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.
"Taxes" means all taxes, assessments, fees, levies, imposts, duties,
penalties, deductions, withholdings or other charges of any nature whatsoever
from time to time or at any time imposed by any Law or any Tribunal.
"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
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described in Section 4048(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 Related Person or of any Affiliate of any Related Person
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 4042 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, and arbitration panel, and court or
any governmental department, commission, board, bureau, agency or
instrumentality of the United States of America or any state, province,
commonwealth, nation, territory, possession, county, parish, town, township,
village or municipality, whether now or hereafter constituted and/or existing.
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, modifications, amendments
and restatements of such agreement, instrument or document, provided that
nothing contained in this Section 1.3 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.
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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. Each determination by Lender of amounts to be paid under Sections
2.14 through 2.18 or any other matters which are to be determined hereunder by
Lender (such as any Eurodollar Rate, Fixed 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 Lender
otherwise consents all financial statements and reports furnished to Lender
hereunder shall be prepared and all financial computations and determinations
pursuant hereto shall be made in accordance with GAAP.
ARTICLE II -- The Loan
Section 2.1. Advances. Subject to the terms and conditions
hereof, Lender agrees to make advances to Borrower (herein called "Advances")
from time to time during the Commitment Period so long as the sum of (a) the
aggregate amount of Advances outstanding plus (b) the Letter of Credit Exposure
does not exceed the Borrowing Base, all as determined as of the date on which
the requested Advance is to be made. Each Advance must be greater than or
equal to $100,000 or must equal the unadvanced portion of the Borrowing Base.
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. The obligation of Borrower to repay to Lender the
aggregate amount of all Advances made by Lender (herein called the "Loan"),
together with interest accruing in connection therewith, shall be evidenced by
a single promissory note (herein called the "Note") made by Borrower payable to
the order of Lender in the form of Exhibit A with appropriate insertions. The
amount of principal owing on the Note at any given time shall be the aggregate
amount of all Advances theretofore made minus all payments of principal
theretofore received by Lender on the Note. Interest on the Note shall accrue
and be due and payable as provided herein and therein. Subject to the terms
and conditions hereof, Borrower may borrow, repay, and reborrow hereunder.
Section 2.2. Requests for Advances. Borrower must give prior
written notice, or telephonic notice promptly confirmed in writing, of any
requested Advance as follows:
(a) if all of such Advance is designated as a Base Rate
Portion, by 11:00 a.m., Dallas, Texas time, on the date such Advance
is requested to be made; or
(b) if any part of such Advance is designated as a Fixed
Rate Portion, by 11:00 a.m., Dallas, Texas time, on the second
Business Day preceding the date such Advance is requested to be made.
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Each such written request or confirmation must be made in the form and
substance of the "Request for Advance" attached hereto as Exhibit B, duly
completed. Each such telephonic request shall be deemed a representation,
warranty, acknowledgment and agreement by Borrower as to the matters which are
to be set out in such written confirmation. If all conditions precedent to
such Advance have been met, Lender will on the date requested make such Advance
available to Borrower in immediately available funds at Lender's office in
Dallas, Texas.
Section 2.3. Use of Proceeds. Borrower shall use all funds from
Advances (i) for the acquisition and development of oil and gas properties and
(ii) for working capital for its operations and for other general business
purposes. In no event shall the funds from any Advance 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" or any "margin securities"
(as such terms are defined respectively in Regulation U, G, T or X promulgated
by the Board of Governors of the Federal Reserve System) or to extend credit to
others directly or indirectly for the purpose of purchasing or carrying any
such margin stock or margin securities. Borrower represents and warrants that
Borrower is not engaged principally, or as one of Borrower's important
activities, in the business of extending credit to others for the purpose of
purchasing or carrying such margin stock or margin securities.
Section 2.4. Rate Elections. Borrower may from time to time
designate all or any portion of the Loan (including any yet to be made Advances
which are to be made prior to or at the beginning of the designated Interest
Period but excluding any portion of the Loan which is required to be repaid
prior to the end of the designated Interest Period) as a Fixed Rate Portion;
provided that without the consent of Lender Borrower may make no such election
during the continuance of a Default and that Borrower may make such an election
with respect to an already existing Fixed Rate Portion only if such election
will take effect at or after the termination of the Interest Period applicable
to such already existing Fixed Rate Portion. Each election by Borrower of a
Fixed Rate Portion shall:
(a) Be made in writing in the form and substance of the
"Rate Election" attached hereto as Exhibit C, duly completed;
(b) Specify the amount of the Loan which Borrower desires
to designate as a Fixed Rate Portion, the first day of the Interest
Period which is to apply thereto, and the length of such Interest
Period; and
(c) Be received by Lender not later than 11:00 a.m.,
Dallas, Texas time, on the second Business Day preceding the first day
of the specified Interest Period.
Each election which meets the requirements of this Section 2.4 (herein called a
"Rate Election") shall be irrevocable. Borrower may make no Rate Election
which does not specify an Interest Period complying with the definition of
"Interest Period" in Section 1.l, and the amount of the Fixed Rate
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Portion elected in any Rate Election must be an integral multiple of $100,000.
Upon the termination of each Interest Period the portion of the Loan
theretofore constituting the related Fixed Rate Portion shall, unless the
subject of a new Rate Election then taking effect, automatically become a part
of the Base Rate Portion and become subject to all provisions of the Loan
Documents governing the Base Rate Portion. Borrower shall have no more than
five (5) Fixed Rate Portions in effect at any time.
Section 2.5. Fees. In consideration of Lender's commitment to
make Advances, Borrower will pay to Lender:
(a) a one-time facility fee in the amount of $37,500,
which fee shall be due and payable on the date hereof;
(b) a commitment fee determined on a daily basis by
applying a rate of 3/8 of one percent (0.375%) per annum to the unused
portion of the Borrowing Base on each day during the Commitment
Period, determined for each such day by deducting from the amount of
the Borrowing Base at the end of such day the unpaid principal balance
of the Loan at the end of such day. This commitment fee shall be due
and payable in arrears on the first day of each January, April, July
and October, beginning October 1, 1997, and at the Conversion; and
(c) a fee determined on the amount of each increase in
the Borrowing Base, such fee to be in an amount equal to 3/8 of one
percent (.375%) of such increase and being due and payable on the
effective date of such increase.
Section 2.6. Discretionary Extension of Commitment Period. Not
more than ninety (90) days and not less than thirty (30) days prior to each
regularly scheduled Determination Date, Borrower may request that Lender extend
the Commitment Period. Lender may, in its 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
Lender, Borrower will, execute and deliver a renewal Note to Lender and (c)
Borrower will execute and deliver such additional documents as Lender may deem
necessary to continue the perfection of the Liens covering the Collateral. In
the event Lender determines not to grant any such extension. Lender shall
promptly so notify Borrower. NOTWITHSTANDING THE FOREGOING, LENDER IS IN NO
WAY OBLIGATED AT ANY TIME TO EXTEND THE COMMITMENT PERIOD OR OTHERWISE MODIFY
THE TERMS OF THE LOAN, AND ANY DETERMINATION BY LENDER TO MAKE ANY SUCH
EXTENSION SHALL IN NO WAY OBLIGATE LENDER TO MAKE ANY OTHER EXTENSIONS IN THE
FUTURE.
Section 2.7. Conversion: Regular Payments. At the end of the
Commitment Period, the Loan shall, unless an Event of Default shall have
occurred and be continuing, automatically convert to a term loan upon the terms
and conditions set forth in this Section 2.7 (the "Conversion"). Upon
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Conversion, Borrower shall immediately pay to Lender an amount equal to the sum
of (a) the amount, if any, by which the outstanding principal balance of the
Loan plus the Letter of Credit Exposure is in excess of the Borrowing Base then
in effect, plus (b) all accrued but unpaid interest. Upon Conversion, the Note
shall be repaid in thirty-six installments, due and payable on the first day of
each month, beginning April 1, 1999 (or the first day of the first month
immediately following Conversion if the Commitment Period is extended by Lender
pursuant to Section 2.6 or shortened pursuant to Section 2.9) and continuing
regularly thereafter until the Loan is paid in full. Each payment shall be in
an amount equal to one/thirty-sixth (1/36) of the outstanding principal balance
of the Loan at the time of Conversion and shall be accompanied with all accrued
but unpaid interest. Notwithstanding the foregoing, Lender may, in its sole
discretion, at the time of Conversion notify Borrower of its election to select
a different amortization schedule for the Note (which revised amortization
schedule will be for the three (3) year period following the date of such
Conversion) based upon Lender's evaluation of the Collateral at the time of
Conversion. In the event Lender elects a modified amortization schedule as
provided in the preceding sentence, Borrower will, upon request by Lender,
execute and deliver to Lender (i) a renewal Note and (ii) such additional
documents as Lender may deem necessary to effect such modification.
Section 2.8. Optional Prepayments. Borrower may, upon notice
received by Lender not later than l :00 p.m., Dallas, Texas time, from time to
time and without premium or penalty prepay the Note, in whole or in part, so
long as each partial prepayment of principal on the Note is greater than or
equal to $100,000, and so long as Borrower does not prepay any Fixed Rate
Portion, and so long as Borrower does not make any prepayments which would
reduce the unpaid principal balance of the Loan to less than $100,000 without
first either (a) terminating this Agreement or (b) providing assurance
satisfactory to Lender in its discretion that Lender's 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 Note in the
inverse order of their maturities. Each prepayment of principal under this
Section 2.8 shall be accompanied by all interest then accrued and unpaid on the
principal so prepaid. Any principal or interest prepaid pursuant to this
Section 2.8 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.
Section 2.9. Mandatory Prepayments. If the sum of (a) the unpaid
principal balance of the Loan plus (b) the Letter of Credit Exposure ever
exceeds the Borrowing Base, Borrower shall, within thirty (30) days after
Lender gives notice of such fact to Borrower, either (a) prepay the principal
of the Loan in an amount at least equal to such excess and if the Loan has been
repaid in full, make deposits into the Letter of Credit Cash Collateral Account
to provide cash collateral for the Letter of Credit Exposure, such that such
excess is eliminated or (b) grant to Lender first perfected Liens in and to
such additional Collateral satisfactory to Lender, to increase the Borrowing
Base to an amount at least equal to the sum of (i) the then outstanding
principal balance of the Loan plus (ii) the Letter of Credit Exposure. Each
prepayment of principal under this Section 2.9 shall be accompanied by all
interest then accrued and unpaid on the principal so prepaid. Any principal or
interest prepaid pursuant to this Section 2.9 shall be in addition to, and not
in lieu of, all payments
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otherwise required to be paid under the Loan Documents at the time of such
prepayment. During the Commitment Period, in the event Borrower fails to
comply with the provisions of this Section 2.9, then upon the expiration of the
thirty (30) day period set forth in the first sentence of this section, the
Loan will convert into a term loan upon the terms and conditions set forth in
Section 2.7.
Section 2.10. Payments to Lender. Borrower will make each payment
which it owes under the Loan Documents not later than 12:00 noon, Los Angeles,
California 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
Lender 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 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 the Note. When Lender collects or
receives money on account of the Obligations which is insufficient to pay all
obligations then due and payable, Lender may apply such money as it elects to
the various Obligations which are then due and payable.
