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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 8, 2000
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PRIZE ENERGY CORP.
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(Exact name of registrant as specified in its charter)
Delaware 001-14575 75-2766114
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
3500 William D. Tate, Suite 200, Grapevine, Texas 76051
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (817) 424-0400
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Not Applicable
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(Former name or former address, if changed since last report)
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Item 1. Changes in Control of Registrant.
On February 8, 2000, a change in control of the Registrant occurred as a
result of the consummation of the merger described under Item 2 below.
All of the required information relating to the change in control is
included in the Registrant's Registration Statement on Form S-4,
Registration No. 333-92561, as amended (the "Registration Statement").
Item 2. Acquisition or Disposition of Assets.
On February 8, 2000, the Registrant (formerly known as Vista Energy
Resources, Inc.) acquired Prize Natural Resources, Inc. (formerly known
as Prize Energy Corp.) ("PNR"). The acquisition was effected through the
merger (the "Merger") of PEC Acquisition Corp., a wholly-owned
subsidiary of the Registrant, with and into PNR, with PNR as the
surviving corporation. PNR is now a wholly-owned subsidiary of the
Registrant. Pursuant to the Merger, each issued and outstanding share of
PNR common stock was converted into 1,665.187 shares of the Registrant's
common stock and each issued and outstanding share of PNR convertible
preferred stock was converted into 1,665.187 shares of the Registrant's
convertible preferred stock. After the Merger, former PNR stockholders
collectively own approximately 84% of the Registrant's outstanding
common stock, assuming conversion of the Registrant's convertible
preferred stock. The Merger will be accounted for as a reverse
acquisition, in which PNR is the purchaser of the Registrant. Therefore,
following the Merger, the historical financial statements of the
Registrant will be the historical financial statements of PNR.
The consideration paid in connection with the Merger was determined
through arms-length negotiations between executive management of PNR
and a special committee of the Board of Directors of the Registrant.
Prior to the Merger, the assets of PNR which constitute equipment or
other physical property were utilized by PNR to carry on its oil and gas
business. The Registrant intends to continue such use of assets.
In conjunction with the Merger, the outstanding senior bank indebtedness
of both PNR and the Registrant were refinanced and combined into a
single bank facility. The new $400 million bank facility is with a group
of banks led by BankBoston, N.A. The current borrowing base is $250
million, leaving approximately $65 million of available borrowing
capacity.
In conjunction with the Merger, the Registrant also changed its name
from Vista Energy Resources, Inc. to Prize Energy Corp.
The Registrant's shares issued to the PNR stockholders in the Merger
were registered under the Securities Act of 1933, as amended, under the
Registration Statement. For further information with respect to the
Merger, including a description of any material
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relationships prior to the Merger between PNR and the Registrant or any
of its affiliates, any director or officer of the Registrant or any of
their associates, see the Registration Statement.
Item 5. Other Events.
Reverse Stock Split. On February 8, 2000, immediately prior to the
Merger, the Registrant effected a one-for-seven reverse split of the
Registrant's outstanding shares of common stock, par value $0.01 per
share, with holders of fractional shares otherwise resulting from such
split receiving cash for such fractional shares (the "Reverse Stock
Split").
As a result of the Reverse Stock Split, the exercise price and the
number of shares of the Registrant's common stock deliverable upon
exercise of the Registrant's outstanding Warrants traded on the American
Stock Exchange were adjusted so that each Warrant represents the right
to purchase one-seventh (1/7th) of a share of the Registrant's common
stock at an exercise price of $28.00 per share. Registered holders of
such Warrants will be entitled to receive, upon exercise, the aggregate
number of whole shares of the Registrant's common stock issuable upon
exercise of such Warrants and, in lieu of any fractional share of common
stock to which such holder would otherwise be entitled, a cash payment
equal to the closing price of the Registrant's common stock on the
principal national securities exchange on which the Registrant's common
stock is traded or, if the Registrant's common stock is not traded on a
national securities exchange, the closing price of the Registrant's
common stock in the over-the-counter market, as reported by the National
Association of Securities Dealers Automated Quotation Service (Nasdaq),
or if not so quoted, then by The National Quotation Bureau, Inc., or an
equivalent generally accepted reporting service, on the trading day
immediately prior to the date of such exercise, multiplied by the
fraction of the share.
Annual Meeting of Stockholders. The 2000 Annual Meeting of Stockholders
of the Registrant is expected to be held on May 25, 2000. As set forth
in the Registration Statement, stockholder proposals submitted pursuant
to Rule 14a-8 under the Securities Exchange Act of 1934 for inclusion in
the Registrant's proxy materials for its 2000 Annual Meeting of
Stockholders must have been received by the Registrant no later than
January 4, 2000. In accordance with the Registrant's Amended and
Restated Bylaws, any stockholder who intends to present a proposal at
the Registrant's 2000 Annual Meeting of Stockholders and has not sought
inclusion of the proposal in the Registrant's proxy materials pursuant
to Rule 14a-8, must provide the Registrant with notice (containing
certain information specified in the Bylaws) of such proposal on or
after February 25, 2000, and on or before March 26, 2000, in order for
such proposal to be properly brought before the meeting.
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In accordance with the Registrant's Amended and Restated Bylaws, any
stockholder who intends to make a nomination for director at the
Registrant's 2000 Annual Meeting of Stockholders must provide the
Registrant with notice (containing certain information specified in the
Bylaws) of such nomination on or after February 25, 2000, and on or
before March 26, 2000, in order for such nomination to be properly
brought before the meeting.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of business acquired.
All of the required financial statements and pro forma financial
information relating to the Merger are included in the Registration
Statement.
(b) Pro forma financial information.
See (a) above.
(c) Exhibits.
The following documents are included as exhibits to this Form 8-K.
Those exhibits below incorporated by reference herein are indicated
as such by the information supplied in the parenthetical thereafter.
If no parenthetical appears after an exhibit, such exhibit is filed
herewith.
2.1 Agreement and Plan of Merger, dated as of October 8, 1999,
among Vista Energy Resources, Inc. (now named Prize Energy
Corp.), PEC Acquisition Corp. and Prize Energy Corp. (now
named Prize Natural Resources, Inc.) (filed as Annex A to the
Proxy Statement/Prospectus included in the Registration
Statement).
2.2 First Amendment to Agreement and Plan of Merger, dated as of
January 5, 2000, among Vista Energy Resources, Inc. (now named
Prize Energy Corp.), PEC Acquisition Corp. and Prize Energy
Corp. (now named Prize Natural Resources, Inc.) (filed as
Exhibit 2.2 to the Registration Statement).
3.1 Amended and Restated Certificate of Incorporation of the
Registrant.
3.2 Amended and Restated Bylaws of the Registrant.
4.1 Amended and Restated Registration Rights Agreement, dated as
of February 8, 2000, among the Registrant, Prize Natural
Resources, Inc. (formerly known as Prize Energy Corp.) and
certain stockholders of the Registrant.
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4.2 Certificate of Designation, Voting Powers and Rights of Series
A 6% Convertible Preferred Stock of the Registrant.
10.1 Amended and Restated Credit Agreement, dated as of February 8,
2000, among Prize Energy Resources, L.P., Vista Resources
Partners, L.P. and Midland Resources, Inc., as borrowers, the
Registrant, as guarantor, certain financial institutions,
BankBoston, N.A., as administrative agent, First Union
National Bank, as syndication agent, CIBC Inc., as
documentation agent, and Bank One, Texas, N.A., as lead
manager.
10.2 Voting and Shareholders Agreement, dated as of February 8,
2000, among the Registrant, Prize Natural Resources, Inc.
(formerly known as Prize Energy Corp.) and certain
stockholders of the Registrant.
10.3 Assignment and Assumption Agreement, dated as of February 8,
2000, between the Registrant and Prize Natural Resources, Inc.
(formerly known as Prize Energy Corp.) relating to that
certain Joint Participation Agreement attached thereto, dated
as of June 29, 1999, between Prize Energy Corp. (now Prize
Natural Resources, Inc.) and Pioneer Natural Resources USA,
Inc.
10.4 Amended and Restated Option Plan of the Registrant.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PRIZE ENERGY CORP.
Date: February 23, 2000 By: /s/ Lon C. Kile
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Lon C. Kile
President
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EXHIBIT INDEX
The following documents are included as exhibits to this Form 8-K. Those
exhibits below incorporated by reference herein are indicated as such by the
information supplied in the parenthetical thereafter. If no parenthetical
appears after an exhibit, such exhibit is filed herewith.
<TABLE>
<CAPTION>
Exhibit
Number Description
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<S> <C>
2.1 Agreement and Plan of Merger, dated as of October 8, 1999, among Vista
Energy Resources, Inc. (now named Prize Energy Corp.), PEC Acquisition
Corp. and Prize Energy Corp. (now named Prize Natural Resources, Inc.)
(filed as Annex A to the Proxy Statement/Prospectus included in the
Registration Statement).
2.2 First Amendment to Agreement and Plan of Merger, dated as of January
5, 2000, among Vista Energy Resources, Inc. (now named Prize Energy
Corp.), PEC Acquisition Corp. and Prize Energy Corp. (now named Prize
Natural Resources, Inc.) (filed as Exhibit 2.2 to the Registration
Statement).
3.1 Amended and Restated Certificate of Incorporation of the Registrant.
3.2 Amended and Restated Bylaws of the Registrant.
4.1 Amended and Restated Registration Rights Agreement, dated as of
February 8, 2000, among the Registrant, Prize Natural Resources, Inc.
(formerly known as Prize Energy Corp.) and certain stockholders of the
Registrant.
4.2 Certificate of Designation, Voting Powers and Rights of Series A 6%
Convertible Preferred Stock of the Registrant.
10.1 Amended and Restated Credit Agreement, dated as of February 8, 2000,
among Prize Energy Resources, L.P., Vista Resources Partners, L.P. and
Midland Resources, Inc., as borrowers, the Registrant, as guarantor,
certain financial institutions, BankBoston, N.A., as administrative
agent, First Union National Bank, as syndication agent, CIBC Inc., as
documentation agent, and Bank One, Texas, N.A., as lead manager.
10.2 Voting and Shareholders Agreement, dated as of February 8, 2000, among
the Registrant, Prize Natural Resources, Inc. (formerly known as Prize
Energy Corp.) and certain stockholders of the Registrant.
10.3 Assignment and Assumption Agreement, dated as of February 8, 2000,
between the Registrant and Prize Natural Resources, Inc. (formerly
known as Prize Energy Corp.) relating to that certain Joint
Participation Agreement attached thereto, dated as of June 29, 1999,
between Prize Energy Corp. (now Prize Natural Resources, Inc.) and
Pioneer Natural Resources USA, Inc.
10.4 Amended and Restated Option Plan of the Registrant.
</TABLE>
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EXHIBIT 3.1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
VISTA ENERGY RESOURCES, INC.
Vista Energy Resources, Inc., a corporation organized and existing
under the laws of the State of Delaware (the "Corporation"), does hereby certify
as follows:
1. The name of the corporation is Vista Energy Resources, Inc. The date
of filing of the Corporation's original Certificate of Incorporation with the
Secretary of State was May 21, 1998. The date of filing of the Certificate of
Designation, Voting Powers and Rights of Series A 6% Convertible Preferred Stock
of Vista Energy Resources, Inc. (the "Certificate of Designation") was February
8, 2000. The Certificate of Designation is included in this Amended and Restated
Certificate of Incorporation as Exhibit A.
2. This Amended and Restated Certificate of Incorporation restates and
integrates and further amends the Certificate of Incorporation to (a) change the
name of the Corporation to "Prize Energy Corp" and (b) further amend the second
paragraph of Article Fifth to reflect that the reverse stock split described
therein has been previously effected by means of filing that certain Certificate
of Amendment of the Certificate of Incorporation of Vista Energy Resources, Inc.
prior to the time of the filing of this Amended and Restated Certificate of
Incorporation.
3. This Amended and Restated Certificate of Incorporation is being
filed pursuant to Sections 242 and 245 of the General Corporation Law of the
State of Delaware. This Amended and Restated Certificate of Incorporation has
been duly authorized in accordance with the General Corporation Law of the State
of Delaware by the Board of Directors of the Corporation, by written consent
pursuant to Section 141(f) of the Delaware General Corporation Law, dated
January 28, 2000, and by the Stockholders of the Corporation, at a meeting held
on February 8, 2000. The vote required was a majority of the outstanding shares
of Common Stock of the Corporation.
4. The text of the Certificate of Incorporation is hereby amended to
read as herein set forth in full:
FIRST: The name of the corporation (the "Corporation") is Prize Energy
Corp.
SECOND: The registered office of the Corporation in the State of
Delaware is located at Corporation Trust Center, 1209 Orange Street, in the City
of Wilmington, County of New Castle. The name of the registered agent of the
Corporation at the address is The Corporation Trust Company.
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THIRD: The purpose for which the Corporation is organized is to engage
in any and all lawful acts and activities for which corporations may be
organized under the General Corporation Law of the State of Delaware (the
"DGCL") and the Corporation shall have the power to perform all lawful acts and
activities.
FOURTH: The Corporation will have perpetual existence.
FIFTH: The total number of shares of stock that the Corporation shall
have authority to issue is 60,000,000 shares of capital stock classified as (i)
50,000,000 shares of common stock, par value $.01 per share ("Common Stock") and
(ii) 10,000,000 shares of preferred stock, par value $.01 per share ("Preferred
Stock").
Effective as of the filing of that certain Certificate of Amendment of
the Certificate of Corporation of Vista Energy Resources, Inc. with the Delaware
Secretary of State on February 8, 2000, and prior to the date of the filing of
this Amended and Restated Certificate of Incorporation with the Delaware
Secretary of State, each seven shares of Common Stock issued and outstanding or
held in the treasury of the Corporation immediately prior to such filing (the
"Old Common Stock") was, without any action on the part of the holder thereof,
converted and reclassified into, and immediately represented one validly issued,
fully paid and non-assessable share of Common Stock. Any fraction of a share of
Common Stock that would otherwise result pursuant to the preceding sentence
(after aggregating all fractional shares held by each stockholder) was
automatically eliminated and, in lieu thereof, the holder thereof became
entitled to receive a cash adjustment in respect of such fraction of a share in
an amount based upon a value of the Common Stock equal to $11.20 per whole
share. Each certificate representing shares of Old Common Stock thereafter
represented that number of shares of Common Stock determined in the previous
sentences; provided, however, that each person holding of record a stock
certificate or certificates representing shares of Old Common Stock shall
receive, upon surrender of such certificate or certificates, a new certificate
or certificates evidencing and representing the number of shares of Common Stock
to which such person is entitled except for those shares as to which such person
is to receive cash in accordance with the preceding sentence.
The designations and the powers, preferences, rights, qualifications,
limitations, and restrictions of the Preferred Stock and Common Stock are as
follows:
1. Provisions Relating to the Preferred Stock.
(a) The Preferred Stock may be issued from time to time in one
or more series, the shares of each series to have any designations and
powers, preferences, rights, qualifications, limitations and
restrictions thereof, as are stated and expressed in this Article Fifth
and in the resolution or resolutions providing for the issue of such
series adopted by the board of directors of the Corporation as
hereafter prescribed (a "Preferred Stock Designation").