Section 2.11. Initial Borrowing Base. During the period from the
date hereof to the first Determination Date the Borrowing Base shall be
$19,000,000.
Section 2.12. Subsequent Determinations of Borrowing Base. At
least 30 days before each Evaluation Date Borrower shall furnish to Lender all
information, reports and data which Lender has then requested concerning the
Related Persons' businesses and properties (including their oil and gas
properties and interests and the reserves and production relating thereto),
together with the Engineering Report most recently delivered to Lender pursuant
to Section 5.l(b)(iv) or Section 5.l(b)(v). On each Evaluation Date, or as
promptly thereafter as practicable, Lender shall by notice to Borrower
designate the new Borrowing Base available to Borrower hereunder, which
designation shall take effect immediately on the date such notice is sent
(herein called a "Determination Date") and shall remain in effect until but not
including the next date as of which the Borrowing Base is redetermined. If
Borrower does not furnish all such information, reports and data by the date
specified in the first sentence of this Section 2.12, Lender may nonetheless
designate the Borrowing Base at any amount which Lender determines and may
redesignate the Borrowing Base from time to time thereafter until Lender
receives all such information, reports and data, whereupon Lender shall
designate a new Borrowing Base as described above. Lender shall determine the
amount of the Borrowing Base based upon the loan collateral value which it in
its discretion assigns to the various items of Collateral at the time in
question in accordance with their respective customary practices and standards
applied generally to loans of this type and size and based upon such other
credit factors (including without limitation the assets, liabilities, cash
flow, business, properties, prospects, management and ownership of Borrower and
its Affiliates) as Lender in its discretion
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deems significant. It is expressly understood that Lender has no obligation to
designate the Borrowing Base at any particular amount, whether in relation to
the face amount of the Note or otherwise, and that Lender's commitment 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 the
fees under Section 2.5(b) and Section 2.5(c) and, to the extent permitted by
Law and regulatory authorities, for the purposes of Section 2.14.
Section 2.13. Borrower's Reduction of Borrowing Base. Until the
termination of the Commitment Period, Borrower may at any time upon five (5)
Business Days' prior notice to Lender reduce the Borrowing Base then in effect
to any lesser amount provided that (a) each reduction must be in the amount of
$100,000 and (b) each reduction must be accompanied by a prepayment of the Note
in the amount by which the outstanding principal balance plus the Letter of
Credit Exposure exceeds the reduced Borrowing Base plus all then accrued but
unpaid interest. Each such notice shall take effect on the date specified
therein (but may not be retroactive) and shall continue in effect until the
next date as of which the Borrowing Base is redetermined.
Section 2.14. Capital Reimbursement. If either (a) the
introduction or implementation of or the compliance with or any change in or in
the interpretation of any Law, or (b) the introduction or implementation of or
the compliance with any request, directive or guideline from any central bank
or other governmental authority (whether or not having the force of Law)
affects or would affect the amount of capital required or expected to be
maintained by Lender or any corporation controlling Lender, then, upon demand
by Lender, Borrower will pay to Lender, from time to time as specified by
Lender, such additional amount or amounts which Lender shall determine to be
appropriate to compensate Lender or any corporation controlling Lender in light
of such circumstances, to the extent that Lender reasonably determines that the
amount of any such capital would be increased or the rate of return on any such
capital would be reduced by or in whole or in part based on the existence of
the face amount of Lender's Loan or commitments under this Agreement.
Section 2.15. Increased Cost of Fixed Rate Portions. If any
applicable domestic or foreign Law, treaty or rule (whether now in effect or
hereinafter enacted or promulgated, including Regulation D) or any
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof (whether or not having the
force of Law):
(a) Shall change the basis of taxation of payments to
Lender of any principal, interest, or other amounts attributable to
any Fixed Rate Portion or otherwise due under this Agreement in
respect of any Fixed Rate Portion (other than Taxes imposed on the
overall net income of Lender or any lending office of Lender by any
jurisdiction in which Lender or any such lending office is located);
or
(b) shall change, impose, modify, apply or deem
applicable any reserve, special deposit or similar requirements in
respect of any Fixed Rate Portion (excluding those for
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which Lender is fully compensated pursuant to adjustments made in the
definition of Fixed Rate) or against assets of, deposits with or for
the account of, or credit extended by, Lender; or
(c) shall impose on Lender or the interbank eurocurrency
deposit market any other condition affecting any Fixed Rate Portion,
the result of which is to increase the cost to Lender of funding or
maintaining any Fixed Rate Portion or to reduce the amount of any sum
receivable by Lender in respect of any Fixed Rate Portion by an amount
deemed by Lender to be material, then Lender shall promptly notify
Borrower in writing of the happening of such event and of the amount
required to compensate Lender for such event (on an after-tax basis,
taking into account any Taxes on such compensation), whereupon (i)
Borrower shall pay such amount to Lender and (ii) Borrower may elect,
by giving to Lender not less than three (3) Business Days' notice, to
convert all (but not less than all) of any such Fixed Rate Portion
into a part of the Base Rate Portion.
Section 2.16. Availability. If (a) any change in applicable Laws,
treaties or rules or in the interpretation or administration thereof of or in
any jurisdiction whatsoever, domestic or foreign, shall make it unlawful or
impracticable for Lender to fund or maintain Fixed Rate Portions, or shall
materially restrict the authority of Lender to purchase or take offshore
deposits of dollars (i.e., "eurodollars"), (b) Lender determines that matching
deposits appropriate to fund or maintain any Fixed Rate Portion are not
available to it, or (c) Lender determines that the formula for calculating the
Fixed Rate does not fairly reflect the cost to Lender of making or maintaining
loans based on such rate, then Borrower's right to elect Fixed Rate Portions
shall be suspended to the extent and for the duration of such illegality,
impracticability or restriction and all Fixed Rate Portions (or portions
thereof) which are then outstanding or are then the subject of any Rate
Election and which cannot lawfully or practicably be maintained or funded shall
immediately become or remain part of the Base Rate Portion. Borrower agrees to
indemnify Lender and hold it harmless against all costs, expenses, claims,
penalties, liabilities and damages which may result from any such change in
Law, treaty, rule, interpretation or administration. Such indemnification
shall be on an after-tax basis, taking into account any Taxes imposed on the
amounts paid as indemnity.
Section 2.17. Funding Losses. In addition to its other obligations
hereunder, Borrower will indemnify Lender against, and reimburse Lender on
demand for, any loss or expense incurred or sustained by Lender (including any
loss or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by Lender to fund or maintain Fixed Rate
Portions or Advances), as a result of (a) any payment or prepayment (whether
authorized or required hereunder or otherwise) of all or a portion of a Fixed
Rate Portion on a day other than the day on which the applicable Interest
Period ends, (b) any payment or prepayment, whether required hereunder or
otherwise, of the Loan made after the delivery, but before the effective date,
of a Rate Election, if such payment or prepayment prevents such Rate Election
from becoming fully effective, (c) the failure of any Advance to be made or of
any Rate Election to become effective due to any condition precedent not being
satisfied or due to any other action or inaction of any Related Person,
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or (d) any conversion (whether authorized or required hereunder or otherwise)
of all or any portion of any Fixed Rate Portion into the Base Rate Portion or
into a different Fixed Rate Portion on a day other than the day on which the
applicable Interest Period ends. Such indemnification shall be on an after-tax
basis, taking into account any Taxes imposed on the amounts paid as indemnity.
Section 2.18. Reimbursable Taxes. Borrower covenants and agrees
that:
(a) Borrower will indemnify Lender against and reimburse
Lender for all present and future income, stamp and other Taxes
whatsoever imposed, assessed, levied or collected on or in respect of
this Agreement or any Fixed Rate Portions (whether or not legally or
correctly imposed, assessed, levied or collected), excluding, however,
any Taxes imposed on or measured by the overall net income of Lender
or any lending office of Lender by any jurisdiction in which Lender or
any such lending office is located (all such non-excluded Taxes being
collectively called "Reimbursable Taxes" in this Section 2.18). Such
indemnification shall be on an after-tax basis, taking into account
any Taxes imposed on the amounts paid as indemnity.
(b) All payments on account of the principal of, and
interest on, the Loan and the Note, and all other amounts payable by
Borrower to Lender hereunder, shall be made in full without set-off or
counterclaim and shall be made free and clear of and without
deductions or withholdings of any nature by reason of any Reimbursable
Taxes, all of which will be for the account of Borrower. In the event
of Borrower being compelled by Law to make any such deduction or
withholding from any payment to Lender, Borrower shall pay on the due
date of such payment, by way of additional interest, such additional
amounts as are needed to cause the amount receivable by Lender after
such deduction or withholding to equal the amount which would have
been receivable in the absence of such deduction or withholding. If
Borrower should make any deduction or withholding as aforesaid,
Borrower shall within 60 days thereafter forward to Lender an official
receipt or other official document evidencing payment of such
deduction or withholding.
(c) If Borrower is ever required to pay any Reimbursable
Tax with respect to any Fixed Rate Portion, Borrower may elect, by
giving to Lender not less than three (3) Business Days' notice, to
convert all (but not less than all) of any such Fixed Rate Portion
into a part of the Base Rate Portion, but such election shall not
diminish Borrower's obligation to pay all Reimbursable Taxes.
Section 2.19 Letter of Credit Facility.
(a) Commitment for Letters of Credit. The Lender shall,
on the terms and conditions set forth in this Agreement and for the
purposes set forth in Section 2.3 issue, increase, and extend Letters
of Credit for the account of the Borrower from time to time on any
Business Day during the Commitment Period; provided that, the (i)
outstanding principal
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amount of Advances plus (ii) the Letter of Credit Exposure may not
exceed the Borrowing Base as of the date on which the requested Letter
of Credit is to be issued. Each Letter of Credit which is extendable
beyond its expiration date must be cancelable upon at least 30 days
notice given by the Lender to the beneficiary of such Letter of
Credit, and no Letter of Credit (other than the Bond Letter of Credit)
may have a maturity greater than 12 months. Each Letter of Credit
must be in form and substance acceptable to the Lender in its sole
discretion. The indebtedness of the Borrower to the Lender resulting
from Letters of Credit shall be evidenced by the Letter of Credit
Applications.
(b) Requesting Letters of Credit. Each Letter of Credit
shall be issued, increased, or extended pursuant to a Letter of Credit
Application or Letter of Credit Application Amendment, as applicable,
given by the Borrower to the Lender in writing or by telecopy promptly
confirmed in writing, such Letter of Credit Application or Letter of
Credit Application Amendment being given not later than 11:00 a.m.
(Dallas, Texas, time) on the fifth Business Day before the date of the
proposed issuance, increase, or extension of the Letter of Credit, or
later if agreed by the Lender. Each Letter of Credit Application or
Letter of Credit Application Amendment shall be fully completed and
shall specify the information required therein, and shall be
irrevocable and binding on the Borrower unless such Letter of Credit
Application or Letter of Credit Application Amendment is rejected by
the Lender. The Lender shall promptly review such Letter of Credit
Application or Letter of Credit Application Amendment. If the Letter
of Credit Application or Letter of Credit Application Amendment is
incomplete, the Lender shall promptly notify the Borrower of the
failure of the Letter of Credit Application or Letter of Credit
Application Amendment and the reason therefor and the Lender shall
have no obligation to issue, increase, or extend any Letter of Credit
under such Letter of Credit Application or Letter of Credit
Application Amendment. For each requested issuance of a Letter of
Credit, the Lender shall promptly notify the Borrower of the proposed
form of the Letter of Credit. Subject to the satisfaction of all
applicable conditions precedent, the Lender shall before close of
business on the date requested by the Borrower for the issuance,
increase, or extension of such Letter of Credit issue, increase, or
extend such Letter of Credit to the specified beneficiary.