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(b) Authority is hereby expressly granted to and vested in the
board of directors of the Corporation to authorize the issuance of the
Preferred Stock from time to time in one or more series, and with
respect to each series of the Preferred Stock, to fix and state by the
resolution or resolutions from time to time adopted providing for the
issuance thereof the following:
(i) whether or not the series is to have voting
rights, full, special or limited, or is to be without voting
rights, and whether or not such series is to be entitled to
vote as a separate class, either alone or together with the
holders of one or more other classes or series of stock;
(ii) the number of shares to constitute the series
and the designations thereof;
(iii) the preferences and relative, participating,
optional and other special rights, if any, and the
qualifications, limitations and restrictions thereof, if any,
with respect to any series;
(iv) whether or not the shares of any series shall be
redeemable at the option of the Corporation or the holders
thereof or upon the happening of any specified event, and, if
redeemable, the redemption price or prices (which may be
payable in the form of cash, notes, securities or other
property), and the time or times at which and the terms and
conditions upon which such shares shall be redeemable and the
manner of redemption;
(v) whether or not the shares of a series shall be
subject to the operation of retirement or sinking funds to be
applied to the purchase or redemption of such shares for
retirement, and, if such retirement or sinking fund or funds
are to be established, the periodic amount thereof, and the
terms and provisions relative to the operation thereof;
(vi) the dividend rate, whether dividends are payable
in cash, stock of the Corporation or other property, the
conditions upon which and the times when such dividends are
payable, the preference to or the relation to the payment of
the dividends payable on any other class or classes or series
of stock, whether or not such dividends shall be cumulative or
noncumulative, and if cumulative, the date or dates from which
such dividends shall accumulate;
(vii) the preferences, if any, and the amounts
thereof which the holders of any series thereof shall be
entitled to receive upon the voluntary or involuntary
dissolution of, or upon any distribution of the assets of, the
Corporation;
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(viii) whether or not the shares of any series, at
the option of the Corporation or the holder thereof or upon
the happening of any specified event, shall be convertible
into or exchangeable for the shares of any other class or
classes of stock, securities or other property of the
Corporation and the conversion price or prices or ratio or
ratios or the rate or rates at which such conversion or
exchange may be made, with such adjustments, if any, as shall
be stated and expressed or provided for in such resolution or
resolutions; and
(ix) any other special rights and protective
provisions with respect to any series as the board of
directors of the Corporation may deem advisable.
(c) The shares of each series of the Preferred Stock may vary
from the shares of any other series thereof in any or all of the
foregoing respects and in any other manner. The board of directors of
the Corporation may increase the number of shares of the Preferred
Stock designated for any existing series by a resolution adding to such
series authorized and unissued shares of the Preferred Stock not
designated for any other series. Unless otherwise provided in the
Preferred Stock Designation, the board of directors of the Corporation
may decrease the number of shares of the Preferred Stock designated for
any existing series by a resolution subtracting from such series
authorized and unissued shares of the Preferred Stock designated for
such existing series, and the shares so subtracted shall become
authorized, unissued and undesignated shares of the Preferred Stock.
2. Provisions Relating to the Common Stock.
(a) The holders of shares of the Common Stock shall be
entitled to vote upon all matters submitted to a vote of the common
stockholders of the Corporation and shall be entitled to one vote for
each share of the Common Stock held.
(b) Subject to the prior rights and preferences, if any,
applicable to shares of the Preferred Stock or any class or series
thereof, and subject to the right of participation, if any, of the
holders of the Preferred Stock in any dividends, the holders of shares
of the Common Stock shall be entitled to receive such dividends
(payable in cash, stock or otherwise) as may be declared thereon by the
board of directors of the Corporation at any time and from time to time
out of any funds of the Corporation legally available therefor.
(c) In the event of any voluntary or involuntary liquidation,
dissolution or winding-up of the Corporation, after distribution in
full of the preferential amounts, if any, to be distributed to the
holders of shares of the Preferred Stock or any class or series
thereof, and subject to the right of participation, if any, of the
holders of the Preferred Stock in any dividends, the holders of shares
of the Common Stock shall be entitled to receive all of the remaining
assets of the Corporation available for distribution to its
stockholders, ratably in proportion to the number of shares of the
Common Stock held by them. A liquidation, dissolution, or winding-up of
the Corporation, as such terms are used in this paragraph (c),
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shall not be deemed to be occasioned by or to include any consolidation
or merger of the Corporation with or into any other corporation or
corporations or other entity or a sale, lease, exchange or conveyance
of all or a part of the assets of the Corporation.
3. General.
(a) Subject to the foregoing provisions of this Amended and
Restated Certificate of Incorporation of the Corporation, the
Corporation may issue shares of its Preferred Stock and Common Stock
from time to time for such consideration (not less than the par value
thereof) as may be fixed by the board of directors of the Corporation,
which is expressly authorized to fix the same in its absolute
discretion subject to the foregoing conditions. Shares so issued for
which the consideration shall have been paid or delivered to the
Corporation shall be deemed fully paid stock and shall not be liable to
any further call or assessment thereon, and the holders of such shares
shall not be liable for any further payments in respect of such shares.
(b) The Corporation shall have authority to create and issue
rights and options entitling their holders to purchase shares of the
Corporation's capital stock of any class or series or other securities
of the Corporation, and such rights and options shall be evidenced by
instrument(s) approved by the board of directors of the Corporation.
The board of directors of the Corporation shall be empowered to set the
exercise price, duration, times for exercise and other terms of such
rights or options; provided, however, that the consideration to be
received for any share of capital stock subject thereto shall not be
less than the par value thereof.
(c) No stockholder of the Corporation shall, by reason of his
or her holding shares of any class of capital stock of the Corporation,
have any preemptive or preferential right to acquire or subscribe for
any additional, unissued or treasury shares (whether now or hereafter
acquired) of any class of capital stock of the Corporation now or
hereafter authorized, or any notes, debentures, bonds or other
securities convertible into or carrying any right, option or warrant to
subscribe for or acquire shares of any class of capital stock of the
Corporation now or hereafter authorized, whether or not the issuance of
any such shares or such notes, debentures, bonds or other securities
would adversely affect the dividends or voting or other rights of that
stockholder.
(d) Cumulative voting of shares of any capital stock having
voting rights is prohibited.
SIXTH: The number and terms of the board of directors of the
Corporation and the procedures to elect directors, to remove directors, and to
fill vacancies in the board of directors shall be as follows:
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1. The number of directors that shall constitute the whole
board of directors shall from time to time be fixed exclusively by the
board of directors by a resolution adopted by a majority of the members
of the board of directors serving at the time of that vote. In no event
shall the number of directors that constitutes the whole board of
directors be fewer than two or more than twenty-one. No decrease in the
number of directors shall have the effect of shortening the term of any
incumbent director. Directors of the Corporation need not be elected by
written ballot unless the bylaws of the Corporation otherwise provide.
2. Vacancies in the board of directors resulting from death,
resignation, retirement, disqualification, removal from office or other
cause and newly-created directorships resulting from any increase in
the authorized number of directors shall be filled by a majority vote
of the remaining directors then in office, though less than a quorum,
or by the sole remaining director, and each director so chosen shall
hold office until the first meeting of stockholders held after his
election for the purpose of electing directors and until his or her
successor is elected and qualified or until his or her earlier death,
resignation or removal from office.
3. No director of the Corporation shall be removed before the
expiration of that director's term of office except for cause and by an
affirmative vote of a majority of the shares entitled to vote thereon
cast at the annual meeting of stockholders or at any special meeting of
stockholders called for this purpose by a majority of the members of
the board of directors serving at the time of that vote.
4. Notwithstanding the foregoing, the election, removal and
the filling of vacancies with respect to directors elected separately
by any series of Preferred Stock shall be governed by the terms of the
Preferred Stock Designation establishing such series.
SEVENTH: All of the power of the Corporation, insofar as it may be
lawfully vested by this Amended and Restated Certificate of Incorporation in the
board of directors, is hereby conferred upon the board of directors of the
Corporation. In furtherance of and not in limitation of that power or the powers
conferred by law, (1) a majority of the whole board of directors shall have the
power to adopt, amend, and repeal the bylaws of the Corporation; (2) the board
of directors may designate and appoint from among its members one or more
committees, and may designate one or more of its members as alternate members,
who may, subject to any limitations imposed by the board of directors, replace
absent or disqualified members at any meeting of such committee; (3) the
stockholders of the Corporation shall have no power to appoint or remove
directors as members of committees of the board of directors, nor to abrogate
the power of the board of directors to establish any such committees or the
power of any such committee to exercise the powers and authority of the board of
directors; (4) the stockholders of the Corporation shall have no power to elect
or remove officers of the Corporation nor to abrogate the power of the board of
directors to elect and remove officers of the Corporation; and (5)
notwithstanding any other provision of this Amended and Restated Certificate of
Incorporation or any provision of law that might otherwise permit a lesser or no
vote, but in addition to any affirmative vote of the holders of any particular
class or series of
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the capital stock of the Corporation required by law or by this Amended and
Restated Certificate of Incorporation, the bylaws of the Corporation shall not
be adopted, altered, amended or repealed by the stockholders of the Corporation
except in accordance with the provisions of the bylaws and by the vote of the
holders of not less than a majority in voting power of the outstanding shares of
stock then entitled to vote upon the election of directors, voting together as a
single class or such higher vote as is set forth in the bylaws. The bylaws of
the Corporation shall not contain any provision inconsistent with this Amended
and Restated Certificate of Incorporation.
EIGHTH: Except as otherwise required by law, special meetings of the
common stockholders of the Corporation, and any proposals to be considered at
such meetings, may only be called by the Board of Directors and no common
stockholder may require the Board of Directors to call a special meeting of the
common stockholders or propose business at such a meeting.
NINTH: No contract or transaction between the Corporation and one or
more of its directors, officers or stockholders or between the Corporation and
any other person (as used herein "person" means a corporation, partnership,
association, firm, trust, joint venture, political subdivision or
instrumentality) or other organization in which one or more of its directors,
officers or stockholders are directors, officers or stockholders, or have a
financial interest, shall be void or voidable solely for this reason, or solely
because the director or officer is present at or participates in the meeting of
the board of directors or committee which authorizes the contract or
transaction, or solely because his, her or their votes are counted for such
purpose, if: (1) the material facts as to his or her relationship or interest
and as to the contract or transaction are disclosed or are known to the board of
directors or the committee, and the board of directors or committee in good
faith authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested directors
be less than a quorum; or (2) the material facts as to his or her relationship
or interest and as to the contract or transaction are disclosed or are known to
the stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by a vote of the stockholders; or (3) the
contract or transaction is fair as to the Corporation as of the time it is
authorized, approved or ratified by the board of directors, a committee thereof,
or the stockholders. Interested directors may be counted in determining the
presence of a quorum at a meeting of the board of directors or of a committee
which authorizes the contract or transaction.
TENTH: The Corporation shall indemnify any person who was, is, or is
threatened to be made a party to a proceeding (as hereinafter defined) by reason
of the fact that he or she (1) is or was a director or officer of the
Corporation or (2) while a director or officer of the Corporation, is or was
serving at the request of the Corporation as a director, officer, partner,
venturer, proprietor, trustee, employee, agent or similar functionary of another
foreign or domestic Corporation, limited liability company, association,
partnership, joint venture, sole proprietorship, trust, employee benefit plan or
other enterprise, entity or organization, to the fullest extent permitted under
the DGCL, as the same exists or may hereafter be amended. Such right shall be a
contract right as such shall run to the benefit of any director or officer who
is elected and accepts the position of director or officer of the Corporation or
elects to continue to serve as a director or officer of the Corporation while
this
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<PAGE> 8
Article Tenth is in effect. Any repeal or amendment of this Article Tenth shall
be prospective only and shall not limit the rights of any such director or
officer or the obligations of the Corporation with respect to any claim arising
from or related to the services of such director or officer in any of the
foregoing capacities prior to any such repeal or amendment to this Article
Tenth. Such right shall include the right to be paid by the Corporation expenses
(including attorneys' fees) incurred in defending any such proceeding in advance
of its final disposition to the maximum extent permitted under the DGCL, as the
same exists or may hereafter be amended. If a claim for indemnification or
advancement of expenses hereunder is not paid in full by the Corporation within
sixty days after a written claim has been received by the Corporation, the
claimant may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim, and, if successful in whole or in part,
the claimant shall also be entitled to be paid the expenses of prosecuting such
claim. It shall be a defense to any such action that such indemnification is not
permitted under the DGCL, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its board of
directors or any committee thereof, independent legal counsel or stockholders)
to have made its determination prior to the commencement of such action that
indemnification of the claimant is permissible in the circumstances nor an
actual determination by the Corporation (including its board of directors or any
committee thereof, independent legal counsel or stockholders) that such
indemnification is not permissible shall be a defense to the action or create a
presumption that such indemnification is not permissible. In the event of the
death of any person having a right of indemnification under the forgoing
provisions, such right shall inure to the benefit of his or her heirs,
executors, administrators, and personal representatives. The rights conferred
above shall not be exclusive of any other right which any person may have or
hereafter acquire under any statute, bylaw, resolution of stockholders or
directors, agreement or otherwise.
The Corporation may additionally indemnify any employee or agent of the
Corporation to the fullest extent permitted by law.
As used herein, the term "proceeding" means any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative,
arbitrative or investigative, any appeal in such an action, suit or proceeding,
and any inquiry or investigation that could lead to such an action, suit or
proceeding.
ELEVENTH: A director of the Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (1) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (2) for acts
or omissions not in good faith or which involve intentional misconduct or
knowing violation of law, (3) under Section 174 of the DGCL, as the same exists
or as such provision may hereafter be amended, supplemented or replaced, or (4)
for any transaction from which the director derived an improper personal
benefit. Any repeal or amendment of this Article Eleventh by the stockholders of
the Corporation shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director of the Corporation arising
from an act or omission occurring prior to the time of such repeal or amendment.
In addition to the circumstances in which a director of the Corporation is not
personally liable as set forth in the foregoing provisions of this Article
Eleventh,
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<PAGE> 9
a director shall not be liable to the Corporation or its stockholders to such
further extent as permitted by any law hereafter enacted, including without
limitation any subsequent amendment to the DGCL. Notwithstanding any other
provisions of this Amended and Restated Certificate of Incorporation or any
provision of law that might otherwise permit a lesser or no vote, but in
addition to any affirmative vote of the holders of any particular class or
series of the capital stock of the Corporation required by law or by this
Amended and Restated Certificate of Incorporation, the affirmative vote of the
holders of not less than two-thirds in voting power of the shares of the
Corporation then entitled to be voted in an election of directors, voting
together for a single class, shall be required to amend or repeal or to adopt
any provision inconsistent with this Article Eleventh.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 10
IN WITNESS WHEREOF, Vista Energy Resources, Inc. has caused this
Amended and Restated Certificate of Incorporation to be signed by C. Randall
Hill, its Chairman and Chief Executive Officer, as of the 8th day of February,
2000.
VISTA ENERGY RESOURCES, INC.
By: /s/ C. Randall Hill
-------------------------------------
C. Randall Hill
Chairman and Chief Executive Officer
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<PAGE> 11
EXHIBIT A
CERTIFICATE OF DESIGNATION, VOTING POWERS AND
RIGHTS OF SERIES A 6% CONVERTIBLE
PREFERRED STOCK OF VISTA ENERGY RESOURCES, INC.
Vista Energy Resources, Inc., a corporation organized and existing
under the laws of the State of Delaware (the "CORPORATION"), DOES HEREBY
CERTIFY:
That, pursuant to authority conferred upon the Board of Directors by
the Corporation's Certificate of Incorporation, as amended, and pursuant to the
provisions of Section 151 of the Delaware General Corporation Law, as amended,
the Board of Directors, by written consent dated as of February 8, 2000,
unanimously adopted the following resolution providing for the creation and
issuance of a series of shares of the Corporation's authorized preferred stock
designated as "Series A 6% Convertible Preferred Stock":
RESOLVED, that a new series of the Corporation's authorized but
unissued preferred stock be, and the same hereby is, established and designated,
and that the designation and amount thereof, and the relative rights,
preferences, qualifications, limitations and restrictions thereof, are as
follows:
SECTION 1. DESIGNATION, NUMBER OF SHARES AND STATED VALUE OF SERIES A
PREFERRED STOCK. There is hereby authorized and established a series of the
Corporation's preferred stock, par value $0.01 per share, that shall be
designated as "Series A 6% Convertible Preferred Stock" ("SERIES A PREFERRED"),
and the number of shares constituting such series shall be 5,000,000. Such
number of shares may be increased, but not decreased, by resolution adopted by
the Board of Directors of the Corporation. The "STATED VALUE" per share of
Series A Preferred initially shall be equal to $7.81 (which amount shall be
proportionately adjusted in the case of recapitalizations, stock splits, stock
dividends, combinations of shares or similar matters directly affecting the
Series A Preferred).
SECTION 2. DEFINITIONS. In addition to the definitions set forth
elsewhere herein, the following terms shall have the meanings indicated:
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in New York, New York, are authorized or
obligated by law or executive order to close.
"CLOSING PRICE" with respect to a particular security on any Trading
Day shall mean the last reported sales price, regular way, for such security on
such Trading Day, or, in case no sale takes place on such day, the average of
the closing bid and ask prices, regular way, on such Trading Day, in either case
as reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the American Stock
Exchange or the New York Stock Exchange or, if not listed or admitted to trading
on the American Stock Exchange or the New York
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Stock Exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which such security is listed or admitted to trading or, if such
security is not listed or admitted to trading on any national securities
exchange, the last quoted price as reported by The Nasdaq Stock Market or such
other system then in use.
"COMMON STOCK" shall mean the common stock, par value $0.01 per share,
of the Corporation.
"CONVERSION PRICE" shall mean the conversion price per share of Common
Stock into which Series A Preferred is convertible, as such conversion price may
be adjusted pursuant to Section 9 hereof. The initial Conversion Price shall be
$7.81.
"JUNIOR SECURITIES" means the Common Stock or any other series of stock
issued by the Corporation ranking junior to the Series A Preferred in payment of
dividends or distributions or upon liquidation, dissolution or winding-up of the
Corporation.
"MARKET PRICE" per share of Common Stock as of any date shall mean (i)
if the Common Stock is listed or admitted to trading on a national securities
exchange or The Nasdaq Stock Market, the average of the daily Closing Prices for
a period of 30 consecutive Trading Days ending on such date, or (ii) if the
Common Stock is not then so listed or admitted, the fair market value per share
of the Common Stock as reasonably determined by an investment banking firm
mutually acceptable to the Corporation and the holders of shares of Series A
Preferred.
"ORIGINAL ISSUE DATE" shall mean the date on which shares of Series A
Preferred are first issued.
"PARITY SECURITY" means any class or series of stock issued by the
Corporation ranking on a parity with the Series A Preferred in payment of
dividends or distributions or upon liquidation, dissolution or winding-up of the
Corporation.
"PAYABLE-IN-KIND" or "PAID-IN-KIND" when used in reference to any
dividend payable on the shares of Series A Preferred means payment of the
dividend by issuance of that number of additional shares of Series A Preferred
that has an aggregate Stated Value equal to the dollar amount of such dividend
then payable. In lieu of any fractional share of Series A Preferred Stock to
which a holder of Series A Preferred Stock would otherwise be entitled, such
holder shall receive the nearest whole share of Series A Preferred Stock (i.e.
if less than .5 rounded down, and if .5 or more rounded up). Shares of Series A
Preferred issued as dividends Payable-in-Kind shall be duly authorized, validly
issued and nonassessable and, upon issuance, shall have rights (including
without limitation dividend, voting, conversion and redemption rights) identical
to the outstanding shares of Series A Preferred in respect of which they are
issued.
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"PERSON" means any individual, corporation, association, partnership,
joint venture, limited liability company, trust, estate, or other entity or
organization.
"SENIOR SECURITIES" means any class or series of stock, or any class or
series of debt or debt security convertible or exchangeable into any class or
series of stock, issued by the Corporation ranking senior to the Series A
Preferred in payment of dividends or distributions or upon liquidation,
dissolution or winding-up of the Corporation.
"TRADING DAY" with respect to any security means (i) if such security
is listed or admitted for trading on any national securities exchange, a day on
which such national securities exchange is open for trading, or (ii) if such
security is not listed or admitted to trading on any national securities
exchange, a Business Day.
"UNDERLYING COMMON STOCK" means at any time, with respect to any share
of Series A Preferred, the aggregate number of shares of Common Stock into which
such share is then convertible pursuant to Section 9 hereof.
SECTION 3. DIVIDENDS AND DISTRIBUTIONS.
(a) The holders of outstanding shares of Series A Preferred
shall be entitled to receive, as and when declared by the Corporation,
out of funds of the Corporation legally available for the payment of
dividends, preferential quarterly dividends at the times and at the
rates provided for in this Section 3. Dividends on shares of the Series
A Preferred shall be cumulative and shall accrue whether or not there
shall be (at the time such dividend becomes payable or at any other
time) profits, surplus or other funds of the Corporation legally
available for the payment of dividends.
(b) Dividends shall accrue on each outstanding share of Series
A Preferred at the rate of six percent (6%) per annum of the Stated
Value (the "DIVIDEND RATE") of such share. Dividends shall be payable
quarterly, in arrears, as of the last Business Day of each December,
March, June and September, commencing with March 2000 (each, a "REGULAR
DIVIDEND PAYMENT DATE"). Dividends shall also be payable on any
Redemption Date and on the final distribution date relating to the
dissolution, liquidating or winding up of the Corporation (each such
date, together with each Regular Dividend Payment Date, is a "DIVIDEND
PAYMENT DATE").
(c) Dividends on outstanding shares of Series A Preferred
shall be Payable-in-Kind during the period (the "EXCLUSIVE PIK
PERIOD") beginning on the Original Issue Date and ending on the earlier
of (i) the Dividend Payment Date on December 31, 2001, and (ii) the
liquidation, dissolution or winding up of the Corporation (in
connection with the bankruptcy or insolvency of the Corporation or
otherwise). After the Exclusive PIK Period, dividends on the shares of
Series A Preferred shall be Payable-in-Kind or, at the Corporation's
option, payable in cash.
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(d) The amount of dividends payable on each Dividend Payment
Date shall be determined by applying the Dividend Rate from but
excluding the immediately preceding Dividend Payment Date (or from but
excluding the date of issuance of shares of Series A Preferred, with
respect to the first dividend period) to and including the Dividend
Payment Date.
(e) Notwithstanding the foregoing or anything else herein to
the contrary, however, dividends payable on any Redemption Date (as
defined in Section 6(c) hereof) or the final distribution date relating
to the dissolution, liquidation or winding up of the Corporation, shall
be payable in cash only. If a Dividend Payment Date does not occur on a
Regular Dividend Payment Date, dividends shall be calculated on the
basis of the actual number of days elapsed from but excluding the
immediately preceding Regular Dividend Payment Date to and including
such non-Regular Dividend Payment Date. Dividends payable on the shares
of Series A Preferred for any period of less than a full quarterly
dividend period shall be computed on the basis of a 360-day year
comprised of twelve 30-day months.
(f) Dividends payable on each Dividend Payment Date shall be
paid to record holders of the shares of Series A Preferred as they
appear on the books of the Corporation at the close of business on the
10th Business Day immediately preceding the respective Dividend Payment
Date or on such other record date as may be fixed by the Board of
Directors of the Corporation in advance of a Dividend Payment Date,
provided that no such record date shall be less than 10 nor more than
60 calendar days preceding such Dividend Payment Date.
(g) So long as any shares of Series A Preferred are
outstanding:
(i) No dividend or other distribution shall be
declared or paid, or set apart for payment, on or in respect
of, any Junior Securities (other than dividends or
distributions payable in shares of Junior Securities or in
rights to purchase Junior Securities), nor shall any Junior
Securities be redeemed, purchased or otherwise acquired for
any consideration (or any money be paid to a sinking fund or
otherwise set apart for the purchase or redemption of any such
Junior Securities) unless full cumulative dividends on all
outstanding shares of Series A Preferred and any Parity
Securities have been or contemporaneously are declared and
paid for all dividend periods terminating on or prior to the
date set for payment of such dividend.
(ii) No dividend or other distribution, except as
described in the next succeeding sentence, shall be declared
or paid, or set apart for payment, on or in respect of, Series
A Preferred or any Parity Securities for any period unless
full cumulative dividends on all outstanding shares of Series
A Preferred and any Parity Securities have been or
contemporaneously are declared and paid for all dividend
periods terminating on or prior to the date set for payment of
such dividend. When
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dividends are not paid in full, as aforesaid, on the shares of
Series A Preferred and any Parity Securities, all dividends
declared upon such Parity Securities shall be declared and
paid pro rata so that the amounts of dividends per share
declared and paid on the shares of Series A Preferred and such
Parity Securities shall in all cases bear to each other the
same ratio that unpaid dividends per share on the Series A
Preferred and on such Parity Securities bear to each other.
(iii) No shares of Series A Preferred or any Parity
Securities shall be redeemed, purchased or otherwise acquired
for any consideration (or any money be paid to a sinking fund
or otherwise set apart for the purchase or redemption of any
such Parity Security) by the Corporation unless the full
cumulative dividends on all outstanding shares of Series A
Preferred shall have been or contemporaneously are declared
and paid for all dividend periods terminating on or prior to
the date on which such redemption, purchase or other payment
is to occur.
(iv) No dividend or other distribution of cash or
debt shall be declared or paid, or set apart for payment, on
or in respect of, any Junior Securities, nor shall any Junior
Securities be redeemed, purchased or otherwise acquired for
any cash or debt consideration (or any money or debt paid to a
sinking fund or otherwise set apart for the purchase or
redemption of any Junior Securities) unless full cumulative
dividends on all outstanding shares of Series A Preferred have
been or contemporaneously are declared and paid in cash for
all dividend periods terminating on or prior to the date set
for payment of such dividend or distribution.
(v) No dividend or other distribution of cash or debt
shall be declared or paid, or set apart for payment, on or in
respect of, any Parity Securities unless full cumulative
dividends on all outstanding shares of Series A Preferred have
been or contemporaneously are declared and paid in cash for
all dividend periods terminating on or prior to the date set
for payment of such dividend or distribution. No Parity
Securities be redeemed, purchased or otherwise acquired for
any cash or debt consideration (or any money or debt paid to a
sinking fund or otherwise set apart for the purchase or
redemption of any Parity Securities) unless the Series A
Preferred shall have been called for redemption pursuant to
Section 6 hereof and the full Redemption Price (as defined in
Section 6(b) hereof) shall have been or contemporaneously is
paid in cash on or prior to the date set for payment of such
dividend or distribution.
SECTION 4. CERTAIN COVENANTS AND RESTRICTIONS. So long as any shares of
Series A Preferred are outstanding:
(a) The Corporation shall at all times reserve and keep
available for issuance upon the conversion of the shares of Series A
Preferred as provided in Section 6 and Section 9 hereof, respectively,
such number of its authorized but unissued shares of Common Stock
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as will be sufficient to permit the conversion of all outstanding
shares of Series A Preferred and all other securities and instruments
convertible into shares of Common Stock, and shall take all reasonable
action within its power required to increase the authorized number of
shares of Common Stock necessary to permit the conversion of all
outstanding shares of Series A Preferred and all such other securities
and instruments convertible into shares of Common Stock.
(b) The Corporation covenants and agrees that all shares of
Common Stock that may be issued upon exercise of the conversion rights
of shares of Series A Preferred will, upon issuance, be duly
authorized, valid issued, fully-paid and nonassessable.
(c) Prior to the delivery of any securities which the
Corporation shall be obligated to deliver upon payment of dividends
Payable-in-Kind or conversion of the Series A Preferred, the
Corporation will endeavor to comply with all federal and state
securities laws and regulations thereunder requiring the registration
of such securities with, or any approval of or consent to the delivery
of such securities by, any governmental authority.
(d) The Corporation shall pay all taxes and other governmental
charges (other than any income or franchise taxes), documentary stamp
or similar issue or transfer taxes that may be imposed with respect to
the issue or delivery of the Series A Preferred (or any other
securities issued on account of the Series A Preferred pursuant hereto)
or shares of Common Stock upon conversion of Series A Preferred or
payment of dividends Payable-in-Kind as provided herein or otherwise.
The Corporation shall not be required, however, to pay any tax or other
charge imposed in connection with any transfer involved in the issue of
any certificate for shares of Common Stock in any name other than that
of the registered holder of the shares of the Series A Preferred
surrendered in connection with the conversion thereof or otherwise,
and, in such case, the Corporation shall not be required to issue or
deliver any stock certificate until such tax or other charge has been
paid, or it has been established to the Corporation's satisfaction that
no tax or other charge is due.
SECTION 5. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding-up
of the Corporation (in connection with the bankruptcy or insolvency of
the Corporation or otherwise), whether voluntary or involuntary, before
any payment or distribution of the assets of the Corporation (whether
capital or surplus) shall be made to or set apart for the holders of
shares of any Junior Securities, the holders of the shares of Series A
Preferred shall be entitled to receive an amount per share in cash
equal to the Stated Value per share held by them, plus an amount in
cash equal to the full cumulative dividends accrued and unpaid thereon,
to the date of such payment, whether or not declared. No payment on
account of any such liquidation, dissolution or winding-up of the
Corporation shall be paid to the holders of the shares of Series A
Preferred or the holders of any Parity Securities unless there shall be
paid at the same time to the holders of the shares of Series A
Preferred and the holders of any Parity
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Securities proportionate amounts determined ratably in proportion to
the full preferential amounts to which the holders of all outstanding
shares of Series A Preferred and the holders of all such outstanding
Parity Securities are respectively entitled with respect to such
distribution (but only to the extent of such preferential amounts). For
purposes of this Section 5, neither a consolidation or merger of the
Corporation with one or more partnerships, corporations or other
entities nor a sale, lease, exchange or transfer of all or any
substantial part of the Corporation's assets for cash, securities or
other property shall be deemed to be a liquidation, dissolution or
winding-up of the Corporation, whether voluntary or involuntary.
(b) After payment of the full amount of the liquidation
preference to which the holders of shares of Series A Preferred are
entitled, such holders will not be entitled to any further
participation in any distribution of assets of the Corporation.
(c) Written notice of any liquidation, dissolution or
winding-up of the Corporation, stating the payment date or dates when
and the place or places where the amounts distributable in such
circumstances shall be payable, shall be given by first class mail,
postage prepaid, not less than 15 days prior to any payment date stated
therein, to the holders of record of the shares of Series A Preferred
at their respective addresses as the same shall appear in the records
of the Corporation.
SECTION 6. REDEMPTION. The outstanding shares of Series A Preferred are
subject to redemption in accordance with the following provisions:
(a) Subject to the terms hereof, the Corporation may at its
option elect to redeem outstanding shares of Series A Preferred, in
whole or in part (pro-rata among the outstanding shares), on any
Business Day if both (i) the average of the Closing Prices of the
Corporation's Common Stock during any period of at least 30 consecutive
Trading Days during the preceding 60 Trading Days shall have exceeded
120% of the Conversion Price, and (ii) the Closing Price per share of
the Corporation's Common Stock on the Trading Day immediately preceding
the day on which such notice is given shall have equaled or exceeded
110% of the Conversion Price.