(c) Fees for Letters of Credit. For each Letter of
Credit issued by the Lender (including Letters of Credit issued
pursuant to Section 5.2(j)), the Borrower shall pay to the Lender a
letter of credit fee equal to 1.00% per annum on the face amount of
such Letter of Credit for the stated term of such Letter of Credit.
The letter of credit fee shall be based upon a 360-day year for the
stated number of days the Letter of Credit could remain outstanding.
The Borrower shall pay the letter of credit fee for each Letter of
Credit annually in advance within fifteen days after when billed
therefore by the Lender. In addition, the Borrower shall pay all
reasonable processing and handling fees and expenses incurred or
charged by the Bank in connection with the Letters of Credit. The
Borrower shall have no right to any refund of letter of credit fees
previously paid by the Borrower, including any
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refund claimed because the Borrower reduces the amount of any Letter
of Credit or cancels any Letter of Credit prior to its expiration
date.
(d) Prepayments of Letters of Credit. In the event that
any Letters of Credit will be outstanding according to their terms
after the Commitment Period, the Lender shall have no obligation to
release any security or support for the Credit Obligations unless the
Borrower shall pay to the Lender an amount equal to the Letter of
Credit Exposure allocable to such Letters of Credit to be held in the
Letter of Credit Collateral Account. At any time the Lender may apply
such cash collateral to any reimbursement obligation or other
obligation of the Borrower to the Lender under any Letter of Credit
Application related to such Letters of Credit.
(e) Reimbursements for Letters of Credit. With respect
to any Letter of Credit and in accordance with the related Letter of
Credit Application, the Borrower agrees to pay on demand to the Lender
any amount due to the Lender under such Letter of Credit Application.
If the Borrower does not pay upon demand of the Lender any amount due
to the Lender under any Letter of Credit Application, (i) the Lender
may pursue its rights under such Letter of Credit Application and
under this Agreement, or (ii) if the commitment of the Lender to make
Advances hereunder has not been terminated, whether by agreement,
maturity, under Section 7.1, or otherwise, the Lender may upon written
notice to the Borrower satisfy such obligation by the making of an
Advance which is designated as a Base Rate Portion on behalf of the
Borrower and the transfer of the proceeds thereof to the Lender. The
Borrower hereby unconditionally and irrevocably authorizes, empowers,
and directs the Lender to make such an Advance on behalf of the
Borrower, to transfer the proceeds thereof to the Lender in
satisfaction of such obligations, and to record and otherwise treat
such payment as the making of an Advance which is designated as a Base
Rate Portion to the Borrower under this Agreement. Nothing herein is
intended to release any of the Borrower's obligations under any Letter
of Credit Application, but only to provide a method of payment
therefor.
(f) Obligations Unconditional. The obligations of the
Borrower under this Agreement and the Letter of Credit Applications to
reimburse the Lender for draws under Letters of Credit and to make
other payments due in respect of Letters of Credit shall be
unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement and the Letter of Credit
Applications under all circumstances, including:
(i) any lack of validity or enforceability of any
Letter of Credit Document;
(ii) any amendment, waiver, or consent to
departure from any Letter of Credit Document;
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(iii) the existence of any claim, set-off, defense,
or other right which the Borrower may have at any time against any
beneficiary or transferee of any Letter of Credit (or any Persons for
whom any such beneficiary or any such transferee may be acting), the
Lender, or any other person or entity, whether in connection with the
transactions contemplated in this Agreement or any unrelated
transaction;
(iv) any statement or any other document presented
under such Letter of Credit proving to be forged, fraudulent, invalid,
or insufficient in any respect or any statement therein being untrue
or inaccurate in any respect; or
(v) payment by the Lender under any Letter of
Credit against presentation of a draft or certificate which does not
comply with the terms of such Letter of Credit; provided, however,
that nothing contained in this paragraph (f) shall be deemed to
constitute a waiver of any remedies of the Borrower in connection with
the Letters of Credit or the Borrower's rights under paragraph (g)
below.
(g) Liability of Lender. The Lender shall not be liable
or responsible for, and the Borrower assumes full responsibility for:
(i) the use which may be made of any Letter of
Credit or any acts or omissions of any beneficiary or transferee in
connection therewith;
(ii) the validity, sufficiency, or genuineness of
documents related to Letters of Credit, or of any endorsement thereon,
even if such documents should prove to be in any or all respects
invalid, insufficient, fraudulent, or forged;
(iii) payment by the Lender against presentation of
documents which do not comply with the terms of a Letter of Credit,
including failure of any documents to bear any reference or adequate
reference to the relevant Letter of Credit; or
(iv) any other circumstances whatsoever in making
or failing to make payment under any Letter of Credit (INCLUDING THE
LENDER'S OWN NEGLIGENCE),except that the Lender shall be liable to the
Borrower, to the extent of any direct, as opposed to consequential,
damages suffered by the Borrower which the Borrower proves were caused
by (A) the Lender's gross negligence or willful misconduct in
determining whether documents presented under a Letter of Credit
comply with the terms of such Letter of Credit or (B) the Lender's
willful failure to make or delay in making lawful payment under any
Letter of Credit after the presentation to it of documentation
strictly complying with the terms and conditions of such Letter of
Credit or the Lender's payment of greater than the maximum amount
permitted under any Letter of Credit. In furtherance and not in
limitation of the foregoing, the Lender may accept documents that
appear on their
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face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary.
(h) Letter of Credit Collateral Account.
(i) If the Borrower is required to deposit funds
in the Letter of Credit Collateral Account pursuant to this Agreement,
then the Borrower and the Lender shall establish the Letter of Credit
Collateral Account and the Borrower shall execute any documents and
agreements, including the Lender's standard form assignment of deposit
accounts, that the Lender requests in connection therewith to
establish the Letter of Credit Collateral Account and grant the Lender
a first priority security interest in such account and the funds
therein. The Borrower hereby pledges to the Lender and grants the
Lender a security interest in the Letter of Credit Collateral Account,
whenever established, all funds held in the Letter of Credit
Collateral Account from time to time, and all proceeds thereof as
security for the payment of the Obligations.
(ii) So long as no Event of Default exists, (A)
the Lender may apply the funds held in the Letter of Credit Collateral
Account only to the reimbursement of any reimbursement obligations and
other obligations under Letter of Credit Applications, and (B) the
Lender shall release to the Borrower at the Borrower's written request
any funds held in the Letter of Credit Collateral Account in an amount
up to but not exceeding the excess, if any (immediately prior to the
release of any such funds), of the total amount of funds held in the
Letter of Credit Collateral Account over the Letter of Credit
Exposure. During the existence of any Event of Default, the Lender
may apply any funds held in the Letter of Credit Collateral Account to
the Credit Obligations in any order determined by the Lender,
regardless of any Letter of Credit Exposure which may remain
outstanding. The Lender may in its sole discretion at any time
release to the Borrower any funds held in the Letter of Credit
Collateral Account.
(iii) The Lender shall have no obligation to invest
funds held in the Letter of Credit Collateral Account. The Lender
shall exercise reasonable care in the custody and preservation of any
funds held in the Letter of Credit Collateral Account and shall be
deemed to have exercised such care if such funds are accorded
treatment substantially equivalent to that which the Lender accords
its own property, it being understood that the Lender shall not have
any responsibility for taking any necessary steps to preserve rights
against any parties with respect to any such funds.
(i) Cash Collateralization of Letters of Credit. Upon
the occurrence of any Event of Default relating to bankruptcy or
insolvency under Section 7.1(h), the Borrower shall pay to the Lender
an amount equal to the Letter of Credit Exposure to be held in the
Letter of Credit Collateral Account for disposition in accordance with
Section 2.19(h). During the continuation of any Event of Default
other than a bankruptcy or insolvency Event of Default
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under Section 7.1(h), the Lender may require by written notice to the
Borrower that the Borrower pay to the Lender an amount equal to the
Letter of Credit Exposure to be held in the Letter of Credit
Collateral Account for disposition in accordance with Section 2.19(h).
(j) Hedging Obligations. Notwithstanding the foregoing,
the Lender shall have no commitment or other obligation to issue the
Letters of Credit described in Section 5.2(j) and the issuance of any
such Letters of Credit shall be in the Lender's sole discretion as
provided therein. Each Letter of Credit issued pursuant to such
Section 5.2(j) shall nonetheless be subject to, and have the benefit
of, all of the provisions applicable to Letters of Credit under this
Agreement, including this Section 2.19.
ARTICLE III -- Conditions Precedent to Lending
Section 3.1. Documents to be Delivered. This Agreement shall not
be effective unless Lender shall have received all of the following, at
Lender's office in Dallas, Texas, duly executed and delivered and in form,
substance and date satisfactory to Lender:
(a) The Note.
(b) An "Omnibus Certificate" of the Secretary and of the
Chairman of the Board or President of General Partner, which shall
contain the names and signatures of the officers of General Partner
authorized to execute Loan Documents on behalf of Borrower and which
shall certify to the truth, correctness and completeness of the
following exhibits attached thereto: (i) a copy of resolutions duly
adopted by the Board of Directors of General Partner 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, (ii) a copy of the
charter documents of General Partner and all amendments thereto,
certified by the appropriate official of General Partner's state of
organization, (iii) a copy of any bylaws of General Partner, (iv) a
copy of the limited partnership agreement of Borrower and all
amendments thereto, (v) a copy of Borrower's Certificate of Limited
Partnership, certified by the appropriate official of Borrower's state
of organization, (vi) a copy of the charter documents of Operator and
all amendments thereto, certified by the appropriate official of
Operator's state of organization and (vii) a copy of any bylaws of
Operator.
(c) A certificate (or certificates) of the due formation,
valid existence and good standing of Borrower in its state of
organization, issued by the appropriate authorities of such
Jurisdiction.
(d) A "Compliance Certificate" of the Chairman of the
Board or President and of the chief financial officer of General
Partner, of even date with such Advance, in which
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such officers certify to the satisfaction of the conditions set out in
subsections (a), (b), (c) and (d) of Section 3.2.
(e) A favorable opinion of Messr. C. Xxxxxxx Xxxx,
counsel for Borrower, General Partner and Operator, substantially in
the form set forth in Exhibit E.
(f) Each Security Document listed in the Security
Schedule.
(g) Certificates of Borrower's good standing and due
qualification to do business, issued by appropriate officials in any
states in which Borrower owns property subject to Security Documents.
(h) Documents similar to those specified in subsections
(c) and (g) of this Section 3.1 with respect to General Partner and
Operator.
(i) Title opinions in form, substance and authorship
satisfactory to Lender, concerning the properties listed on Schedule
3.
(j) The facility fee described in Section 2.5(a).
(k) Evidence satisfactory to Lender that Borrower is in
compliance with the insurance requirements of Section 5.l(h).
(l) A duly executed and delivered copy of the Purchase
and Sale Agreement among Borrower, FGL, Inc. and EG Operating and all
conveyances, lien releases and other documents and instruments
executed in connection therewith.
(m) Evidence satisfactory to the Lender that the
Borrower, FGL, Inc. and EG Operating shall have consummated the
transactions contemplated by the Purchase and Sale Agreement referred
to in Section 3.1(m) above.
Section 3.2. Additional Conditions Precedent. Lender has no
obligation to make any Advance (including the first) or issue, extend or amend
any Letter of Credit 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 Advance or the date of issuance, extension or amendment
of any Letter of Credit (except to the extent that the facts upon
which such representations 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 Advance or such
issuance, extension or amendment, as applicable.
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(b) No Default shall exist at the date of such Advance or
such issuance, extension or amendment of any Letter of Credit, as
applicable.
(c) No material adverse change shall have occurred to
Borrower's individual or Consolidated financial condition or
businesses since the date of this Agreement.
(d) Each Related Person shall have performed and complied
with all agreements and conditions required in the Loan Documents to
be performed or complied with by it on or prior to the date of such
Advance or such issuance, extension or amendment of any Letter of
Credit.
(e) The making of such Advance or such issuance,
extension or amendment of any Letter of Credit shall not be prohibited
by any Law and shall not subject Lender to any penalty or other
onerous condition under or pursuant to any such Law.
(f) Lender shall have received all documents and
instruments which Lender has then requested, in addition to those
described in Section 3.1 (including opinions of legal counsel for the
Related Persons and Lender; 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 Borrower
and other Persons), as to (i) the accuracy and validity of or
compliance with all representations, warranties and covenants made by
any of the Related Persons 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 satisfactory to
Lender in form, substance and date.
(g) All legal matters relating to the Loan Documents and
the consummation of the transactions contemplated thereby shall be
satisfactory to Messrs. Xxxxxxxxx & Xxxxxxxxx, L.L.P., counsel to
Lender.
ARTICLE IV -- Representations and Warranties
Section 4.1. Borrower's Representations and Warranties. To
confirm Lender's understanding concerning Borrower and Borrower's business,
properties and obligations and to induce Lender to enter into this Agreement
and to make the Loan, Borrower represents and warrants to Lender that:
(a) No Default. Borrower is not in default in the
performance of any of the covenants and agreements contained herein.
No event has occurred and is continuing which constitutes a Default.
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(b) Organization and Good Standing. Each Related Person
which is a corporation or partnership is duly organized, validly
existing and in good standing under the Laws of its state of
organization, having all corporate or partnership powers required to
carry on its business and enter into and carry out the transactions
contemplated hereby. Each such 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. Each such
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.
(c) Authorization. Each Related Person which is a
corporation or partnership has duly taken all corporate or partnership
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. Borrower is duly
authorized to borrow funds hereunder.
(d) 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 domestic or foreign Law, (2) the articles or
certificate of incorporation, bylaws, charter, or partnership
agreement or certificate of any Related Person, or (3) any 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, or (iii) result in or require the creation of any
Lien upon any assets or properties of any Related Person except as
expressly contemplated in the Loan Documents. 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.
(e) 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.
(f) Financial Statements. The Financial Statements
fairly present the Borrower's Consolidated financial position at the
respective dates thereof and the Consolidated results of the
Borrower's operations and the Borrower's Consolidated cash flows for
the respective
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periods thereof. Since the date of the audited annual Financial
Statements no material adverse change has occurred in the Borrower's
financial condition or businesses or in the Borrower's Consolidated
financial condition or businesses, except as reflected in the
quarterly Financial Statements or in the Disclosure Schedule. All
Financial Statements were prepared in accordance with GAAP.
(g) 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 Borrower or
material with respect to Borrower's Consolidated financial condition
and not shown in the Financial Statements or disclosed in the
Disclosure Schedule or a Disclosure Report. Except as shown in the
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 is materially likely in the
foreseeable future to materially and adversely affect the businesses,
properties, prospects, operations, or financial condition of such
Related Person or of Borrower on a Consolidated basis.
(h) Full Disclosure. No certificate, statement or other
information delivered herewith or heretofore by any Related Person to
Lender in connection with the negotiation of this Agreement or in
connection with any transaction contemplated hereby 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 the
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 that has not been disclosed to
Lender in writing which could materially and adversely affect
Borrower's properties, business, prospects or condition (financial or
otherwise) or Borrower's Consolidated properties, businesses,
prospects or condition (financial or otherwise). There are no
statements or conclusions in any Engineering Report which are based
upon or include misleading information or fail to take into account
material information regarding the matters reported therein, it being
understood that each Engineering Report is necessarily based upon
professional opinions, estimates and projections and that Borrower
does not warrant that such opinions, estimates and projections will
ultimately prove to have been accurate. Borrower has heretofore
delivered to Lender true, correct and complete copies of the Financial
Statements and its most recent Engineering Report.
(i) Litigation. Except as disclosed in the 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, domestic or foreign, which do
or may materially and adversely affect Borrower or, on a Consolidated
basis, Borrower and its properly Consolidated subsidiaries, their
ownership or use of any of their assets or properties, their
businesses or financial condition or prospects, or the right or
ability of any Related
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Person to enter into the Loan Documents to which it is a party or to
consummate the transactions contemplated thereby or to perform its
obligations thereunder and (ii) there are no outstanding Judgments,
injunctions, writs, rulings or orders by any such governmental entity
against any Related Person or any Related Person's stockholders,
partners, directors or officers which have or may have any such
effect.
(j) ERISA Liabilities. All currently existing ERISA
Plans are listed in the Disclosure Schedule or a Disclosure Report.
Except as disclosed in the Financial Statements or in the Disclosure
Schedule or a Disclosure Report, no Termination Event has occurred
with respect to any ERISA Plan and the Related Persons are in
compliance with ERISA in all material respects. No Related Person 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 4 12(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.
(k) Environmental and Other Laws. The Related Persons
are conducting their businesses in material compliance with all
applicable Laws, including without limitation all applicable
Environmental Laws. Except as disclosed in the Disclosure Schedule or
a Disclosure Report: no Related Person (i) has received any notice or
otherwise learned of any claimed Environmental Liability which would,
if adversely determined, individually or in the aggregate have a
material and adverse effect on the financial condition or business
operations of Borrower or on the validity, performance, perfection or
enforceability of any of the Loan Documents, arising in connection
with (A) any non-compliance with or violation of the requirements of
any Environmental Law or (B) the release or threatened release of any
Hazardous Materials into the environment or to the improper storage or
disposal (including storage or disposal at off-site locations) of any
Hazardous Materials, (ii) has had any threatened or actual liability
in connection with the release or threatened release of any Hazardous
Materials into the environment or to the improper storage or disposal
of any Hazardous Materials, which would individually or in the
aggregate have a material and adverse effect on the financial
condition or business operations of Borrower or on the validity,
performance, perfection or enforceability of any of the Loan Documents
or (iii) has received notice or otherwise learned of any federal or
state investigation evaluating whether any remedial action is needed
to respond to a release or threatened release of any Hazardous
Materials into the environment or to the improper storage or disposal
of any Hazardous Materials for which such Related Person is or may be
liable. For purposes of this Section 4.1(k), the term "Environmental
Liability" means any claim, demand, obligation, cause of action,
accusation, allegation, order, violation, damage, injury, judgment,
penalty or fine, cost of enforcement, cost of remedial action or any
other cost or expense whatsoever,
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including reasonable attorneys' fees and disbursements, resulting from
the violation or alleged violation of any Environmental Law.
(l) Names and Places of Business. None of Borrower,
General Partner or Operator 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 Borrower, General Partner and Operator are located at the
address of Borrower set forth on the signature page hereto. Except as
indicated in the Disclosure Schedule or a Disclosure Report, none of
Borrower, General Partner or Operator has any other office or place of
business.
(m) Borrower's Subsidiaries. Borrower does not presently
have any Subsidiary or own any stock in any other corporation or
association except those listed in the Disclosure Schedule or a
Disclosure Report. Borrower is not 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, Borrower owns,
directly or indirectly, the equity interest in each of its
Subsidiaries which is indicated in the Disclosure Schedule.
(n) Title to Properties. 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 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.
(o) Government Regulation. Neither Borrower 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.
(p) Insider. Neither Borrower, nor any other 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 Borrower, 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 Lender, of a bank holding company of which Lender is a
Subsidiary or of any Subsidiary of a bank holding company of which
Lender is a Subsidiary.
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(q) 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 Borrower is not a party to or bound by any
material contracts or agreements other than those disclosed to Lender.
(r) Solvency. Borrower is, and upon giving effect to the
issuance of the Note, the execution of the Loan Documents by Borrower
and the consummation of the transactions contemplated hereby will be,
solvent (as such term is used in applicable bankruptcy, liquidation,
receivership, insolvency or similar Laws).
(s) No Financing of Regulated Corporate Takeovers. No
proceeds of any Advance 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.
Section 4.2. Representation by Lender. Lender hereby represents
that it will acquire the Note for its own account in the ordinary course of its
commercial lending business; however, the disposition of Lender's property
shall at all times be and remain within its control and, in particular and
without limitation, Lender may sell or otherwise transfer the Note, any
participation interest or other interest in the Note, or any of its other
rights and obligations under the Loan Documents.
ARTICLE V -- Covenants of Borrower
Section 5.1. Affirmative Covenants. To conform with the terms and
conditions under which Lender is willing to have credit outstanding to
Borrower, and to induce Lender to enter into this Agreement and make the Loan,
Borrower warrants, covenants and agrees that until the full and final payment
of the Obligations and the termination of this Agreement, unless Lender has
previously agreed otherwise:
(a) Payment and Performance. Borrower 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. Borrower
will cause the other Related Persons to observe, perform and comply
with every such term, covenant and condition.
(b) Books, Financial Statements and Reports. Each
Related Person will at all times maintain full and accurate books of
account and records. Borrower will maintain and will cause its
Subsidiaries to maintain a standard system of accounting and will
furnish the following statements and reports to Lender at Borrower's
expense:
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(i) 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
Borrower 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 Xxxxxx Xxxxxxxx & Co., or other independent
certified public accountants selected by Borrower and
acceptable to Lender, 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 partners' capital for such Fiscal Year, each
setting forth in comparative form the corresponding figures
for the preceding Fiscal Year. In addition, within ninety
(90) days after the end of each Fiscal Year, Borrower will
furnish a report signed by such accountants stating that they
have read this Agreement, containing calculations showing
compliance (or non-compliance) at the end of such Fiscal Year
with the requirements of Section 5.2(e), and further stating
that in making the examination and reporting on the
Consolidated financial statements described above they did not
conclude that any Default existed at the end of such Fiscal
Year or at the time of their report, or, if they did conclude
that a Default existed, specifying its nature and period of
existence.
(ii) 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 Year, Borrower's Consolidated
and consolidating balance sheet as of the end of such Fiscal
Quarter and Consolidated and consolidating statements of
Borrower's earnings and cash flows for the period from the
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 Borrower will, together
with each such set of financial statements and each set of
financial statements furnished under subsection (i) of this
Section 5.l(b), furnish a certificate in the form of Exhibit D
signed by the chief financial officer of Borrower stating that
such financial statements are accurate and complete, 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 Section
5.2(e), 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.