(b) The redemption price per share for Series A Preferred (the
"REDEMPTION PRICE") shall be equal to the Stated Value plus an amount
equal to the aggregate dollar amount of all accrued and unpaid
dividends through the Redemption Date. The Redemption Price shall be
paid in cash from any source of funds legally available therefor.
(c) The Business Day designated by the Corporation for the
redemption of shares of Series A Preferred is referred to herein as the
"REDEMPTION DATE." Not less than 60 days nor more than 75 days prior to
the Redemption Date, a notice specifying the time and place of such
redemption shall be given by first class mail, postage prepaid, to the
holders of record of the shares of Series A Preferred to be redeemed at
their respective addresses as the
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same shall appear on the books of the Corporation (but no failure to
mail such notice or any defect therein shall affect the validity of the
proceedings for redemption except as to the holder to whom the
Corporation has failed to mail such notice or except as to the holder
whose notice was defective), calling upon each such holder of record to
surrender to the Corporation on the Redemption Date at the place
designated in such notice such holder's certificate or certificates
representing the then outstanding shares of Series A Preferred held by
such holder. Each such notice of redemption shall specify the
Redemption Date, the Redemption Price, the place or places of payment,
that payment will be made upon presentation and surrender of the shares
of Series A Preferred, that dividends will cease to accrue on such
shares on and after the Redemption Date, the then-effective Conversion
Price pursuant to Section 9 hereof, and that the right of holders to
convert shares of Series A Preferred will terminate at the close of
business on the Business Day immediately preceding the Redemption Date
(unless the Corporation defaults in the payment of the Redemption
Price). On or after the Redemption Date, each holder of shares of
Series A Preferred called for redemption shall surrender such holder's
certificate or certificates for such shares to the Corporation at the
place designated in the redemption notice and shall thereupon be
entitled to receive payment of the Redemption Price in the manner set
forth in Section 6(b) above. If the redemption is delayed for any
reason, dividends shall continue to accrue on the shares of Series A
Preferred outstanding, and shall be added to and become a part of the
Redemption Price of such shares, until the Redemption Price, as so
adjusted, for such shares is paid in full.
(d) Notwithstanding the foregoing, if notice of redemption has
been given pursuant to Sections 6(a) and 6(c) hereof and any holder of
the Series A Preferred shall, before the close of business on the
Business Day immediately preceding the Redemption Date, give notice to
the Corporation pursuant to Section 9(b) hereof of the conversion of
any or all of the shares to be redeemed held by that holder, then (i)
the Corporation shall not have the right to redeem those shares for
which the conversion notice has been given, (ii) the holder shall not
be entitled to payment of the Redemption Price with respect to those
shares, (iii) the conversion of those shares shall become effective as
provided in Section 9 hereof, and (iv) any funds that have been
deposited for the payment of the Redemption Price of those shares shall
be returned to the Corporation immediately after such conversion.
SECTION 7. SHARES TO BE RETIRED. All shares of Series A Preferred
repurchased, redeemed, converted or otherwise acquired by the Corporation shall
be retired and cancelled and shall be restored to the status of authorized but
unissued shares of Preferred Stock, without designation as to series, and may
thereafter be reissued (subject to the provisions of Section 8 hereof).
SECTION 8. VOTING RIGHTS.
(a) Except as otherwise provided in this Section 8 or required
by law or any provision of the Certificate of Incorporation of the
Corporation, the holders of the shares of
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Series A Preferred shall vote together with the shares of Common Stock
as a single class at any annual or special meeting of stockholders of
the Corporation upon the following basis: each holder of shares of
Series A Preferred shall be entitled to such number of votes for the
shares of Series A Preferred held by such holder on the record date
fixed for such meeting as shall be equal to the whole number of shares
of Underlying Common Stock with respect to such shares of Series A
Preferred immediately after the close of business on the record date
fixed for such meeting. In all cases where the holders of separate
classes or series of the Corporation's capital stock have the right to
vote separately as a class, the holders of Series A Preferred shall be
entitled to one vote for each such share held by them.
(b) For so long as any shares of Series A Preferred remain
outstanding, the Corporation shall not, without the affirmative vote or
consent of the holders of a majority of the shares of Series A
Preferred voting together as a single class, authorize, create or
issue, or increase the authorized or issued amount of, any class or
series of stock of Senior Securities, Parity Securities or Series A
Preferred (except through payment of dividends Payable-in-Kind on the
Series A Preferred), or any security convertible into or exchangeable
for Senior Securities or Parity Securities or reclassify or modify any
Junior Securities so as to become Parity Securities or Senior
Securities.
(c) Shares of Series A Preferred acquired by a subsidiary of
the Corporation shall have no voting rights.
(d) For so long as any shares of Series A Preferred remain
outstanding, the Corporation shall not, without the affirmative vote or
consent of the majority (unless a higher percentage shall then be
specified by law) of the shares of Series A Preferred voting together
as a single class, merge or consolidate with or into any other Person
or permit any other Person to merge with or into the Corporation,
unless each share of Series A Preferred shall remain outstanding and
unaffected or shall be converted into or exchanged for convertible
preferred stock of the surviving entity (and, in the case of triangular
mergers, with conversion rights into the common equity of the ultimate
parent entity) having powers, preferences and relative participating,
optional and other rights, and qualifications, limitations and
restrictions thereof identical to a share of Series A Preferred, and
unless the affirmative vote or consent of the holders of all the shares
of Series A Preferred voting together as a single class shall have been
obtained if such exchange, merger or consolidation shall result in the
existence of Senior Securities or Parity Securities (treating
securities issued by the surviving entity as having been issued by the
Corporation) other than those previously approved pursuant to Section
8(b) hereof; provided, however, that the voting rights with respect to
this Section 8(d) shall be exercisable only by the original holder of
the Series A Preferred and such voting rights shall terminate on the
first date on which such original holder no longer owns shares of
Series A Preferred which constitute at least 14.03% of the total issued
and outstanding shares of Common Stock of the Corporation (based upon
the number of shares of Common Stock into which the shares of Series A
Preferred are then
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convertible and deeming the shares of Series A Preferred to be
converted into issued and outstanding shares of Common Stock for the
purpose of such computation).
SECTION 9. CONVERSION RIGHTS. Holders of shares of Series A Preferred
shall have the right to convert all or a portion of such shares into shares of
Common Stock, as follows:
(a) Subject to and upon compliance with the provisions of this
Section 9, shares of Series A Preferred shall be convertible at the
option of the holder thereof into duly authorized, validly issued,
fully paid and non-assessable shares of Common Stock. The number of
shares of Common Stock deliverable upon conversion of one share of
Series A Preferred shall be determined by dividing the Stated Value of
such share of Series A Preferred by the Conversion Price then in effect
(i.e., prior to any adjustment of the Conversion Price, one share of
Common Stock will be issued for each share of Series A Preferred
surrendered for conversion). In lieu of any fractional share of Common
Stock to which a holder of Series A Preferred Stock would otherwise be
entitled, such holder shall receive the nearest whole share of Common
Stock (i.e., if less than .5 rounded down, and if .5 or more rounded
up). A holder of Series A Preferred may provisionally convert any
shares of Series A Preferred that are the subject of a pending
registration with the Securities and Exchange Commission. Unless the
holder states an earlier time in the conversion notice to the
Corporation, a provisional conversion will be effective only as of the
closing of the holder's sale of Common Stock issuable upon conversion
of Series A Preferred made pursuant to such an effective registration
statement (and only with respect to the shares so sold); otherwise,
such shares of Series A Preferred shall be outstanding as Series A
Preferred for all purposes hereunder (including accrual and payment of
dividends) during any period in which a provisional conversion is
pending.
(b) The conversion of shares of Series A Preferred may be
effected by the holder thereof by the surrender of the certificate for
such shares to the Corporation at the principal office of the
Corporation. If the conversion is to be provisional as provided in
Section 9(a) above, the holder shall also deliver a notice to the
Corporation with a statement to that effect. If any shares of Series A
Preferred are called for redemption pursuant to Section 6 hereof, such
right of conversion shall cease and terminate as to the shares called
for redemption at the close of business on the Business Day immediately
preceding the Redemption Date, unless the Corporation shall default in
the payment of the Redemption Price, in which event such conversion
right shall remain in effect until full payment of the Redemption Price
has been made.
(c) As promptly as practicable after the surrender of shares
of Series A Preferred for conversion (unless the shares are surrendered
in a provisional conversion as provided in Section 9(a) hereof), the
Corporation shall issue and deliver or cause to be issued and delivered
to the holder of such shares certificates representing the number of
fully paid and non-assessable shares of Common Stock into which such
shares of Series A Preferred have been converted in accordance with the
provisions of this Section 9. In lieu of any fractional
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<PAGE> 21
share of Common Stock to which a holder of Series A Preferred Stock
would otherwise be entitled, such holder shall receive the nearest
whole share of Common Stock (i.e., if less than .5 rounded down, and if
.5 or more rounded up). Subject to the following provisions of this
Section 9, and, except with respect to provisional conversions, such
conversion shall be deemed to have been made as of the close of
business on the date on which the shares of Series A Preferred shall
have been surrendered for conversion in the manner herein provided, so
that all rights of the holder of the shares of Series A Preferred so
surrendered shall cease at such time, and the person or persons
entitled to receive the shares of Common Stock upon conversion thereof
shall be treated for all purposes as having become the record holder or
holders of such shares of Common Stock at such time; provided, however,
that any such surrender (other than for provisional conversion) on any
date when the stock transfer books of the Corporation are closed shall
be deemed to have been made, and shall be effective to terminate the
rights of the holder or holders of the shares of Series A Preferred so
surrendered for conversion and to constitute the person or persons
entitled to receive such shares of Common Stock as the record holder or
holders thereof for all purposes, at the opening of business on the
next succeeding day on which such transfer books are open and such
conversion shall be at the Conversion Price in effect at such time. If
shares are surrendered for provisional conversion, the Corporation
shall either (i) reissue certificates for the number of shares of
Series A Preferred surrendered for provisional conversion, if the sale
of the underlying Common Stock (as provided in Section 9(a) above) does
not occur, or (ii) issue certificates for the number of shares of
Common Stock into which the shares provisionally surrendered have been
converted to the order of the purchaser thereof, if the sale of the
underlying Common Stock (as provided in Section 9(a) above) does occur.
If, following the delivery of a notice of redemption by the Corporation
pursuant to Section 6 hereof, but not otherwise, a holder of shares of
Series A Preferred elects to exercise its rights of conversion under
this Section 9, such holders of shares of Series A Preferred who
surrender their shares of Series A Preferred for conversion shall be
entitled to payment in cash by the Corporation of all accrued and
unpaid dividends to the date the Series A Preferred are surrendered for
conversion (or deemed to have been converted, in the case of shares
provisionally converted), prorated for any portion of the then current
dividend period during which the Series A Preferred are surrendered for
conversion, whether or not any dividend in respect of the then-current
dividend period has been declared or set aside. The Corporation shall
make that payment as promptly as practicable following the surrender of
certificates for shares of Series A Preferred for conversion as
provided herein (or following the sale of the underlying Common Stock,
in the case of shares that are provisionally converted and subsequently
sold as provided in Section 9(a) hereof) and, when applicable, shall
accompany the certificates for Common Stock into which such shares of
Series A Preferred have been converted.
(d) Before taking any action which would cause an adjustment
reducing the Conversion Price below the then par value of the shares of
Common Stock deliverable upon conversion of the shares of Series A
Preferred, the Corporation will take any corporate action which may, in
the opinion of its counsel, be necessary in order that the Corporation
may
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<PAGE> 22
validly and legally issue fully paid and non-assessable shares of
Common Stock at such adjusted Conversion Price.
(e) The Conversion Price shall be subject to adjustment from
time to time as follows:
(i) In case at any time the Corporation shall (A)
subdivide the outstanding shares of Common Stock into a
greater number of shares, or (B) combine the outstanding
shares of Common Stock into a smaller number of shares, the
Conversion Price in effect immediately prior thereto shall be
adjusted proportionately so that the adjusted Conversion Price
shall bear the same relation to the Conversion Price in effect
immediately prior to such event as the total number of shares
of Common Stock outstanding immediately prior to such event
shall bear to the total number of shares of Common Stock
outstanding immediately after such event. Such adjustment
shall become effective immediately after the effective date of
a subdivision or combination.
(ii) In case at any time the Corporation shall
declare, order, pay or make any dividend or other distribution
to holders of the Common Stock payable in shares of Common
Stock, then, in each such case, subject to Section 9(e)(v)
hereof, the Conversion Price in effect immediately prior to
the close of business on the record date fixed for
determination of holders of any class of securities entitled
to receive such dividend or distribution shall be reduced to a
price (calculated to the nearest .001 of a cent) determined by
multiplying such Conversion Price by a fraction:
(A) the numerator of which shall be the
number of shares of Common Stock outstanding
immediately prior to such dividend or distribution;
and
(B) the denominator of which shall be the
number of shares of Common Stock outstanding
immediately after such dividend or distribution.
Shares of Common Stock owned by or held for the account of the
Corporation shall not be deemed outstanding for the purpose of
any such computation. Such adjustment shall be made on the
date such dividend is paid or such distribution is made and
shall become effective retroactive to the record date for the
determination of stockholders entitled to receive such
dividend or distribution.
(iii) In case at any time the Corporation shall
declare, order, pay or make any dividend or other distribution
to all holders of the Common Stock, other than a dividend
payable in shares of Common Stock (including, without
limitation, dividends or distributions payable in cash,
evidences of indebtedness, rights, options or warrants to
subscribe or purchase any Common Stock or other securities, or
any
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<PAGE> 23
other securities or other property, but excluding any rights
to purchase any stock or other securities if such rights are
not separable from the Common Stock except upon the occurrence
of a contingency beyond the control of the Corporation), then,
and in each such case, subject to Section 9(e)(v) hereof, the
Conversion Price in effect immediately prior to the close of
business on the record date fixed for the determination of
holders of Common Stock entitled to receive such dividend or
distribution shall be reduced to a price (calculated to the
nearest .001 of a cent) determined by multiplying such
Conversion Price by a fraction:
(A) the numerator of which shall be the
Market Price per share of Common Stock in effect as
of such record date or, if the Common Stock trades on
an ex-dividend basis, on the Trading Day immediately
prior to the date of commencement of ex-dividend
trading, less the value of such dividend or
distribution (as determined in good faith by the
Board of Directors of the Corporation) applicable to
one share of Common Stock; and
(B) the denominator of which shall be such
Market Price per share of Common Stock as of such
record date or, if the Capital Stock trades on an
ex-dividend basis, on the Trading Day immediately
prior to the date of commencement of ex-dividend
trading.
Such adjustment shall be made on the date such dividend is
paid or such distribution is made and shall become effective
retroactive to the record date for the determination of
stockholders entitled to receive such dividend or
distribution. In case at any time the Corporation shall
declare, order, pay or make a dividend or rights to purchase
any stock or other securities that are not separable from the
Common Stock except upon the occurrence of a contingency
beyond the control of the Corporation, the Corporation shall
make provision so that the holder of any share of Series A
Preferred thereafter surrendered for conversion shall be
entitled to receive the number of shares of Common Stock and
rights to purchase stock or other securities that such holder
would have owned or have been entitled to receive after the
occurrence of any of such events had the share of Series A
Preferred been surrendered for conversion immediately before
the occurrence of such event or the record date therefor,
whichever is earlier. If any such rights are redeemed, the
holder of Series A Preferred shall have the right to receive,
in lieu of any such rights, any cash, property or securities
paid in respect of such redemption.
(iv) In case at any time the Corporation issues or
sells any shares of Common Stock or any rights, options or
warrants to subscribe for or purchase shares of Common Stock
or shares having the same rights, privileges and preferences
as the Common Stock ("EQUIVALENT COMMON STOCK") or securities
convertible into Common Stock or equivalent common stock, at a
price per share of Common Stock or equivalent common stock (or
having a conversion price per share, if a security is
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<PAGE> 24
convertible into shares of Common Stock or equivalent common
stock) less than the Market Price of the Common Stock as of
the date of such issue or sale, then upon such issue or sale
the Conversion Price shall be reduced to such Conversion Price
determined by multiplying the Conversion Price in effect
immediately prior to such issue or sale by a fraction, (y) the
numerator of which shall be the sum of the number of shares of
Common Stock outstanding immediately prior to such issue or
sale plus the number of shares of Common Stock which the
aggregate offering price of the total number of shares of
Common Stock and/or equivalent common stock so to be offered
(and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at
such Market Price and (z) the denominator of which shall be
the sum of the number of shares of Common Stock outstanding
immediately prior to such issue or sale plus the number of
additional shares of Common Stock and/or equivalent common
stock to be offered for subscription or purchase (or into
which the convertible securities so to be offered are
initially convertible). In case such subscription price may be
paid in a consideration part of or all of which shall be in a
form other than cash, the value of such consideration shall be
determined in good faith by the Board of Directors of the
Corporation. Shares of Common Stock owned by or held for the
account of the Corporation shall not be deemed outstanding for
the purpose of any such computation. Such issue or sale
adjustment shall be made successively upon the issuance or
sale of shares of Common Stock or equivalent common stock or
any rights, options or warrants to subscribe for or purchase
Common Stock or equivalent common stock or securities
convertible into common stock or equivalent common stock.
Notwithstanding the foregoing, no adjustment of the Conversion
Price pursuant to this Section 9(e)(iv) shall be made upon (A)
the conversion or redemption of shares of Series A Preferred;
(B) the payment of any stock dividend on the Series A
Preferred; (C) the issuance of options to officers, directors
and employees of the Corporation and its subsidiaries to
purchase shares of Common Stock, including any such options as
are issued and outstanding as of the Original Issue Date,
provided that, with respect to all such options, the number of
shares of Common Stock that may be subject to such options
shall be limited to 15% of the Corporation's fully diluted
shares of Common Stock based upon securities outstanding as of
the Original Issue Date; (D) the issuance and sale of Common
Stock upon exercise of any rights or options referenced in the
immediately preceding clause (C) or in Section 9(e)(iii)
above; or (E) the issuance and sale of Common Stock in an
underwritten public offering.
(v) If the amount of any adjustment of the Conversion
Price required pursuant to this Section 9(e) would be less
than 1% of the Conversion Price in effect at the time such
adjustment is otherwise so required to be made, such amount
shall be carried forward and an adjustment with respect
thereto made at the time of and together with any subsequent
adjustment which, together with such amount and any other
amount or amounts so carried forward, shall aggregate at least
1% of such
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<PAGE> 25
Conversion Price. All calculations under this Section 9(e)
shall be made to the nearest .001 of a cent.
(vi) Except as herein otherwise expressly provided,
for all purposes of this Section 9(e) the term "Common Stock"
shall mean the Common Stock and any shares of stock or other
class of capital stock of the Corporation which is not
preferred as to dividends or assets over any other class of
capital stock of the Corporation and which is not subject to
redemption, or which is issued to the holders of shares of
Common Stock upon any reclassification thereof.
Notwithstanding anything in this Section 9(e), there will be no
adjustment hereunder as a result of the reverse stock split
contemplated in Section 5.17 of the Agreement and Plan of Merger dated
October 8, 1999, to which the Corporation is a party, which reverse
stock split shall be deemed to have occurred prior to effectiveness of
this Certificate.
(f) In case at any time after the Original Issue Date, the
Corporation shall be a party to any transaction (including without
limitation a merger, consolidation, statutory share exchange, sale of
all or substantially all of the Corporation's assets or
recapitalization of the Common Stock), in each case as a result of
which shares of Common Stock (or any other securities of the
Corporation then issuable upon conversion of the Series A Preferred)
shall be converted into the right to receive stock, securities or other
property (including without limitation cash or any combination thereof)
(each of the foregoing transactions being referred to as a "FUNDAMENTAL
CHANGE TRANSACTION"), then the shares of Series A Preferred remaining
outstanding will thereafter no longer be subject to conversion into
Common Stock (or such other securities) pursuant to this Section 9, but
instead each share shall be convertible into the kind and amount of
stock and other securities and property receivable (including without
limitation cash) upon the consummation of such Fundamental Change
Transaction by a holder of that number of shares or fraction thereof of
Common Stock (or such other securities) into which one share of Series
A Preferred was convertible immediately prior to such Fundamental
Change Transaction assuming such holder of Common Stock failed to
exercise any right of election as to the kind of consideration to be
received in such Fundamental Change Transaction. The Corporation shall
not be a party to any Fundamental Change Transaction after which shares
of the Series A Preferred shall remain outstanding unless the terms of
such Fundamental Change Transaction are consistent with the provisions
of this Section 9(f), and it shall not consent or agree to the
occurrence of any such Fundamental Change Transaction until the
Corporation has entered into an agreement with the successor or
purchasing entity, as the case may be, for the benefit of the holders
of the shares of Series A Preferred which will contain provisions
enabling the holders of shares of the Series A Preferred which remain
outstanding after such Fundamental Change Transaction to convert such
shares into the consideration received by holders of Common Stock (or
any other securities of the Corporation then issuable upon conversion
of the Series A Preferred) at the Conversion Price immediately after
such Fundamental Change Transaction. In the event that at any time, as
a result of an adjustment made pursuant to this
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<PAGE> 26
Section 9, the Series A Preferred shall become subject to conversion
into any securities other than shares of Common Stock, thereafter the
number of such other securities so issuable upon conversion of the
shares of Series A Preferred shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to
the provisions with respect to the shares of Series A Preferred
contained in this Section 9. The provisions of this Section 9(f) shall
similarly apply to successive Fundamental Change Transactions.
(g) Upon the occurrence of any event requiring an adjustment
of the Conversion Price, then, and in any such case, the Corporation
shall promptly deliver to the holders of shares of Series A Preferred a
notice stating the Conversion Price resulting from such adjustment and
the method of calculation thereof and setting forth a brief statement
of the facts requiring such adjustment and upon which such adjustment
is based.
(h) In case at any time:
(i) the Corporation shall declare or pay to all
holders of Common Stock any dividend (whether payable in
Common Stock, cash, securities or other property);
(ii) there shall be any capital reorganization, or
reclassification of the Common Stock of the Corporation or
consolidation or merger of the Corporation with, or sale of
all or substantially all of its assets to, another corporation
or other entity;
(iii) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Corporation;
(iv) there shall be any other Fundamental Change
Transaction; or
(v) there shall occur any other event that would
cause an adjustment to the Conversion Price of the Series A
Preferred;
then, in any one or more of such cases, the Corporation shall give to
the holder of shares of Series A Preferred (A) at least 15 days prior
to any event referred to in clause (i) or (v) above and at least 30
days prior to any event referred to in clause (ii), (iii) or (iv)
above, written notice of the date on which the books of the Corporation
shall close or records shall be taken for such dividend or distribution
or for determining rights to vote in respect of any such organization,
reclassification, consolidation, merger, sale, dissolution,
liquidation, winding-up or Fundamental Change Transaction, and (B) in
the case of any such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation, winding-up or Fundamental
Change Transaction known to the Corporation, at least 30 days prior
written notice of the date, or if not then known, a reasonable
approximation thereof by the Corporation) when the same shall take
place. Such notice in accordance with the foregoing clause (A) shall
also specify, in the case of any such dividend or distribution, the
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<PAGE> 27
date on which such holders of Common Stock shall be entitled thereto,
and such notice in accordance with the foregoing clause (B) shall also
specify the date on which such holders of Common Stock shall be
entitled to exchange their Common Stock, securities or other property
deliverable upon such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation, winding-up or Fundamental
Change Transaction, as the case may be.
(i) Whenever the Conversion Price is adjusted as provided
herein, the Corporation shall prepare and mail to the record holders of
Series A Preferred an officer's certificate signed by the Chairman of
the Board, President, or Chief Financial Officer of the Corporation
setting forth the Conversion Price after the adjustment, the method of
calculation thereof, and a brief statement of the facts requiring the
adjustment and upon which the adjustment is based. If the calculation
of the adjustment requires a determination by the Corporations' Board
of Directors, the certificate shall attach and certify to the
resolution of the Board of Directors relating to the determination.
(j) All shares of Common Stock issuable upon the conversion
set forth in this Section 9 shall be duly authorized, validly issued,
fully-paid and nonassessable.
SECTION 10. RANKING. Without limiting the definition of Junior
Securities, the following securities and obligations of the Corporation shall
rank junior to the Series A Preferred with respect to the payments required or
permitted to be made to the holders thereof pursuant to their respective
governing instruments and payments required to be made to the holders of the
Series A Preferred pursuant hereto: the shares of Common Stock. No Senior
Securities or Parity Securities are outstanding or authorized on the date hereof
or will be outstanding or authorized on the Original Issue Date.
SECTION 11. RECORD HOLDERS. The Corporation may deem and treat the
record holder of any shares of Series A Preferred as the true and lawful owner
thereof for all purposes, and the Corporation shall not be affected by any
notice to the contrary.
SECTION 12. NOTICES. Except as may otherwise be provided by law or
provided for herein, all notices referred to herein shall be in writing, and all
notices hereunder shall be deemed to have been given upon receipt, in the case
of a notice of conversion given to the Corporation as contemplated in Section
9(b) hereof, or, in all other cases, upon the earlier of receipt of such notice
or three Business Days after the mailing of such notices sent by first-class
mail, postage prepaid, addressed: If to the Corporation, to its principal
executive offices (Attention: Corporate Secretary) or to any agent of the
Corporation designated as permitted hereby; or if to a holder of the Series A
Preferred, to such holder at the address of such holder as listed in the stock
record books of the Corporation (which shall include the records of the Transfer
Agent), or to such other address as the Corporation or holder, as the case may
be, shall have designated by notice similarly given.
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<PAGE> 28
SECTION 13. REGISTRATION OF TRANSFER. Upon the surrender of any
certificate representing the Series A Preferred to the Corporation or its
transfer agent, the Corporation shall, or shall cause its transfer agent to, at
the request of the record holder of such certificate, execute and deliver (at
the Corporation's expense) a new certificate or certificates in exchange
therefor, of Series A Preferred representing in the aggregate the number of
shares of Series A Preferred represented by the surrendered certificate. Each
such new certificate shall be registered in such name and shall represent such
number of shares of Series A Preferred as is requested by the holder of the
surrendered certificate and shall be substantially identical in form to the
surrendered certificate, and dividends shall accrue on the Series A Preferred
represented by such new certificate from the date as of which dividends have
been fully paid on the Series A Preferred represented by the surrendered
certificate.
SECTION 14. REPLACEMENT. Upon receipt of evidence satisfactory to the
Corporation (an affidavit of the registered holder shall be satisfactory) of the
ownership and the loss, theft, destruction or mutilation of any certificate
evidencing shares of Series A Preferred, and, in the case of any such loss,
theft or destruction, upon receipt of indemnity reasonably satisfactory to the
Corporation (provided, that, if the holder is a financial institution or other
institutional investor, its own agreement shall be satisfactory), or, in the
case of any such mutilation, upon surrender of such certificate, the Corporation
shall (at its own expense) execute and deliver in lieu of such certificate a new
certificate of like kind representing the number of shares of Series A Preferred
of such class represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of the lost, stolen, destroyed or mutilated
certificate, and dividends shall accrue on the Series A Preferred represented by
such new certificate from the date to which dividends have been fully paid on
the Series A Preferred represented by the lost, stolen, destroyed or mutilated
certificate.
SECTION 15. SUCCESSORS AND TRANSFEREES. The provisions applicable to
shares of Series A Preferred shall bind and inure to the benefit of and be
enforceable by the Corporation, the respective successors to the Corporation,
and by any record holder of shares of Series A Preferred.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
executed as of the 8th day of February, 2000.
VISTA ENERGY RESOURCES, INC.
By: /s/ C. Randall Hill
-------------------------------------
C. Randall Hill
Chairman and Chief Executive Officer
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<PAGE> 1
EXHIBIT 3.2
AMENDED AND RESTATED
BYLAWS
OF
PRIZE ENERGY CORP.
(FORMERLY VISTA ENERGY RESOURCES, INC.)
ARTICLE ONE
OFFICES
Section 1. REGISTERED OFFICE. The registered office of Prize Energy
Corp. (hereinafter called the "CORPORATION") in the State of Delaware shall be
at Corporation Trust Center, 1209 Orange Street, in the City of Wilmington,
County of New Castle, State of Delaware 19801, and the registered agent in
charge thereof shall be The Corporation Trust Company.
Section 2. OTHER OFFICES. The Corporation may also have an office or
offices, and keep the books and records of the Corporation, except as may
otherwise be required by law, at such other place or places, either within or
outside the State of Delaware, as the Board of Directors may from time to time
determine or the business of the Corporation may require.
ARTICLE TWO
STOCKHOLDERS' MEETINGS
Section 1. PLACE OF MEETINGS. All meetings of the stockholders for the
election of directors shall be at such place as may be fixed from time to time
by the Board of Directors, or at such other place either within or outside the
State of Delaware as shall be designated from time to time by the Board of
Directors and stated in the notice of the meeting. Meetings of stockholders for
any other purpose may be held at such time and place, within or outside the
State of Delaware, as shall be stated in the notice of the meeting or in a duly
executed waiver of notice thereof.
Section 2. ANNUAL MEETINGS. Annual meetings of stockholders shall be
held on such date and at such time as shall be designated from time to time by
the Board of Directors and stated in the notice of the meeting, at which they
shall elect by a plurality vote a Board of Directors and transact such other
business as may properly be brought before the meeting.
Section 3. NOTICE OF ANNUAL MEETING. Written notice of the annual
meeting stating the place, date and hour of the meeting shall be given to each
stockholder entitled to vote at such meeting not less than 10 nor more than 50
days before the date of the meeting.
<PAGE> 2
Section 4. STOCKHOLDER PROPOSALS. At an annual meeting of the
stockholders of the Corporation, only such business shall be conducted as shall
have been properly brought before the meeting. To be properly brought before an
annual meeting, business must be (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors, (b)
otherwise properly brought before the meeting by or at the direction of the
Board of Directors, or (c) otherwise properly brought before the meeting by a
stockholder of the Corporation. For business to be properly brought before an
annual meeting by a stockholder, the stockholder must have given timely notice
thereof in writing to the Secretary of the Corporation. To be timely, a
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the Corporation, not less than 60 days nor more
than 90 days prior to the meeting; provided, however, that, in the event that
less than 70 days' notice or prior public disclosure of the date of the meeting
is given or made to stockholders, notice by the stockholder, to be timely, must
be so received not later than the close of business on the 10th day following
the day on which such notice of the date of the annual meeting was mailed or
such public disclosure was made. A stockholder's notice to the Secretary shall
set forth, as to each matter the stockholder proposes to bring before the annual
meeting (w) a brief description of the business desired to be brought before the
annual meeting and the reasons for conducting such business at the annual
meeting, (x) the name and address, as they appear on the Corporation's books, of
the stockholder proposing such business, (y) the class and number of shares of
the Corporation which are beneficially owned by the stockholder, and (z) any
material interest of the stockholder in such business. Notwithstanding anything
in these Bylaws to the contrary, no business shall be conducted at any annual
meeting except in accordance with the procedures set forth in this Section 4.