(iii) Promptly upon their becoming available,
copies of all financial statements, reports and notices sent
by Borrower to its partners.
(iv) By March 1 of each year (beginning March 1,
1998), an engineering report prepared by an independent
petroleum engineer chosen by Borrower and acceptable to
Lender, concerning all oil and gas properties and interests
owned by
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Borrower 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 in form and substance
satisfactory to Lender, 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 Engineering Report delivered in
connection with the March 1, 1997 Evaluation Date. This
report shall distinguish (or shall be delivered together with
a certificate from an appropriate officer of Borrower which
distinguishes) those properties treated in the report which
are Collateral from those properties treated in the report
which are not Collateral.
(v) By September 1 of each year beginning
September 1, 1997, and thereafter on the sixth- month
anniversary of each report required to be delivered pursuant
to such Section 5.1(b)(iv)), an engineering report prepared by
in-house petroleum engineers employed by Borrower concerning
all oil and gas properties and interests owned by Borrower
which are located in or offshore of the United States and
which have attributable to them proved oil and gas reserves.
This report shall be substantially in the form and substance
as the reports delivered under Section 5.1(b)(iv) above and
otherwise shall be satisfactory to Lender. Notwithstanding
the foregoing, in the event Borrower acquires (through one
transaction or a series of related transactions) properties
having an aggregate purchase of at least $5,000,000, Borrower
will, together with the report described above in this Section
5.1(b)(v), deliver to Lender an engineering report prepared by
independent petroleum engineers meeting the requirements of
Section 5.l(b)(iv) covering such properties.
(vi) As soon as available, and in any event within
fifteen (15) Business Days after the end of each March, June,
September and December, a report describing by lease or unit
the gross volume of production and sales attributable to
production during such quarter from the properties described
in Section 5.1(b)(iv) above and describing the related
severance taxes, other taxes, leasehold operating expenses and
capital costs attributable thereto and incurred during such
quarter.
(vii) Within fifteen (15) days after any material
change occurs in insurance coverage by Borrower, a report
describing such change, and, within ninety (90) days after the
end of each Fiscal Year, a new insurance certificate, naming
Lender as an additional insured or loss payee, as appropriate.
(c) Other Information and Inspections. Each Related
Person will furnish to Lender any information which Lender may from
time to time reasonably request concerning any covenant, provision or
condition of the Loan Documents or any matter in connection with the
Related Persons' businesses and operations. Each Related Person will
permit representatives appointed by Lender (including independent
accountants, agents, attorneys, appraisers and any other Persons) to
visit and inspect any of such Related Person's property,
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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 Lender or its representatives to
investigate and verify the accuracy of the information furnished to
Lender in connection with the Loan Documents and to discuss all such
matters with its officers, partners, employees and representatives.
(d) Notice of Material Events and Change of Address.
Borrower will promptly notify Lender:
(i) of any material adverse change in Borrower's
financial condition or Borrower's Consolidated financial
condition or in the aggregate value of the Collateral,
(ii) of the occurrence of any Default,
(iii) of 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,
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 might have a material adverse
effect upon Borrower's Consolidated financial condition or on
the value of any material part of the Collateral,
(iv) of the occurrence of any Termination Event,
(v) of 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
(vi) of the filing of any suit or proceeding
against any Related Person in which an adverse decision could
have a material adverse effect upon any Related Person's
financial condition, business or operations or on the value of
any Collateral.
Upon the occurrence of any of the foregoing, the 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. Borrower will also notify Lender and Lender's
counsel in writing at least twenty (20) 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
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books and records concerning the Collateral, furnishing with such
notice any necessary financing statement amendments or requesting
Lender and its counsel to prepare the same.
(e) Maintenance of Properties. Each Related Person will
maintain, preserve, protect, and keep all Collateral and all other
property used or useful in the conduct of its business in good
condition and in compliance with all applicable Laws and will from
time to time make all repairs, renewals and replacements in accordance
with prudent industry standards.
(f) Maintenance of Existence and Qualifications. Each
Related Person which is a corporation or partnership will maintain and
preserve its corporate or partnership existence and its rights and
franchises in full force and effect and will qualify to do business as
a foreign corporation or partnership in all states or jurisdictions
where required by applicable Law, except where the failure so to
qualify will not have any material adverse effect on Borrower.
(g) Payment of Trade Debt, Taxes, etc. Each Related
Person will (i) timely file all required tax returns; (ii) timely pay
all Taxes; (iii) within ninety (90) days after the same becomes due
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; (iv) pay and discharge when due all
other Debt now or hereafter owed by it; and (v) 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.
(h) Insurance. Each Related Person will keep or cause to
be kept adequately insured by financially sound and reputable insurers
its equipment, vehicles and all other property of a character usually
insured by similar Persons engaged in the same or similar businesses.
Each of the Related Persons shall obtain insurance in their names to
meet the requirements of this Section 5.1(h) and Borrower shall
deliver to Lender endorsements naming Lender as an additional insured
or loss payee, as appropriate, on all liability and property insurance
policies of the Related Persons, together with a detailed schedule of
all insurance of the Related Persons reflecting compliance with the
provisions of this Section 5.1(h). Upon demand by Lender, any
insurance policies covering Collateral shall be endorsed (i) to
provide for payment of losses to Lender as its interests may appear,
pursuant to a mortgage clause (without contribution) of standard form
made part of the applicable policy, (ii) to provide that such policies
may not be canceled or reduced or affected in any manner for any
reason without fifteen days prior notice to Lender, (iii) to provide
for any other matters specified in any applicable Security Document or
which Lender may reasonably require; and (iv) 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
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41
and properties) of the property insured. Each Related Person shall at
all times maintain adequate insurance against its liability for injury
to persons or property, which insurance shall be by financially sound
and reputable insurers.
(i) Payment of Expenses. Whether or not the transactions
contemplated by this Agreement are consummated, Borrower 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 Lender (including attorneys' fees) in connection with (i)
the negotiation, preparation, execution and delivery of the Loan
Documents, and any and all consents, waivers or other documents or
instruments relating thereto, (ii) 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, (iii) the
borrowings hereunder and other action reasonably required in the
course of administration hereof, and (iv) the defense or enforcement
of the Loan Documents or the defense of Lender's exercise of its
rights thereunder (including costs and expenses of determining whether
and how to carry out such defense or enforcement). Notwithstanding
the foregoing, Borrower shall not be liable for fees of Lender's
counsel incurred in connection with the negotiation, preparation,
execution and delivery of this Agreement and the other Loan Documents
at the time of the original closing in an amount in excess of $15,000;
provided that such cap shall not include any filing fees or other
expenses related to this transaction.
(j) Performance on Borrower's 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, Lender may pay the same. Borrower shall immediately
reimburse Lender for any such payments and each amount paid by Lender
shall constitute an Obligation owed hereunder which is due and payable
on the date such amount is paid by Lender.
(k) Interest. Borrower hereby promises to pay interest
to Lender at the Late Payment Rate on all Obligations which Borrower
has in this Agreement promised to pay (including Obligations to pay
fees or to reimburse or indemnify Lender) and which are not paid when
due. Such interest shall accrue from the date such Obligations become
due until they are paid.
(l) 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 with all Laws.
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(m) Environmental Matters; Environmental Reviews.
(i) Each Related Person will comply in all
material respects with all Environmental Laws now or hereafter
applicable to such Related Person 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.
(ii) Borrower will promptly furnish to Lender all
written notices of violation, orders, claims, citations,
complaints, penalty assessments, suits or other proceedings
received by Borrower, or of which it has notice, pending or
threatened against Borrower, by any governmental authority
with respect to any alleged violation of or 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.
(iii) Borrower will promptly furnish to Lender all
requests for information, notices of claim, demand letters,
and other notifications, received by Borrower 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
at any location.
(n) Evidence of Compliance. Each Related Person will
furnish to Lender at such Related Person's or Borrower's expense all
evidence which Lender from time to time reasonably requests as to the
accuracy and validity of or compliance with all representations,
warranties and covenants made by any Related Person in the Loan
Documents, the satisfaction of all conditions contained therein, and
all other matters pertaining thereto.
(o) 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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(p) Subordination of Affiliate Obligations. Borrower
agrees and covenants that until such time as (i) Lender has received
full and final payment of the Note and (ii) all Obligations have been
performed in their entirety, all indebtedness, liability and
obligations of any type (the "Affiliate Obligations"),of Borrower to
any other Related Person or any Affiliate of Borrower, shall be, and
hereby are made, subordinate and inferior to all Debt, Obligations and
liability of Borrower to Lender. Upon the occurrence and continuation
of an Event of Default, no Affiliate Obligation may be paid by
Borrower 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 Borrower receives
payment of any Affiliate Obligations, such Related Person or Affiliate
shall hold such proceeds in trust for Lender and shall immediately
remit same to Lender for application against the Obligations.
(q) Liens on Mortgaged Properties Acquired or Completed
in the Future. Within thirty (30) days following each Determination
Date, Borrower will execute and deliver documentation in form and
substance satisfactory to Lender, granting to Lender first perfected
Liens on and in the oil, gas and mineral lease(s) covering each well
(i) acquired or completed since the prior Determination Date which is
capable of production of Hydrocarbons in paying quantities, insofar as
such lease(s) cover the proration unit assigned to such well, (ii)
which is to be included in the Borrowing Base, and (iii) the Lien on
which is necessary to provide Lender a first perfected Lien on
substantially all of the aggregate value of all oil, gas and mineral
leases owned by Borrower. Prior to the granting of such Liens,
Borrower will furnish to Lender title opinions in form, substance and
authorship satisfactory to Lender and Borrower, concerning such
properties as may be necessary to provide title coverage of not less
than seventy-five percent (75%) of the aggregate value of the oil and
gas properties owned by Borrower.
Section 5.2. Negative Covenants. To conform with the terms and
conditions under which Lender is willing to have credit outstanding to
Borrower, and to induce Lender to enter into this Agreement and make the Loan,
Borrower warrants, covenants and agrees that until the full and final payment
of the Obligations and the termination of this Agreement, unless Lender has
previously agreed otherwise:
(a) Restricted Debt. No Related Person will in any
manner owe or be liable for Restricted Debt except:
(i) the Obligations.
(ii) guaranties of Debt which is owed by Borrower
to Lender.
(iii) Debt in respect of Hedging Contracts
permitted under Section 5.2(j).
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(iv) 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.
(v) miscellaneous items of Restricted Debt not
described in subsections (i), (ii), (iii) and (iv) of this
Section 5.2(a) 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.
(b) Limitation 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.
(c) Limitation on Mergers. Except as permitted by
Section 5.2(f), 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 5.2(c), the term
"substantial value" means property or assets which have a fair market
value in excess of fifty percent (50%) of the fair market value of all
the assets of the acquiring Related Person prior to including the
assets then being acquired. Any Subsidiary of Borrower may, however,
be merged into or consolidated with Borrower, so long as Borrower is
the surviving business entity. No Subsidiary of Borrower which is a
partnership will allow any diminution of Borrower's interest (direct
or indirect) therein.