The chair of the annual meeting shall, if the facts warrant, determine and
declare to the meeting that business was not properly brought before the meeting
in accordance with the provisions of this Section 4, and, if the chair should so
determine, he or she shall so declare to the meeting and any such business not
properly brought before the meeting shall not be transacted.
Section 5. STOCKHOLDERS LIST. The officer who has charge of the stock
ledger of the Corporation shall prepare and make, at least 10 days before each
annual meeting of stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least 10 days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or, if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is present.
Section 6. SPECIAL MEETINGS. Special meetings of the stockholders, for
any purpose or purposes, unless otherwise prescribed by statute or by the
certificate of incorporation, may be called by the Chairman of the Board and
shall be called by the Chairman of the Board, the President or the Secretary at
the request in writing of a majority of the Board of Directors, or at the
request in writing of stockholders owning a majority in amount of the entire
capital stock of the Corporation issued and
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<PAGE> 3
outstanding and entitled to vote. Such request shall state the purpose or
purposes of the proposed meeting.
Section 7. NOTICE OF SPECIAL MEETINGS. Written notice of a special
meeting of the stockholders stating the place, date and hour of the meeting and
the purpose or purposes for which the meeting is called, shall be given not less
than 10 nor more than 60 days before the date of the meeting, to each
stockholder entitled to vote at such meeting.
Section 8. BUSINESS AT SPECIAL MEETINGS. Business transacted at any
special meeting of stockholders shall be limited to the purposes stated in the
notice.
Section 9. QUORUM. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting, at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than 30 days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 10. REQUIRED VOTE. When a quorum is present at any meeting, the
vote of the holders of a majority of the stock having voting power present in
person or represented by proxy shall decide any question brought before such
meeting, unless the question is one upon which, by express provision of the
statutes or of the certificate of incorporation, a different vote is required,
in which case such express provision shall govern and control the decision of
such question.
Section 11. VOTING; PROXIES. Each stockholder shall, at every meeting
of the stockholders, be entitled to one vote in person or by proxy for each
share of the capital stock having voting power held by such stockholder, but no
proxy shall be voted on after three years from its date, unless the proxy
provides for a longer period.
Section 12. CONSENT IN LIEU OF MEETING. Unless otherwise provided in
the certificate of incorporation, any action which is required or is permitted
to be taken at any annual or special meeting of stockholders of the Corporation
may be taken without a meeting, without prior notice and without a vote, if a
consent or consents in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of notes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted and
shall be delivered to the Corporation by delivery to its registered office in
Delaware, its principal place of business, or an officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to a
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corporation's registered office shall be by hand or by certified or registered
mail return receipt requested.
ARTICLE THREE
BOARD OF DIRECTORS
Section 1. NUMBER AND QUALIFICATIONS. The Board of Directors shall
consist of such number of directors as may be determined from time to time by
resolution of the Board of Directors; provided, however, that the Board shall
not be less than three nor more than nine and no decrease in the number of
directors constituting the Board shall have the effect of shortening the term of
any incumbent director. The directors need not be stockholders or residents of
the State of Delaware.
Section 2. NOMINATION OF DIRECTORS. Nominations of persons for election
to the Board of Directors of the Corporation may be made at a meeting of
stockholders by or at the direction of the Board of Directors or by any
stockholder of the Corporation entitled to vote for the election of directors at
the meeting who complies with the notice procedures set forth in this Section 2.
Such nominations, other than those made by or at the direction of the Board of
Directors, shall be made pursuant to timely notice in writing to the Secretary
of the Corporation. To be timely, a stockholder's notice shall be delivered to
or mailed and received at the principal executive offices of the Corporation not
less than 60 days nor more than 90 days prior to the meeting; provided, however,
that, in the event that less than 70 days' notice or prior public disclosure of
the date of the meeting is given or made to stockholders, notice by the
stockholder to be timely must be so received not later than the close of
business on the 10th day following the day on which such notice of the date of
the meeting was mailed or such public disclosure was made. Such stockholder's
notice shall set forth (a) as to each person whom the stockholder proposes to
nominate for election or re-election as a director: (i) the name, age, business
address and residence address of such person, (ii) the principal occupation or
employment of such person, (iii) the class and number of shares of the
Corporation which are beneficially owned by such person, and (iv) any other
information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required, in
each case pursuant to Regulation 14A under the Securities Exchange Act of 1934,
as amended (including without limitation such person's written consent to being
named in the proxy statement as a nominee and to serving as a director if
elected); and (b) as to the stockholder giving the notice: (i) the name and
address, as they appear on the Corporation's books, of such stockholder and (ii)
the class and number of shares of the Corporation which are beneficially owned
by such stockholder. At the request of the Board of Directors, any person
nominated by the Board of Directors for election as a director shall furnish to
the Secretary of the Corporation that information required to be set forth in a
stockholder's notice of nomination which pertains to the nominee. No person
shall be eligible for election as a director of the Corporation unless nominated
in accordance with the procedures set forth in this Section 2. The chair of the
meeting shall, if the facts warrant, determine and declare to the meeting that a
nomination was not made in accordance
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with the procedures prescribed by these Bylaws, and, if the chair should so
determine, he or she shall so declare to the meeting and the defective
nomination shall be disregarded.
Section 3. RESIGNATIONS. Any director of the Corporation may resign at
any time by giving written notice to the Chairman of the Board of Directors, the
President or the Secretary of the Corporation. Resignations shall become
effective upon receipt or at such later time as shall be specified therein and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
Section 4. VACANCIES AND NEWLY CREATED DIRECTORSHIPS. Any vacancies in
the Board of Directors and any newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, or by a sole remaining
director, and the directors so chosen shall hold office until the next annual
meeting of stockholders and until their successors are duly elected and shall
qualify, unless sooner displaced. If there are no directors in office, then an
election of directors may be held in the manner provided by statute. If, at the
time of filling any vacancy or any newly created directorship, the directors
then in office shall constitute less than a majority of the whole board (as
constituted immediately prior to any such increase), the Court of Chancery may,
upon application of any stockholder or stockholders holding at least 25 percent
of the total number of the shares at the time outstanding having the right to
vote for such directors, summarily order an election to be held to fill any such
vacancies or newly created directorships, or to replace the directors chosen by
the directors then in office.
Section 5. MANAGEMENT OF THE CORPORATION. The business and affairs of
the Corporation shall be managed by its Board of Directors, which may exercise
all such powers of the Corporation and do all such lawful acts and things as are
not by statute, the certificate of incorporation or these Bylaws directed or
required to be exercised or done by the stockholders.
Section 6. PLACES OF MEETINGS. The Board of Directors of the
Corporation may hold meetings, both regular and special, either within or
outside the State of Delaware, as determined by the Board of Directors or the
Chairman of the Board of Directors.
Section 7. INITIAL BOARD MEETINGS. The first meeting of each newly
elected Board of Directors shall be held immediately following and at the same
place as the annual meeting of stockholders and no notice of such meeting shall
be necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event such meeting is not
held at such time and place, the meeting may be held at such time and place as
shall be specified in a notice given as hereinafter provided for special
meetings of the Board of Directors, or as shall be specified in a written waiver
signed by all of the directors.
Section 8. REGULAR MEETINGS. Regular meetings of the Board of Directors
may be held without notice at such time and at such place as shall from time to
time be determined by the board.
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Section 9. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by the Chairman of the Board of Directors on 24 hour notice to
each director, either personally or by mail or by telegram; special meetings
shall be called by the Chairman of the Board of Directors, the President or the
Secretary in like manner and on like notice on the written request of any
director.
Section 10. QUORUM OF AND ACTION BY DIRECTORS. At all meetings of the
Board of Directors, a majority of the directors then in office shall constitute
a quorum for the transaction of business and the act of a majority of the
directors present at any meeting at which there is a quorum shall be the act of
the Board of Directors, unless the act of a greater number is required by
statute, the certificate of incorporation or these Bylaws, in which case the act
of such greater number shall be requisite to constitute the act of the board. If
a quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 11. ACTION WITHOUT A MEETING. Unless otherwise restricted by
the certificate of incorporation or these Bylaws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if all members of the board or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the board or committee.
Section 12. TELEPHONE MEETINGS. The members of the Board of Directors
or any committee thereof may participate in a meeting of the board or such
committee utilizing conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other and
such participation shall constitute presence in person at such meeting.
Section 13. COMMITTEES. The Board of Directors may, by resolution
passed by the affirmative vote of at least a majority of the directors then in
office, designate one or more committees, each committee to consist of one or
more of the directors of the Corporation. The Board of Directors may designate
one or more directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee. Any such
committee, to the extent provided in the resolution, shall have and may exercise
the powers of the Board of Directors in the management of the business and
affairs of the Corporation, and may authorize the seal of the Corporation to be
affixed to all papers which may require it; provided, however, that, in the
absence or disqualification of any member of such committee or committees, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member. Such committee or committees shall have
such name or names as may be determined from time to time by resolution adopted
by the Board of Directors.
Section 14. COMMITTEE MEETINGS. Each committee shall keep regular
minutes of its meetings and report the same to the Board of Directors when
requested by the Board of Directors or any director.
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Section 15. DIRECTORS' COMPENSATION. Subject to the provisions of
Article Four hereof, the Board of Directors shall have authority to determine,
from time to time, the amount of compensation, if any, which may be paid to its
members for their services as directors. The directors shall be paid their
reasonable expenses, if any, of attendance at each meeting of the Board of
Directors. Subject to the provisions of Article Four hereof, the Board of
Directors shall also have power in its discretion to provide for and to pay to
directors rendering services to the Corporation not ordinarily rendered by
directors as such, special compensation appropriate to the value of such
services as determined by the Board of Directors from time to time. Nothing
herein contained shall be construed to preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor.
ARTICLE FOUR
SPECIAL BOARD AUTHORIZATION
FOR CERTAIN MATTERS.
Section 1. DEFINITIONS. For purposes of this Article Four the following
terms shall have the meanings specified below:
"AFFILIATE": any Person (other than a Subsidiary) which, directly or
indirectly, is controlled by an officer of the Corporation or is in control of,
is controlled by, or is under common control with a person controlled by an
officer of the Corporation. For purposes of this definition, any director,
officer or employee involved in the management of the Corporation shall be
deemed to be "in control of" the Corporation and a Person shall be deemed to be
"controlled by" the Corporation if the Corporation possesses, directly or
indirectly, power either to (i) vote 10 percent or more of the securities having
ordinary voting power for the election of directors of such Person, or (ii)
direct or cause the direction of the management and policies of such Person
whether by contract or otherwise.
"CAPITAL EXPENDITURES": costs and expenses associated with the
acquisition, development or redevelopment of the Oil and Gas Properties or any
other fixed or capital assets of the Corporation or any of its Subsidiaries
which pursuant to GAAP are required to be capitalized and subject to depletion,
depreciation or amortization, including without limitation Drilling or
Completion Expenditures.
"CAPITAL PROJECT": any project, transaction, agreement, arrangement or
series of transactions, agreements or arrangements to which the Corporation or a
Subsidiary of the Corporation is a party involving a capital expenditure,
including without limitation (i) any purchase, lease, acquisition, developmental
drilling, completion and/or recompletion of proved developed producing, proved
developed non-producing, or proved undeveloped Oil and Gas Properties; (ii) any
purchase, lease or acquisition and/or exploratory drilling of Oil and Gas
Properties; and (iii) any purchase, lease, acquisition, construction,
development or completion of transportation, compression, gathering or related
facilities for oil, gas or related products or the provision of services,
equipment or other Property for use in developing, completing or transporting
oil, gas or related products or otherwise
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directly related and ancillary to the oil and gas business, including without
limitation the transportation, production, storage and handling of water
utilized or disposed of in oil and gas production.
"DEBT": as to any Person, all indebtedness, liabilities and obligations
of such Person (excluding deferred taxes) whether primary or secondary, direct
or indirect, absolute or contingent (i) for borrowed money, (ii) constituting an
obligation to pay the deferred purchase price of Property, (iii) evidenced by
bonds, debentures, notes or similar instruments, (iv) arising under futures
contracts, swap contracts, commodity hedge agreements or similar speculative
agreements, (v) arising under leases serving as a source of financing or
otherwise capitalized in accordance with GAAP (but excluding customary oil, gas
or mineral leases and operating leases of equipment), (vi) arising under
conditional sales or other title retention agreements, (vii) under direct or
indirect guaranties of Debt of any Person or constituting obligations to
purchase or acquire or to otherwise protect or insure a creditor against loss in
respect of indebtedness of any Person (such as obligations under working capital
maintenance agreements, agreements to keep-well, agreements to purchase Debt,
assets, goods, securities or services, or take-or-pay agreements, but excluding
endorsements in the ordinary course of business of negotiable instruments in the
course of collection), (viii) with respect to letters of credit or applications
or reimbursement agreements therefor, or (ix) 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 without limitation 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 with respect to other obligations to deliver goods or services in
consideration of advance payments.
"DRILLING OR COMPLETION EXPENDITURE": any expenditure incurred, or
required to be incurred, by the Corporation or any Subsidiary, with respect to
exploratory drilling of Oil and Gas Properties or any developmental drilling,
completion and/or recompletion of proved developed producing, proved developed
non-producing, or proved undeveloped Oil and Gas Properties.
"GAAP": generally accepted accounting principles as applied in the oil
and gas industry in the United States of America in effect from time to time.
"LIEN": any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether such interest
is based on the common law, statute or contract, and including without
limitation the lien or security interest arising from a mortgage, encumbrance,
pledge, security agreement, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes. The term "Lien" shall include
reservations, exceptions, encroachments, easements, rights of way, covenants,
conditions, restrictions, leases and other title exceptions and encumbrances
affecting Property.
"OIL AND GAS PROPERTIES": all rights, estates, titles and interests of
the Corporation or its Subsidiaries in and to any oil, gas or other mineral fee
or leasehold estates, any royalty, overriding royalty interest, production
payment, net profit interest, mineral fee interest and other rights therein,
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and all real and personal property of any kind or nature associated therewith,
including without limitation all proceeds from the production or sale of oil,
gas and other hydrocarbons, all easements, permits, licenses, servitudes and
rights of way, all pipelines, gathering lines, trunk lines, lateral lines,
compressors, dehydration and pumping equipment, tanks, storage facilities and
plants, and all options, rights of refusal, contract rights, accounts receivable
and general intangibles arising from any contracts or agreements relating
thereto.
"PERMITTED DEBT": any Debt (i) which is set forth in an Approved Budget
(as defined in Section 2(i) of this Article Four); (ii) consisting of loans or
advances among the Corporation and its Subsidiaries which have been approved by
the Board of Directors pursuant to the provisions of Section 2 of this Article
Four; (iii) incurred under the Corporation's and its Subsidiaries' senior bank
credit facility; or (iv) not described in clauses (i) - (iii) above which is
incurred at times when the Corporation is in compliance with a minimum net worth
test deemed acceptable by at least 70 percent of the members of the Board of
Directors.
"PERMITTED LIENS": any or all of the following: (i) Liens securing
Permitted Debt; (ii) Liens for taxes, assessments or other governmental charges
or levies not yet due or which are being contested in good faith by appropriate
action and if reserves adequate under GAAP shall have been established therefor;
(iii) legal or equitable encumbrances deemed to exist by reason of the existence
of any litigation or any other legal proceeding or arising out of a judgment or
award with respect to which an appeal is being prosecuted in good faith and if
reserves adequate under GAAP shall have been established therefor; (iv)
vendors', carriers', warehousemen's, repairmen's, mechanics', workmen's,
materialmen's, construction or other like Liens arising by operation of law in
the ordinary course of business or incident to the construction or improvement
of any Property, or operator or non-operator Liens under joint operating
agreements, in respect of obligations which are not yet due or which are
contested in good faith by appropriate proceedings and if reserves adequate
under GAAP shall have been established therefor; and (v) servitudes, easements,
restrictions, rights of way and other similar rights or Liens in real or
immovable property or any interest therein, provided the same do not materially
impair the use of such property for the purposes for which it is held.
"PERSON": any corporation, natural person, firm, joint venture,
association, limited liability company, partnership, trust, unincorporated
organization, government or any department or agency of any government or any
other form of entity.
"PROPERTY": any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"SUBSIDIARY" or "SUBSIDIARIES": with respect to any Person, any
corporation, association, partnership, limited liability company, joint venture,
or other business or corporate entity, enterprise or organization of which the
management is directly or indirectly (through one or more intermediaries)
controlled by such Person or 50 percent or more of the equity interests in which
is directly or indirectly (through one or more intermediaries) owned by such
Person. Unless otherwise
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qualified, all references to a "Subsidiary" or to "Subsidiaries" in this Article
Four shall refer to a Subsidiary or Subsidiaries of the Corporation.
Section 2. SPECIAL BOARD AUTHORIZATION FOR CERTAIN MATTERS. The
Corporation (and the officers and agents acting on the Corporation's behalf)
shall not, and the Corporation, when acting in its capacity as the general
partner or controlling stockholder of any of its Subsidiaries (and the officers
and agents acting on the Corporation's behalf in such capacity), shall not
permit such Subsidiaries to, do any of the things described in clauses (i)-(x)
below without the affirmative vote of at least a majority of all directors then
serving on the Board of Directors at a regular meeting or a special meeting
called for such purpose, or by written consent:
(i) approve and implement annual budgets for general and
administrative expenses (including without limitation salary, bonuses,
general operating and overhead expenses) of the Corporation or any of
its Subsidiaries or annual budgets for Capital Expenditures of the
Corporation or any of its Subsidiaries, or incur expenses or disburse
funds for any of such purposes prior to the approval of such budgets
by the Board of Directors as required hereby (any budgets which are
approved as required herein are referred to as "APPROVED BUDGETS");
(ii) approve, agree, grant or otherwise make arrangements for any
payment or grant of, annual compensation or benefits to officers or
other executive employees of the Corporation or any of its
Subsidiaries, including without limitation entering into employment
agreements, adopting stock option plans or employee benefit plans or
granting options or benefits to any such persons under any existing
plans;
(iii) make any expenditure not otherwise subject to Board of
Director approval under this Section 2, which exceeds by more than 5
percent the amount set forth in the appropriate line item for such
expenditure in an Approved Budget;
(iv) approve, enter into any agreements or other arrangements
with respect to, or make any payments, incur any expenses or disburse
any funds for (A) any Capital Project, the completion or full
capitalization of which can reasonably be expected to require the
Corporation or any of its Subsidiaries to expend, in the aggregate, in
excess of $15,000,000, (B) the acquisition, directly or indirectly, of
any assets or securities of any company with an aggregate purchase
price in excess of $15,000,000, to the extent such acquisition is not
otherwise subject to approval under the preceding clause (A), or (C)
any Capital Project for the exploration of an Oil and Gas Property
with undeveloped or possible reserves (including without limitation
the acquisition of leasehold interests and seismic data, the drilling
of wells and all related costs and expenses) which can reasonably be
expected to require the Corporation or any of its Subsidiaries to
expend, in the aggregate, in excess of $2,500,000;
(v) authorize or permit any amendment, modification or change, or
waiver of any right under, or voluntarily fail to perform obligations
under (when the means for such performance is available), any
agreement pertaining to Permitted Debt, except for any amendment,
modification, change, waiver or voluntary failure to perform an
agreement
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pertaining to Debt which (A) would not subject the Corporation or such
Subsidiary, as applicable, to obligations, requirements or liabilities
which, taken as a whole, are materially more burdensome to such party
than the obligations, requirements or liabilities imposed on them
before such amendment, modification, change, waiver or voluntary
failure to perform, and (B) is made or given in the ordinary course of
business and would not reasonably be expected to result in a decrease
of more than $500,000 in the value of the benefits that would accrue
to the Corporation or such Subsidiary, as applicable, under such
agreement;
(vi) approve, agree or consent to or make or enter into any
agreement or transaction or take any other action the effect of which
is to cause any fundamental change in the Corporation or any of its
Subsidiaries, or their respective businesses, including without
limitation the following: (A) any material change in the Corporation's
or any of its Subsidiaries' operating strategies or in the geographic
locations or methods of conducting their respective businesses; (B)
the institution of proceedings to be adjudicated a bankrupt or
insolvent, or the consent to the institution of bankruptcy or
insolvency proceedings or the filing of a petition or consent to a
petition seeking reorganization or relief under any applicable federal
or state law relating to bankruptcy, or the consent to the appointment
of a receiver, liquidator, assignee, trustee, sequestrator or other
similar official, or an assignment for the benefit of creditors, or,
except as may be required by any fiduciary obligation of the Board of
Directors or as may be required by applicable law, the admission in
writing of inability to pay debts generally as they become due, or any
corporate action in furtherance of any such action; or (C) any
voluntary withdrawal as a general partner or managing member, or
relinquishment of rights as a controlling stockholder, of any
Subsidiary;
(vii) issue any capital stock, partnership interest, limited
liability company interest or other similar equity interest in the
Corporation or any of its Subsidiaries or repurchase any capital
stock, partnership interest, limited liability company interest or
other similar equity interest in the Corporation or any of its
Subsidiaries (including without limitation any common stock or
preferred stock of the Corporation or any general partnership, limited
partnership or preferred limited partnership interest in any
partnership);
(vii) create Subsidiaries or make additional contributions or
investments in any Subsidiaries;
(ix) sell, lease, transfer or otherwise dispose of (including
without limitation farm-outs), directly or indirectly, any assets,
other than sales of product produced in the ordinary course of
business, with a fair market value, in the aggregate, in excess of
$5,000,000; or
(x) enter into or modify any hedge, swap, futures, option or
other derivative transactions or contracts.
Section 3. SUPER MAJORITY BOARD AUTHORIZATION FOR CERTAIN MATTERS. The
Corporation (and the officers and agents acting on the Corporation's behalf)
shall not, and the Corporation, when
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acting in its capacity as the general partner or controlling stockholder of any
of its Subsidiaries (and the officers and agents acting on the Corporation's
behalf in such capacity), shall not permit such Subsidiaries to, do any of the
things described in clauses (i)-(v) below without the affirmative vote of at
least 70 percent of all directors then serving on the Board of Directors (or, in
the case of a matter described clause (iii) below, at least 70 percent of all
directors who are not required to abstain from voting on the transaction as a
result of a conflict or potential conflict of interest in the transaction) at a
regular meeting or a special meeting called for such purpose, or by written
consent:
(i) approve, agree or consent to, or make or enter into any
agreement, transaction or take any other action the effect of which is
to cause, any merger, consolidation or amalgamation, liquidation,
winding-up or dissolution, conveyance, sale, lease, assignment,
transfer or other disposition of, in one transaction or a series of
transactions, all or any material part of their respective businesses
or Properties having a value of $100,000,000 or more, whether now
owned or hereafter acquired;
(ii) incur, create, authorize, issue, assume or suffer to exist
any Debt or any Liens related thereto except Permitted Debt and
Permitted Liens;
(iii) enter into any transaction, including without limitation
any purchase, sale, lease or exchange of Property or the rendering of
any service, with any Affiliate or employee unless such transactions
are in the ordinary course of the Corporation's or such Subsidiary's
business and are upon fair and reasonable terms no less favorable to
the Corporation, or such Subsidiary, as the case may be, than it would
obtain in a comparable arm's-length transaction with unaffiliated
Persons and the aggregate amount of money or the value of Property to
be paid or received by the Corporation or such Subsidiary in such
transaction, together with all other transactions then in effect among
the Corporation or such Subsidiary and its Affiliates, would not
exceed $200,000 in any 12 month period;
(iv) pay any dividends on shares of the Corporation's common
stock while any shares of the Corporation's Series A 6% Convertible
Preferred Stock ("SERIES A PREFERRED") remain outstanding; or
(v) increase or decrease the aggregate number of authorized
shares of Series A Preferred, increase or decrease the par value of
Series A Preferred, or alter or change the powers, preferences or
special rights of Series A Preferred so as to adversely affect the
shares of Series A Preferred.
Section 4. PROVISIONS CUMULATIVE. The provisions in this Article Four
are not intended to be an exclusive statement of all of the actions of the
Corporation which require prior approval of the Board of Directors, and this
Article Four shall be deemed to be cumulative of any and all requirements
imposed by the certificate of incorporation, other provisions of these Bylaws or
applicable law with respect to Board of Director approval of actions taken by
the Corporation.
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ARTICLE FIVE
NOTICES
Section 1. MANNER OF GIVING NOTICE. Whenever, under the provisions of
the statutes or of the certificate of incorporation or of these Bylaws, notice
is required to be given to any director or stockholder, it shall not be
construed to mean personal notice, but such notice may be given in writing, by
mail, addressed to such director or stockholder, at his address as it appears on
the records of the Corporation, with postage thereon prepaid, and such notice
shall be deemed to be given at the time when the same shall be deposited in the
United States mail. Notice to directors may also be given by prepaid telegram.
Section 2. WAIVER OF NOTICE. Whenever any notice is required to be
given under the provisions of the statutes or of the certificate of
incorporation or of these Bylaws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto.
ARTICLE SIX
OFFICERS
Section 1. NUMBER, QUALIFICATIONS AND DESIGNATION. The officers of the
Corporation shall be chosen by the Board of Directors and shall be a President,
Secretary and such other officers as may be elected in accordance with the
provisions of Section 3 of this Article Six. One person may hold more than one
office. Officers may be, but need not be, directors or stockholders of the
Corporation.
Section 2. ELECTION AND TERM OF OFFICE. The officers of the
Corporation, except those elected by delegated authority pursuant to Section 3
of this Article Six, shall be elected annually by the Board of Directors, and
each such officer shall hold his or her office until such officer's successor
shall have been elected and shall qualify, or until his or her earlier death,
resignation or removal. Any officer may resign at any time upon written notice
to the Corporation or may be removed, with or without cause, by the Board of
Directors.
Section 3. OTHER OFFICERS, COMMITTEES AND AGENTS. The Board of
Directors may from time to time elect such other officers, including without
limitation a Chairman of the Board of Directors, a Vice Chairman of the Board of
Directors, a Treasurer and one or more Vice Presidents, Assistant Secretaries
and Assistant Treasurers, and appoint such committees, employees and other
agents as it deems necessary, who shall hold their offices for such terms and
shall exercise such powers and perform such duties as are provided in these
Bylaws, or as the Board of Directors may from time to time determine. The Board
of Directors may delegate to any officer or committee the power to elect
subordinate officers and to retain or appoint employees or other agents, or
committees
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thereof, and to prescribe the authority and duties of such subordinate officers,
committees, employees or other agents.
Section 4. CHAIRMAN OF THE BOARD AND VICE CHAIRMAN. The Chairman of the
Board of Directors, if any, shall preside at all meetings of the Board of
Directors and shall perform such other duties as may be prescribed by the Board
of Directors from time to time. He or she may sign and deliver on behalf of the
Corporation any deeds, mortgages, bonds, contracts, certificates, powers of
attorney and other instruments which the Board of Directors has authorized to be
executed, except in cases where the signing and execution thereof shall be
expressly delegated by the Board of Directors or by these Bylaws to some other
officer or agent of the Corporation or shall be required by law to be otherwise
signed or executed. The Vice Chairman, if any, shall, at the request of the
Chairman or in his or her absence or disability, perform the duties and exercise
the powers of the Chairman, and shall perform such other duties as the Board of
Directors shall prescribe.
Section 5. PRESIDENT. The President shall preside at all meetings of
the stockholders and, if there is no Chairman or Vice Chairman of the Board of
Directors, or in their absence, all meetings of the Board of Directors. He or
she may sign and deliver on behalf of the Corporation any deeds, mortgages,
bonds, contracts, certificates, powers of attorney and other instruments which
the Board of Directors has authorized to be executed, except in cases where the
signing and execution thereof shall be expressly delegated by the Board of
Directors or by these Bylaws to some other officer or agent of the Corporation
or shall be required by law to be otherwise signed or executed. The President
may employ all agents and employees of the Corporation and may discharge any
such agent or employee, and, in general, shall perform all duties incident to
the office of President, and such other duties as from time to time may be
assigned to him or her by the Board of Directors.
Section 6. CHIEF EXECUTIVE OFFICER. The Board of Directors shall assign
the duties of the Chief Executive Officer of the Corporation to either the
Chairman of the Board of Directors or the President. Such duties shall include
the authority and powers necessary for the general management of the business,
properties, activities and policies of the Corporation, subject, however, to the
control of the Board of Directors.
Section 7. CHIEF OPERATING OFFICER. The Board of Directors shall assign
the duties of the Chief Operating Officer of the Corporation to the Chairman of
the Board of Directors, the President or any other officer of the Corporation.
Such duties shall include the authority necessary for the active management and
general supervision of the everyday business of the Corporation and the duty to
see that all orders and policies of the Chief Executive Officer and the Board of
Directors are carried into effect. The Chief Operating Officer shall appoint and
remove, employ and discharge, and fix the compensation of all employees and
agents of the Corporation, other than the duly elected officers, subject to the
approval of the Board of Directors. At the request of the Chief Executive
Officer, or in his or her absence or disability, the Chief Operating Officer
shall exercise all the powers and discharge all the duties of the Chief
Executive Officer.
Section 8. CHIEF FINANCIAL OFFICER. The Board of Directors may assign
the duties of Chief Financial Officer of the Corporation to any officer of the
Corporation. Such duties shall
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include the active management and supervision of the financial and accounting
affairs of the Corporation.
Section 9. VICE PRESIDENTS. Any Vice President shall, at the request of
the President or in his absence or disability, perform the duties and exercise
the powers of the President and such other duties as may from time to time be
assigned by the Board of Directors, the Chairman of the Board of Directors or
the President. At the discretion of the Board of Directors, one or more Vice
Presidents may be designated as an Executive Vice President or Senior Vice
President.
Section 10. SECRETARY AND ASSISTANT SECRETARIES. The Secretary shall
(i) attend all meetings of the stockholders and of the Board of Directors and
shall record the proceedings of the stockholders and of the directors and of
committees of the Board in a book or books to be kept for that purpose; (ii) see
that notices are given and records and reports properly kept and filed by the
Corporation as required by law; (iii) be the custodian of the seal of the
Corporation and see that it is affixed to all documents to be executed on behalf
of the Corporation under its seal; and (iv) in general, perform all duties
incident to the office of Secretary, and such other duties as may from time to
time be assigned to him or her by the Board of Directors, the Chairman of the
Board of Directors or the President. Any Assistant Secretary shall, at the
request of the Secretary or in his or her absence or disability, perform the
duties and exercise the powers of the Secretary and shall perform such other
duties as the Board of Directors, the President or the Secretary shall
prescribe.