(d) 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:
(i) equipment which is worthless or obsolete or
which is replaced by equipment of equal suitability and value.
(ii) inventory (including oil and gas sold as
produced and seismic data) which is sold in the ordinary
course of business on ordinary trade terms.
(iii) contracts for the future sale of fixed
quantities of oil and gas at fixed prices, so long as the
contracting party is acceptable to Lender.
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(iv) 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 Borrower's Consolidated financial condition,
business or operations.
Neither Borrower nor any other Related Person will sell, transfer or
otherwise dispose of capital stock of any of Borrower'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.
(e) 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 except for Permitted
Distributions; provided that no dividend or other distribution which
would have been a Permitted Distribution may be declared or paid if a
Default or Event of Default has occurred and is continuing or would
exist after giving effect to such declaration or payment. No Related
Person will directly or indirectly make any capita/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, outstanding or created), or cause or
permit any reduction or retirement of the capital stock of any Related
Person, except as expressly provided in this Section 5.2(e). Such
contributions, purchases, redemptions, acquisitions, retirements or
reductions may be made by the partners of Borrower without limitation
to Borrower, so long as no Default or Event of Default has occurred
and is continuing or would exist after giving effect thereto.
(f) 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 other than
oil and gas properties.
(g) 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.
(h) Transactions with Affiliates. Neither Borrower nor
any of its Subsidiaries 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
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dealing with Persons other than such Affiliates, provided that such
restriction shall not apply to transactions among Borrower and its
wholly-owned Subsidiaries.
(i) 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 Borrower, (ii) to redeem equity interests held
in it by Borrower, (iii) to repay loans and other indebtedness owing
by it to Borrower, (iv) to place Liens on any of its assets, or (v) to
transfer any of its assets to 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 Lender
under or acquired pursuant to any Security Documents. No Related
Person will incur any obligation to contribute to any "multiemployer
plan" as defined in Section 4001 of ERISA.
(j) Hedging Contracts. No Related Person will be a party
to or in any manner be liable on any Hedging Contract, except Hedging
Contracts entered into by Borrower with the purpose and effect of
fixing prices on Hydrocarbons expected to be produced by Borrower,
which contracts are approved in advance by Lender in its sole
discretion. To the extent Borrower desires to enter into a Hedging
Contract which requires a standby letter of credit to secure such
contract's margin requirements, and Lender has approved Borrower's
execution thereof, Lender may, in its sole discretion, issue such
letter of credit. NOTWITHSTANDING THE FOREGOING, LENDER IS IN NO WAY
OBLIGATED TO PERMIT BORROWER TO ENTER INTO ANY HEDGING CONTRACT AND,
IN THE EVENT ANY SUCH CONTRACT IS EXECUTED, TO ISSUE ANY LETTER OF
CREDIT REQUIRED THEREUNDER.
(k) Fiscal Year. No Related Person will change its
fiscal year.
ARTICLE VI -- Security
Section 6.1. The Security. The Obligations will be secured by the
Security Documents listed in the Security Schedule and any additional Security
Documents hereafter delivered by any Related Person and accepted by Lender.
Section 6.2. Agreement to Deliver Security Documents. Borrower
agrees to deliver and to cause its Subsidiaries to deliver, to further secure
the Obligations whenever requested by Lender in its sole and absolute
discretion, deeds of trust, mortgages, chattel mortgages, security agreements,
financing statements and other Security Documents in form and substance
satisfactory to Lender for
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the purpose of granting, confirming, and perfecting first and prior liens or
security interests in any real or personal property which is at such time
Collateral or which was intended to be Collateral pursuant to any Security
Document previously executed and not released by Lender. Borrower also agrees
to deliver, whenever requested by Lender in its sole and absolute discretion,
favorable title opinions from legal counsel acceptable to Lender with respect
to any Related Person's properties and interests designated by Lender, based
upon abstract or record examinations to dates acceptable to Lender and (a)
stating that such Related Person has good and defensible title to such
properties and interests, free and clear of all Prohibited Liens, (b)
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 (c) covering such other matters as Lender may request.
Section 6.3. Perfection and Protection of Security Interests and
Liens. Borrower will from time to time deliver to Lender any financing
statements, continuation statements, extension agreements and other documents,
properly completed and executed (and acknowledged when required) by the Related
Persons in form and substance satisfactory to Lender, which Lender requests for
the purpose of perfecting, confirming, or protecting any Liens or other rights
in Collateral securing any Obligations.
Section 6.4. Bank Accounts: Offset. To secure the repayment of
the Obligations Borrower hereby grants to Lender 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 Lender 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 Borrower
now or hereafter held or received by or in transit to Lender from or for the
account of 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 Borrower with Lender, and (c) any other
credits and claims of Borrower at any time existing against Lender, including
claims under certificates of deposit. Upon the occurrence of any Default,
Lender is hereby authorized to foreclose upon, offset, appropriate, and apply,
at any time and from time to time, without notice to Borrower, any and all
items hereinabove referred to against the Obligations then due and payable.
These remedies are separate and cumulative, and any of them may be exercised
independently of the others without regard to procedures or restrictions
applicable to any of the others.
Section 6.5. Guaranties of Borrower's Subsidiaries. Each
Subsidiary of Borrower now existing or created, acquired or coming into
existence after the date hereof shall, promptly upon request by Lender, execute
and deliver to Lender an absolute and unconditional guaranty of the timely
repayment of the Obligations and the due and punctual performance of the
Obligations of Borrower hereunder, which guaranty shall be satisfactory to
Lender in form and substance. Borrower will cause each of its Subsidiaries to
deliver to Lender, simultaneously with its delivery of such a guaranty, written
evidence satisfactory to Lender and its counsel that such Subsidiary has
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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 6.6. Production Proceeds. Notwithstanding that, by the
terms of the various Security Documents, Borrower is and will be assigning to
Lender all of the "Production Proceeds" (as defined therein) accruing to the
property covered thereby, so long as no Default has occurred Borrower 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 a
Default, Lender may exercise all rights and remedies granted under the Security
Documents, including the right to obtain possession of all Production Proceeds
then held by Borrower or to receive directly from the purchasers of production
all other Production Proceeds. In no case shall any failure, whether purposed
or inadvertent, by Lender to connect directly any such Production Proceeds
constitute in any way a waiver, remission or release of any of its rights under
the Security Documents, nor shall any release of any Production Proceeds by
Lender to Borrower constitute a waiver, remission, or release of any other
Production Proceeds or of any rights of Lender to collect other Production
Proceeds thereafter.
ARTICLE VII -- Events of Default and Remedies
Section 7.1. 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 when
due and payable, 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 5.l(d) or
Section 5.2;
(d) Any Related Person fails (other than as referred to
in Sections 7.1(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 Lender to
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
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made, or any Loan Document at any time ceases to be valid, binding and
enforceable as warranted in Section 4.l(e) for any reason other than
its release or subordination by Lender;
(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, if such agreement or instrument is materially
significant to Borrower or to Borrower and its subsidiaries on a
Consolidated basis, 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 5.1(g)) 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 court 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 thirty (30) days; or
(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, partnership 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 thirty (30) 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 thirty (30) days
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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 court 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 (30)
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 $10,000 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); and
(j) Any material adverse change occurs in Borrower's
individual or Consolidated financial condition or businesses or
operations.
Upon the occurrence of an Event of Default described in subsection (h)(i),
(h)(ii) or (h)(iii) of this Section 7.1 with respect to Borrower, all of the
Obligations shall thereupon be immediately due and payable, without demand,
presentment, notice of demand or of dishonor and nonpayment, protest, notice of
protest, notice of intention to accelerate, declaration or notice of
acceleration, or any other notice or declaration of any kind, all of which are
hereby expressly waived by Borrower and each Related Person who at any time
ratifies or approves this Agreement. During the continuance of any other Event
of Default, Lender at any time and from time to time may without notice to
Borrower or any other Related Person declare any or all of the Obligations
immediately due and payable, and all such Obligations shall thereupon be
immediately due and payable, without demand, presentment, notice of demand or
of dishonor and nonpayment, protest, notice of protest, notice of intention to
accelerate, declaration or notice of acceleration, or any other notice or
declaration of any kind, all of which are hereby expressly waived by Borrower
and each Related Person who at any time ratifies or approves this Agreement.
After any such acceleration (whether automatic or due to declaration by
Lender), any obligation of Lender to make any further Advances or loans of any
kind under any agreement with any Related Person shall be permanently
terminated.
Section 7.2. Remedies. If any Default shall occur and be
continuing, Lender 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 Lender may
enforce the payment of any Obligations due or enforce any other legal
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or equitable right which it may have. All rights, remedies and powers
conferred upon Lender 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.
Section 7.3. Indemnity. Borrower agrees to indemnify Lender, 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 7.3
collectively called "liabilities and costs") which to any extent (in whole or
in part) may be imposed on, incurred by, or asserted against Lender growing out
of, resulting from or in any other way associated with any of the Collateral,
the Loan Documents, or the transactions and events (including the enforcement
or defense thereof) at any time associated therewith or contemplated therein
(including any violation or noncompliance with any Environmental Laws by any
Related Person or any Liabilities or duties of any Related Person or of Lender
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 CAUSED, IN WHOLE OR IN PART, BY ANY
NEGLIGENT ACT OR OMISSION OF ANY KIND BY LENDER, PROVIDED ONLY THAT LENDER
SHALL BE NOT ENTITLED UNDER THIS SECTION 7.3 TO RECEIVE INDEMNIFICATION FOR
THAT PORTION, IF ANY, OF ANY LIABILITIES, AND COSTS WHICH IS PROXIMATELY CAUSED
BY ITS OWN INDIVIDUAL GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, AS DETERMINED IN
A FINAL JUDGMENT. If any Person (including Borrower or any of its Affiliates)
ever alleges such gross negligence or willful misconduct by Lender, the
indemnification provided for in this Section 7.3 shall nonetheless be paid upon
demand, subject to later adjustment or reimbursement, until such time as a
court of competent jurisdiction enters a final judgment as to the extent and
effect of the alleged gross negligence or willful misconduct. As used in this
Section 7.3 the term "Lender" 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.
ARTICLE VIII -- Miscellaneous
Section 8.1. Waivers and Amendments: Acknowledgments.
(a) Waivers and Amendments. No failure or delay (whether
by course of conduct or otherwise) by Lender in exercising any right,
power or remedy which Lender may have under any of the Loan Documents
shall operate as a waiver thereof or of any other right, power or
remedy, nor shall any single or partial exercise by Lender 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 by Lender, and then
such waiver or consent shall be effective only in the specific
instances and for the purposes for
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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 and agreement of the parties hereto
and thereto 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, and no waiver,
consent, release, modification or amendment of or supplement to this
Agreement or the other Loan Documents shall be valid or effective
unless the same is in writing and signed by the party against whom it
is sought to be enforced.
(b) Acknowledgments and Admissions. 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 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
Lender 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) Lender owes no fiduciary duty to Borrower with respect to
any Loan Document or the transactions contemplated thereby, (v) the
relationship pursuant to the Loan Documents between Borrower, on one
hand, and Lender, 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 Borrower and
Lender, (vii) should an Event of Default or Default occur or exist
Lender 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, (viii) without limiting any of the foregoing, Borrower is not
relying upon any representation or covenant by Lender, or any
representative thereof, and no such representation or covenant has
been made, that Lender 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 (ix) Lender has relied upon the
truthfulness of the acknowledgments in this Section 8.1(b) in deciding
to execute and deliver this Agreement and to make the Loan.
Section 8.2. Survival of Agreements; Cumulative Nature. All of
the 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 Loan and the delivery of the
Note and the other Loan Documents, and shall further survive until all of the
Obligations are paid in full to Lender and all of Lender's obligations to
Borrower are terminated. All statements and agreements contained in any
certificate or other instrument delivered by any Related Person to Lender under
any
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Loan Document shall be deemed representations and warranties by Borrower or
agreements and covenants of Borrower under this Agreement. The
representations, warranties, indemnities, and covenants made by the Related
Persons in the Loan Documents, and the rights, powers, and privileges granted
to Lender 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
Lender 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 8.3. 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, and
shall be deemed sufficiently given or furnished if delivered by personal
delivery, by telecopy, by delivery service with proof or delivery, or by
registered or certified United States mail, postage prepaid, to Borrower and
the Related Persons at the address of Borrower specified on the signature pages
hereto and to Lender 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 at the address and in the
manner provided herein, (b) in the case of telecopy, upon receipt, or (c) in
the case of registered or certified United States mail, three (3) days after
deposit in the mail; provided, however, that no Request for Advance or Rate
Election shall become effective until actually received by Lender.
Section 8.4. Joint and Several Liability: Parties in Interest.
All Obligations which are incurred by two (2) 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 Lender.
Section 8.5. 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 TEXAS AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS AND THE LAWS OF
THE UNITED STATES OF AMERICA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
CHAPTER 15 OF TEXAS REVISED CIVIL STATUTES ARTICLE 5069 (WHICH REGULATES
CERTAIN REVOLVING
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CREDIT LOAN ACCOUNTS AND REVOLVING TRI-PARTY ACCOUNTS) DOES NOT APPLY TO THIS
AGREEMENT OR THE NOTE. BORROWER HEREBY IRREVOCABLY SUBMITS ITSELF AND EACH
OTHER RELATED PERSON TO THE JURISDICTION OF THE STATE AND FEDERAL COURTS
SITTING IN THE STATE OF TEXAS AND AGREES AND CONSENTS THAT SERVICE OF PROCESS
MAY BE MADE UPON IT OR ANY OF THE RELATED PERSONS IN ANY LEGAL PROCEEDING
RELATING TO THE LOAN DOCUMENTS OR THE OBLIGATIONS BY ANY MEANS ALLOWED UNDER
TEXAS 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 NORTHERN DISTRICT OF TEXAS, DALLAS
DIVISION, TO THE EXTENT IT HAS SUBJECT MATTER A JURISDICTION, AND OTHERWISE IN
THE TEXAS DISTRICT COURTS SITTING IN DALLAS COUNTY, TEXAS. 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. IN FURTHERANCE THEREOF, BORROWER AND LENDER
EACH HEREBY ACKNOWLEDGE AND AGREE THAT IT WAS NOT INCONVENIENT FOR THEM TO
NEGOTIATE AND RECEIVE FUNDING OF THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT IN SUCH COUNTY AND THAT IT WILL BE NEITHER INCONVENIENT NOR UNFAIR TO
LITIGATE OR OTHERWISE RESOLVE ANY DISPUTES OR CLAIMS IN A COURT SITTING IN SUCH
COUNTY.
Section 8.6. Limitation on Interest. Lender, the Related Persons
and any other parties to the Loan Documents intend to contract in strict
compliance with applicable usury Law from time to time in effect. In
furtherance thereof such Persons stipulate and agree that none of the terms and
provisions contained in the Loan Documents shall ever be construed to create a
contract to pay, for the use, forbearance or detention of money, interest in
excess of the maximum amount of interest permitted to be charged by applicable
Law from time to time in effect. Neither any Related Person nor any present or
future guarantors, endorsers, or other Persons hereafter becoming liable for
payment of any Obligation shall ever be liable for unearned interest thereon or
shall ever be required to pay interest thereon in excess of the maximum amount
that may be lawfully charged under applicable Law from time to time in effect,
and the provisions of this Section 8.6 shall control over all other provisions
of the Loan Documents which may be in conflict or apparent conflict herewith.
Lender expressly disavows 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)
Lender or any other holder of any or all of the Obligations shall otherwise
collect moneys which are determined to constitute interest which would
otherwise increase the interest on any or all of the Obligations to an amount
in excess of that permitted to be charged by applicable Law then in effect,
then all sums determined to constitute interest in excess of such legal limit
shall, without penalty, be promptly applied to reduce the then outstanding
principal of the related Obligations or, at Lender's or such
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holder's option, promptly returned to Borrower or the other payor thereof upon
such determination. In determining whether or not the interest paid or
payable, under any specific circumstance, exceeds the maximum amount permitted
under applicable Law, Lender and the Related Persons (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. In the event applicable Law provides for an
interest ceiling under Texas Revised Civil Statutes Annotated article 5069-
1.04, that ceiling shall be the indicated rate ceiling and shall be used when
appropriate in determining the Highest Lawful Rate. As used in this Section
8.6 the term "applicable Law" means the Laws of the State of Texas or the Laws
of the United States of America, whichever Laws allow the greater interest, as
such Laws now exist or may be changed or amended or come into effect in the
future.
Section 8.7. Termination: Limited Survival. In its sole and
absolute discretion Borrower may at any time that no Obligations are owing
elect in a written notice delivered to Lender to terminate this Agreement.
Upon receipt by Lender 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 Documents, any Obligations
under Sections 2.14 through 2.18 and any obligations which any Person may have
to indemnify or compensate Lender shall survive any termination of this
Agreement or any other Loan Document. At the request and expense of Borrower,
Lender shall prepare and execute all necessary instruments to reflect and
effect such termination of the Loan Documents.
Section 8.8. 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 8.9. 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 8.10. WAIVER OF JURY TRIAL, PUNITIVE DAMAGES, ETC. EACH OF
BORROWER AND LENDER HEREBY (a) KNOWINGLY, VOLUNTARILY, INTENTIONALLY, AND
IRREVOCABLY 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
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AFTER MATURITY; (b) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY
LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY
SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN,
OR IN ADDITION TO, ACTUAL DAMAGES; (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 8.10. BORROWER HEREBY
REPRESENTS AND ACKNOWLEDGES THAT IT IS A "BUSINESS CONSUMER" FOR THE PURPOSES
OF THE TEXAS DECEPTIVE TRADE PRACTICES -- CONSUMER PROTECTION ACT, THAT IT HAS
ASSETS OF $5,000,000 OR MORE ACCORDING TO ITS MOST RECENT FINANCIAL STATEMENTS
PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, THAT IT
HAS KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS THAT ENABLE IT
TO EVALUATE THE MERITS AND RISKS OF CREDIT TRANSACTIONS GENERALLY AND OF THE
TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS IN PARTICULAR, AND THAT IT IS
NOT IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION WITH RESPECT TO THE
PARTIES TO AND THE TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS; BORROWER
HEREBY WAIVES THE PROVISIONS OF THE TEXAS DECEPTIVE TRADE PRACTICES -- CONSUMER
PROTECTION ACT (OTHER THAN SECTION 17.555 THEREOF), AS FROM TIME TO TIME
AMENDED.
THE WRITTEN LOAN 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 BY THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
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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. Xxxxxxx Xxxx
--------------------------------
C. Xxxxxxx Xxxx
Chairman of the Board
Address:
000 Xxxx Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: C. Xxxxxxx Xxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
UNION BANK OF CALIFORNIA, N.A.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
By: /s/ Xxxx X. Xxxxx
--------------------------------
Xxxx X. Xxxxx
Vice President
Address:
000 Xxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxxx
and Xxxx X. Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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SCHEDULE 1
DISCLOSURE SCHEDULE
To supplement the following sections of the Agreement of which this
Schedule is a part, Borrower hereby makes the following disclosures:
1. Section 4.1(f) Financial Statements:
None.
2. Section 4.l (g) Other Obligations and Restrictions:
None.
3. Section 4.1(i) Litigation:
None.
4. Section 4.1(j) ERISA Liabilities:
None.
5. Section 4.l(k) Environmental and Other Laws:
None.
6. Section 4.1(1) Names and Places of Business:
None.
7. Section 4.l(m) Borrower's Subsidiaries:
Borrower owns all of the capital stock of Vista Resources,
Inc., a Texas corporation.
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SCHEDULE 2
SECURITY SCHEDULE
1. Deed of Trust, Mortgage, Security Agreement, Assignment,
Fixture Filing and Financing Statement executed by Borrower in favor of Lender
(the "Mortgage") and filed in the following jurisdictions:
(a) Lea County, New Mexico;
(b) Xxxxxxx County, Texas;
(c) Xxxxxx County, Texas;
(d) Xxxxxx County, Texas; and
(e) Xxxxxxx County, Texas.
2. UCC- 1 Financing Statements executed by Borrower in connection
with the Mortgage and filed in the following jurisdictions:
(a) Secretary of State, New Mexico; and
(b) Secretary of State, Texas.
3. First Supplemental Deed of Trust, Mortgage, Security
Agreement, Fixture Filing and Financing Statement executed by Borrower in favor
of Lender and filed in the following jurisdictions:
(a) Lea County, New Mexico;
(b) Xxxxxxx County, Texas;
(c) Xxxxxx County, Texas;
(d) Xxxxxx County, Texas; and
(e) Xxxxxxx County, Texas.
4. Second Supplemental Deed of Trust, Mortgage, Security
Agreement, Fixture Filing and Financing Statement executed by Borrower in favor
of Lender and filed in the following jurisdictions:
(a) Lea County, New Mexico;
(b) Xxxxxxx County, Texas;
(c) Xxxxxx County, Texas;
(d) Xxxxxx County, Texas; and
(e) Xxxxxxx County, Texas.
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5. Deed of Trust, Mortgage, Security Agreement, Assignment,
Fixture Filing and Financing Statement executed by Borrower in favor of Lender
(the "Mortgage") and filed in the following jurisdictions:
(a) Eddy County, New Mexico;
(b) Crane County, Texas;
(c) Xxxxxx County, Texas;
(d) Xxxxxx County Texas;
(e) Xxxxxx County, Texas; and
(f) Xxxx County, Texas.
6. First Supplemental Deed of Trust, Mortgage, Security
Agreement, Fixture Filing and Financing Statement executed by Borrower in favor
of Lender to be filed in the following jurisdictions:
(a) Eddy County, New Mexico;
(b) Crane County, Texas;
(c) Xxxxxx County, Texas;
(d) Xxxxxx County Texas;
(e) Xxxxxx County, Texas; and
(f) Xxxx County, Texas.
7. Third Supplemental Deed of Trust, Mortgage, Security
Agreement, Fixture Filing and Financing Statement executed by Borrower in favor
of Lender and filed in the following jurisdictions:
(a) Xxxxxx County, Texas.
8. Third Supplemental Deed of Trust, Mortgage, Security
Agreement, Fixture Filing and Financing Statement ("Third Supplement") executed
by Borrower in favor of Lender for filing in the following jurisdictions:
(a) Lea County, New Mexico;
(b) Xxxxxxx County, Texas;
(c) Xxxxxx County, Texas; and
(d) Xxxxxxx County, Texas.
9. Deed of Trust, Mortgage, Security Agreement, Fixture Filing
and Financing Statement executed by Borrower in favor of Lender for filing in
the following jurisdictions:
(a) Xxxxxx County, New Mexico;
(b) Xxxxxx Xxxxxx, Xxxxx;
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00
(x) Xxxxxx Xxxxxx, Xxxxx;
(d) Brazos County, Texas;
(e) Xxxxxxxx County, Texas;
(f) Cass County, Texas;
(g) Colorado County, Texas;
(h) Xxxxxx County, Texas;
(i) Xxxxxxxx County, Texas;
(j) Xxxxxx County, Texas;
(k) Xxxxxx County, Texas;
(l) Xxxxxxxx County, Texas;
(m) Xxxxxxx County, Texas;
(n) Xxxxx County, Texas; and
(o) Xxxxxx County, Texas.
10. Fourth Supplemental Deed of Trust, Mortgage, Security
Agreement, Fixture Filing and Financing Statement ("Fourth Supplement")
executed by Borrower in favor of Lender for filing in the following
jurisdictions:
(a) Xxxxxx County, Texas.
11. UCC-3 Financing Statements executed by Borrower in connection
with the Third Supplement and the Fourth Supplement for filing in the following
jurisdictions:
(a) Secretary of State, New Mexico; and
(b) Secretary of State, Texas.
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SCHEDULE 3
TITLE OPINIONS AND REPORTS
Title Opinions
Xxxxxx
Andover
Xxxxxxx Xxxxx
Xxxxxx
Xxxx Xxxxxxxxx "13"
Federal B-1
Hillboldt
Xxxxxx, X. X.
Xxxxxxxx-Xxxxx 1
Xxxx "A"
Xxxx 1-X
Xxxx 2
Xxxx 2-1
Title Reports
Xxxxxx-Xxxxxxx
Xxxxxxx-Xxxx Gas Xxxx #0
Xxxxxxxx-Xxxxx
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EXHIBIT A
AMENDED AND RESTATED PROMISSORY NOTE
$50,000,000 Dallas, Texas August 15, 1997
FOR VALUE RECEIVED, the undersigned, VISTA RESOURCES PARTNERS, L.P., a
Texas limited partnership (herein called "Borrower"), hereby promises to pay to
the order of UNION BANK OF CALIFORNIA, N.A. (herein called "Lender"), the
principal sum of FIFTY MILLION AND NO/100 DOLLARS ($50,000,000), or, if less,
the aggregate unpaid principal amount of the Loan made under this Note by
Lender to Borrower 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
Lender, 000 Xxxxx Xxxxxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, or at such
other place as from time to time may be designated by the holder of this Note.
This Note (a) is issued and delivered under that certain Amended and
Restated Credit Agreement of even date herewith between Borrower and Lender
(herein, as from time to time supplemented, amended or restated, called the
"Credit Agreement"), and is the 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 first day of each month,
beginning September 1, 1997, 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 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.
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"Fixed Rate Payment Date" means, with respect to any Fixed Rate
Portion: (i) the day on which the related Interest Period ends (and, if such
Interest Period is longer than one (1) month, the 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 Fixed Rate Portion and is
unpaid. If the terms hereof or of the Credit Agreement provide that payments
of interest or principal with respect to such Fixed Rate Portion shall be
deferred from one Fixed Rate Payment Date to another day, such other day shall
also be a Fixed Rate Payment Date.
The principal amount of this Note shall be paid in regular
installments as provided in Section 2.7 of the Credit Agreement.
The Base Rate Portion of the Loan (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. On each Base Rate Payment
Date Borrower shall pay to the holder hereof all unpaid interest which has
accrued on the Base Rate Portion to but not including such Base Rate Payment
Date. Each Fixed Rate Portion of the Loan (exclusive of any past due principal
or interest) shall bear interest on each day during the related Interest Period
at the related Fixed Rate in effect on such day. On each Fixed Rate Payment
Date relating to such Fixed Rate Portion Borrower shall pay to the holder
hereof all unpaid interest which has accrued on such Fixed Rate Portion to but
not including such Fixed Rate Payment Date. All past due principal of and past
due interest on the Loan shall bear interest on each day outstanding at the
Late Payment Rate in effect on such day, and such interest shall be due and
payable daily as it accrues. Notwithstanding the foregoing provisions of this
paragraph: (a) this Note shall never bear interest in excess of the Highest
Lawful Rate, and (b) if at any time the rate at which interest is payable on
this Note is limited by the Highest Lawful Rate (by the foregoing clause (a) or
by reference to the Highest Lawful Rate in the definitions of Base Rate, Fixed
Rate, and Late Payment Rate), this Note shall bear interest at the Highest
Lawful Rate and shall continue to bear interest at the Highest Lawful Rate
until such time as the total amount of interest accrued hereon equals (but does
not exceed) the total amount of interest which would have accrued hereon had
there been no Highest Lawful Rate applicable hereto.
This Note is subject to mandatory prepayments as provided in Section
2.9 of the Credit Agreement.
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 amount of 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. In the event applicable law provides for a
ceiling under Texas Revised Civil Statutes Annotated article 5069-1.04, that
ceiling shall be the indicated rate ceiling and shall be used in this Note for
calculating the Highest Lawful Rate and for all other purposes. The term
"applicable law" as used in this Note shall mean the laws of the State of Texas
or the laws of the United States,
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whichever laws allow the greater interest, as such laws now exist or may be
changed or amended or come into effect in the future.
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, Borrower 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.
Borrower 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 is given in renewal and restatement of the $15,000,000
Promissory Note dated as of September 27, 1995 made by the Borrower payable to
the order of the Lender, as such note has been amended, modified or
supplemented from time-to-time prior to the date hereof.
THIS NOTE AND THE RIGHTS AND DUTIES OF THE PARTIES HERETO SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF TEXAS (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:
-------------------------------
C. Xxxxxxx Xxxx
Chief Executive Officer
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EXHIBIT B
REQUEST FOR ADVANCE
Reference is made to that certain Amended and Restated Credit
Agreement dated as of August 15, 1997 (as from time to time amended, the
"Agreement"), by and between Vista Resources Partners, L.P. ("Borrower") and
Union Bank of California, N.A. ("Lender"). 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, Borrower hereby requests Lender to make
an Advance to Borrower in the principal amount of $___________ and specifies
_______________,19___, as the date Borrower desires for Lender to make such
Advance and to deliver to Borrower the proceeds thereof.
To induce Lender to make such Advance, Borrower hereby represents,
warrants, acknowledges, and agrees that:
(a) The officer of Borrower signing this instrument is
the duly elected, qualified and acting officer of the General Partner
as indicated below such officer's signature hereto having all
necessary authority to act for Borrower in making the request herein
contained.
(b) The representations and warranties of 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 8.1(a) of the Agreement; nor will any
such Default exist upon Borrower's receipt and application of the
Advance requested hereby. Borrower will use the Advance hereby
requested in compliance with Section 2.3 of the Agreement.
(d) Except to the extent waived in writing as provided in
Section 8.1(a) of the Agreement, Borrower has performed and complied
with all agreements and conditions in the Agreement required to be
performed or complied with by Borrower on or prior to the date hereof,
and each of the conditions precedent to Advances contained in the
Agreement remains satisfied.
(e) The unpaid principal balance of the Loan, after the
making of the Advance requested hereby, will not be in excess of the
Borrowing Base on the date requested for the making of such Advance.
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(f) The Loan Documents have not been modified, mended or
supplemented by any unwritten representations or promises, by any
course of dealing, or by any other means not provided for in Section
8.1(a) of the Agreement. The Agreement and the other Loan Documents
are hereby ratified, approved, and confirmed in all respects.
The officer of Borrower signing this instrument hereby certifies that, to
the best of his knowledge after due inquiry, the above representations,
warranties, acknowledgments, and agreements of Borrower are true, correct and
complete.
IN WITNESS WHEREOF, this instrument is executed as of ____________,
19___.
VISTA RESOURCES PARTNERS, L.P.
By: Vista Resources I, Inc.,
its General Partner
By:
---------------------------------
C. Xxxxxxx Xxxx
Chief Executive Officer
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EXHIBIT C
RATE ELECTION
Reference is made to that certain Amended and Restated Credit
Agreement dated as of August 15, 1997 (as from time to time amended, the
"Agreement"), by and between Vista Resources Partners, L.P. ('Borrower") and
Union Bank of California, N.A. ('Lender"). 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, Borrower hereby elects a Fixed Rate
Portion in the 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, Borrower hereby represents, warrants, acknowledges and agrees that:
(a) The officer of Borrower signing this instrument is a
duly elected, qualified and acting _____________ of the General
Partner, having all necessary authority to act for Borrower 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 8.1(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
8.1(a) of the Agreement. The Agreement and the other Loan Documents
are hereby ratified, approved, and confirmed in all respects.
The officer of Borrower signing this instrument hereby certifies that,
to the best of his knowledge after due inquiry, the above representations,
warranties, acknowledgments, and agreements of Borrower are true, correct and
complete.
IN WITNESS WHEREOF, this instrument is executed as of ____________,
19___.
VISTA RESOURCES PARTNERS, L.P.
By: Vista Resources I, Inc.,
its General Partner
By:
-----------------------------
C. Xxxxxxx Xxxx
Chief Executive Officer
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EXHIBIT D
CERTIFICATE ACCOMPANYING FINANCIAL STATEMENTS
Reference is made to that certain Amended and Restated Credit
Agreement dated as of August 15, 1997 (as from time to time amended, the
"Agreement"), by and between Vista Resources Partners, L.P. ("Borrower") and
Union Bank of California, N.A. ("Lender"), 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 5.1(b)(ii) of the
Agreement. Together herewith Borrower is furnishing to Lender Borrower's
[audited/unaudited] financial statements (the "Financial Statements") as at
____________________ (the "Reporting Date"). Borrower hereby represents,
warrants, and acknowledges to Lender that:
(a) the officer of the General Partner signing this
instrument is the duly elected, qualified and acting _______________
of the General Partner and as such is the General Partner's chief
financial officer;
(b) the Financial Statements are accurate and complete
and satisfy the requirements of the Agreement;
(c) attached hereto is a schedule of calculations showing
Borrower's compliance as of the Reporting Date with the requirements
of Section(s) __________ of the Agreement [and Borrower's
non-compliance as of such date with the requirements of Section(s)
__________ of the Agreement];
(d) on the Reporting Date Borrower was, and on the date
hereof Borrower is, in full compliance with the disclosure
requirements of Section 5.l(d) 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].
The officer of Borrower 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 Borrower and, to the best of his knowledge,
such representations, warranties, and acknowledgments are true, correct and
complete.
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IN WITNESS WHEREOF, this instrument is executed as of
____________, 19___.
VISTA RESOURCES PARTNERS, L.P.
By: Vista Resources I, Inc.,
its General Partner
By:
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C. Xxxxxxx Xxxx
Chief Executive Officer
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