Section 11. TREASURER AND ASSISTANT TREASURERS. The Treasurer, if any,
shall have or provide for the custody of the funds or other property of the
Corporation. Whenever so required by the Board of Directors, the Chairman of the
Board of Directors or the President, the Treasurer shall render an account
showing his or her transactions as Treasurer and the financial condition of the
Corporation. In general, the Treasurer shall discharge such other duties as may
from time to time be assigned to him or her by the Board of Directors, the
Chairman of the Board of Directors or the President. Any Assistant Treasurer
shall, at the request of the Treasurer or in his or her absence or disability,
perform the duties and exercise the powers of the Treasurer and shall perform
such other duties as the Board of Directors, the President or the Treasurer
shall prescribe.
Section 12. OFFICERS' BONDS. No officer of the Corporation need provide
a bond to guarantee the faithful discharge of his or her duties unless the Board
of Directors shall by resolution so require a bond, in which event such officer
shall give the Corporation a bond (which shall be renewed if and as required) in
such sum and with such surety or sureties as shall be satisfactory to the Board
of Directors for the faithful performance of the duties of his or her office.
Section 13. COMPENSATION. The compensation of the officers and agents
of the Corporation elected by the Board of Directors shall be fixed from time to
time by the Board of Directors. Any employment contract, whether for an officer,
agent or employee, if expressly approved or specifically authorized by the Board
of Directors, may fix a term of employment, and any such contract, but only if
so approved or authorized, shall be valid and binding upon the Corporation in
accordance with the terms thereof; provided, however, this provision shall not
limit or restrict in any way the right of the Corporation at any time in its
discretion (which right is hereby expressly
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reserved) to remove from office, discharge or terminate the employment or
otherwise dispense with the services of any such officer, agent or employee, as
provided in these Bylaws, prior to the expiration of the term of employment
under any such contract, provided only that the Corporation shall not thereby be
relieved of any continuing liability for salary or other compensation provided
for in such contract.
Section 14. ACTION WITH RESPECT TO SECURITIES OF OTHER CORPORATIONS.
Unless otherwise directed by the Board of Directors, the Chairman of the Board
of Directors, the President or any Vice President of the Corporation shall have
power to vote and otherwise act on behalf of the Corporation, in person or by
proxy, at any meeting of security holders, or with respect to any action of
security holders, of any other Corporation in which the Corporation may hold
securities and shall have power to exercise any and all rights and powers which
the Corporation may possess by reason of its ownership of securities in such
other Corporation.
ARTICLE SEVEN
SHARES AND TRANSFERS OF SHARES
Section 1. SHARE CERTIFICATES. Every holder of stock in the Corporation
shall be entitled to have a certificate, in the name of the Corporation, signed
by the Chairman of the Board of Directors, the President or a Vice President,
and the Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary of the Corporation, certifying the number of shares owned by such
holder in the Corporation.
Section 2. SIGNATURES. Where a certificate is countersigned (i) by a
transfer agent other than the Corporation or its employee, or (ii) by a
registrar other than the Corporation or its employee, any other signature on the
certificate may be facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he or she were such officer, transfer agent or registrar at the date of
issue.
Section 3. LOST CERTIFICATES. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or to give the Corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the Corporation
with respect to the certificate or certificates alleged to have been lost,
stolen or destroyed.
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Section 4. TRANSFERS OF STOCK. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
Section 5. FIXING RECORD DATE. In order that the Corporation may
determine the stockholders entitled to notice of and to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than 60 nor less than 10 days
before the date of such meeting, nor more than 60 days prior to any other
action. A determination of stockholders of record entitled to notice of and to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
Section 6. REGISTERED STOCKHOLDERS. The Corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the owner
of shares, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise provided
by the laws of Delaware.
ARTICLE EIGHT
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS
Section 1. THIRD PARTY ACTIONS. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation), by reason of the fact that such person is or was a
director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including without limitation attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding if such person acted
in good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner that such person reasonably believed to be
in or not
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opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his or her
conduct was unlawful.
Section 2. DERIVATIVE ACTIONS. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that such
person is or was a director, officer, employee or agent of the Corporation, or
is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including without limitation attorneys'
fees) actually and reasonably incurred by such person in connection with the
defense or settlement of such action or suit if such person acted in good faith
and in a manner such person reasonably believed to be in or not opposed to the
best interests of the Corporation, except that no indemnification shall be made
in respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the Corporation unless and only to the extent that the
Court of Chancery of Delaware or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses that the Court of
Chancery of Delaware or such other court shall deem proper.
Section 3. DETERMINATION OF INDEMNIFICATION. Any indemnification under
Section 1 or 2 of this Article Eight (unless ordered by a court) shall be made
by the Corporation only as authorized in the specific case upon a determination
that indemnification of the director, officer, employee or agent is proper in
the circumstances because such person has met the applicable standard of conduct
set forth in Section 1 or 2 of this Article Eight. Such determination shall be
made (i) by unanimous vote of the directors who are not parties to such action,
suit or proceeding, even though less than a quorum, or (ii) if there are no such
directors, or if such directors so direct, by independent legal counsel in a
written opinion, or (iii) by the stockholders.
Section 4. RIGHT TO INDEMNIFICATION. Notwithstanding the other
provisions of this Article Eight, to the extent that a director, officer,
employee or agent of the Corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in Section 1
or 2 of this Article Eight, or in defense of any claim, issue or matter therein,
such person shall be indemnified against expenses (including without limitation
attorneys' fees) actually and reasonably incurred by such person in connection
therewith.
Section 5. ADVANCEMENT OF EXPENSES. The Corporation shall pay the
expenses (including without limitation attorneys' fees) incurred in defending
any civil, criminal, administrative or investigative action, suit or proceeding
in advance of the final disposition of such action, suit or proceeding;
provided, however, that the payment of expenses incurred by a director, officer,
employee or agent in advance of the final disposition of the action, suit or
proceeding shall be made only upon receipt of an undertaking by or on behalf of
the director, officer, employee or agent to repay all amounts advanced if it
should be ultimately determined that such person is not entitled to be
indemnified under this Article Eight or otherwise.
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Section 6. INDEMNIFICATION AND ADVANCEMENT OF EXPENSES NOT EXCLUSIVE.
The indemnification and advancement of expenses provided by, or granted pursuant
to, the other Sections of this Article Eight shall not be deemed exclusive of
any other rights to which any person seeking indemnification may be entitled
under any law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in such person's official capacity and as to action
in another capacity while holding such office. All rights to indemnification
under this Article Eight shall be deemed to be provided by a contract between
the Corporation and the director, officer, employee or agent who served in such
capacity at any time while these Bylaws and other relevant provisions of the
Delaware General Corporation Law and other applicable law, if any, are in
effect. Any repeal or modification thereof shall not affect any rights or
obligations then existing.
Section 7. INSURANCE. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against any liability asserted against
such person and incurred by such person in any such capacity, or arising out of
such person's status as such, whether or not the Corporation would have the
power to indemnify such person against such liability under the applicable
provisions of the Delaware General Corporation Law.
Section 8. DEFINITIONS OF CERTAIN TERMS. For purposes of this Article
Eight, references to "the Corporation" shall include, in addition to the
resulting corporation, any constituent corporation (including without limitation
any constituent of a constituent) absorbed in a consolidation or merger that, if
its separate existence had continued, would have had power and authority to
indemnify its directors, officers, employees or agents, so that any person who
is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall stand in the same position under
the provisions of this Article Eight with respect to the resulting or surviving
corporation as such person would have with respect to such constituent
corporation if its separate existence had continued.
For purposes of this Article Eight: (i) references to "other
enterprise" shall include employee benefit plans; (ii) references to "fines"
shall include any excise tax assessed on a person with respect to any employee
benefit plan; and (iii) references to "serving at the request of the
Corporation" shall include any service as a director, officer, employee or agent
of the Corporation that imposes duties on, or involves services by, such
director, officer, employee or agent with respect to an employee benefit plan,
its participants or beneficiaries. A person who acted in good faith and in a
manner such person reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the Corporation" as referred to in
this Article Eight.
Section 9. CONTINUATION AND SUCCESSORS. The indemnification and
advancement of expenses provided by, or granted pursuant to, this Article Eight
shall continue as to a person who
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has ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such a person.
ARTICLE NINE
MISCELLANEOUS
Section 1. INTERESTED DIRECTORS AND OFFICERS: QUORUM. No contract or
transaction between the Corporation and one or more of its directors or
officers, or between the Corporation and any other corporation, partnership,
association or other organization in which one or more of its directors or
officers are directors or officers or have a financial interest, shall be void
or voidable solely for this reason, or solely because the director or officer is
present at or participates in the meeting of the Board of Directors or committee
thereof which authorizes the contract or transaction, or solely because his, her
or their votes are counted for such purpose, if (i) the material facts as to his
or her relationship or interest and as to the contract or transaction are
disclosed or are known to the board or the committee, and the board or committee
in good faith authorizes the contract or transaction by the affirmative votes of
a majority of the disinterested directors, even though the disinterested
directors be less than a quorum; or (ii) the material facts as to his or her
relationship or interest and as to the contract or transaction are disclosed or
are known to the stockholders entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote of the stockholders;
or (iii) the contract or transaction is fair as to the Corporation as of the
time it is authorized, approved or ratified by the board, a committee thereof or
the stockholders. Common or interested directors may be counted in determining
the presence of a quorum at a meeting of the board or of a committee which
authorizes the contract or transaction.
Section 2. DIVIDENDS. Dividends upon the capital stock of the
Corporation, subject to the provisions of the certificate of incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the certificate of
incorporation.
Section 3. RESERVES. Before payment of any dividend, there may be set
aside out of any funds of the Corporation available for dividends such sum or
sums as the directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Corporation, or
for such other purpose as the directors shall think conducive to the interest of
the Corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
Section 4. FISCAL YEAR. The fiscal year of the Corporation shall be
fixed by resolution of the Board of Directors.
Section 5. SEAL. The seal of the Corporation shall be in such form as
shall be adopted and approved from time to time by the Board of Directors. The
seal may be used by causing it, or a facsimile thereof, to be impressed,
affixed, imprinted or in any manner reproduced.
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Section 6. LOANS AND GUARANTIES. The Corporation may lend money to,
guaranty obligations of and otherwise assist its directors, officers and
employees if the Board of Directors determines that such a loan, guaranty or
assistance reasonably may be expected to benefit, directly or indirectly, the
Corporation.
ARTICLE TEN
AMENDMENTS
The provisions of these Bylaws set forth in Article Four and in this
Article Ten may be amended or repealed, or new bylaws which replace such
provisions may be adopted, only by the affirmative vote of at least 70 percent
of all directors then serving on the Board of Directors or by the unanimous
written consent of all the directors. Any provision of these Bylaws not
described in the preceding sentence may be amended or repealed, or new bylaws
which replace such provisions may be adopted, by the affirmative vote of a
majority of the number of directors then comprising the Board of Directors or by
unanimous written consent of all the directors, unless (i) by statute or the
certificate of incorporation the power is reserved exclusively to the
stockholders in whole or in part, or (ii) the stockholders in amending,
repealing or adopting a particular bylaw expressly provide that the Board of
Directors may not amend or repeal that bylaw.
APPROVED by the Board of Directors of the Corporation on the 8th day of
February, 2000.
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EXHIBIT 4.1
AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
THIS AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this
"AGREEMENT") is made and entered into as of the 8th day of February, 2000, by
and among Vista Energy Resources, Inc., a Delaware corporation (the "COMPANY"),
Prize Energy Corp., a Delaware corporation ("PRIZE"), and each of the parties
listed as Owners on Exhibit A hereto (collectively, the "OWNERS" and,
individually, an "OWNER"). Certain terms used herein are defined in Section 3 of
this Agreement.
1. Background. The Company, Prize and PEC Acquisition Corp., a Delaware
corporation ("MERGER SUB"), have entered into a transaction, which was
consummated on the date hereof, in which Merger Sub was merged with and into
Prize, Prize became a wholly-owned subsidiary of the Company and the
stockholders of Prize received shares of capital stock in the Company in
exchange for their shares of capital stock in Prize (the "MERGER"). The Company
and the Vista Holders are parties to a Registration Rights Agreement dated
October 28, 1998 (the "PRIOR VISTA AGREEMENT"). Prize and the Prize Holders are
parties to an Amended and Restated Registration Rights Agreement dated June 29,
1999 (the "PRIOR PRIZE AGREEMENT"). The parties hereto desire to enter into this
Agreement in order to terminate and replace the Prior Vista Agreement and the
Prior Prize Agreement and to set forth the rights of the parties hereto with
respect to the registration of the shares of capital stock of the Company. The
Prior Vista Agreement and the Prior Prize Agreement are hereby terminated and
canceled, effective on the date hereof, and shall have no further force or
effect.
2. Registration under Securities Act, etc.
2.1. Registration on Request.
(a) Registration of Immediate Offering. Concurrently with or from time
to time after the Secondary Offering Date, subject to the limitations of Section
2.1(g) hereof, upon the written request (a "DEMAND REQUEST") of one or more
Owners, requesting that the Company effect the registration under the Securities
Act of all or a portion of such Owners' Registrable Securities (an "IMMEDIATE
OFFERING REGISTRATION") and specifying the number of Registrable Securities
requested to be registered and the intended method of disposition thereof
(including whether or not such requested disposition is to be in an underwritten
offering):
(i) Within five business days after the receipt of such
request, the Company shall give written notice of the Demand Request
(together with a copy of the Demand Request) to all other Owners of
Registrable Securities, if any; and
(ii) After giving such notice and subject to the limitations
set forth in Section 2.1(g) below, the Company shall use reasonable
efforts to file a registration
<PAGE> 2
statement with the Commission with respect to the Immediate Offering
Registration as soon as is practicable but in any event no later than
60 days after the Company's receipt of the Demand Request in order to
effect the registration under the Securities Act of:
(A) the Registrable Securities which the Company is
requested to register in the Demand Request, and
(B) all other Registrable Securities which the
Company is requested to register by the Owners who give
written notice to the Company within 15 business days after
written notice of the Demand Request from the Company.
The Owner's notice shall state the number of Registrable Securities
requested to be registered and whether the request to register such
securities constitutes a Demand Request pursuant to Section 2.1 of this
Agreement or a request for Piggyback Registration (as defined in
Section 2.2(a) hereof) pursuant to Section 2.2 of this Agreement. If
such request constitutes a Demand Request, such written notice to the
Company shall specify the intended method of disposition of the Owner's
Registrable Securities (including whether or not such requested
disposition is to be in an underwritten offering).
(b) Registration of Delayed or Continuous Offering. Concurrently with
or from time to time after the Secondary Offering Date (or at any time, in the
case of a Shelf Registration, as defined below, which does not provide for
underwritten take-downs), subject to the limitations of Section 2.1(g) hereof,
upon the written request (the "SHELF REQUEST") of Pioneer, the Individual Vista
Holders or the Owners of more than 50% of the Registrable Securities held by
Owners other than Pioneer and the Individual Vista Holders, requesting that the
Company effect the registration under the Securities Act of all or a portion of
such Owners' Registrable Securities for resale in a delayed or continuous
offering to the extent permitted by Rule 415 (or any successor rule thereto)
under the Securities Act (a "SHELF REGISTRATION" and, together with an Immediate
Offering Registration, a "DEMAND OFFERING") and specifying the number of
Registrable Securities requested to be registered and the intended methods of
disposition thereof (including whether or not such requested registration is to
include underwritten offerings):
(i) Within five business days after the receipt of the Shelf
Request, the Company shall give written notice of the Shelf Request
(together with a copy of the Shelf Request) to all other Owners of
Registrable Securities, if any; and
(ii) After giving such notice and subject to the limitations
set forth in Section 2.1(g) below, the Company shall use reasonable
efforts to file a registration statement with the Commission with
respect to the Shelf Registration as soon as is reasonable but in any
event no later than 60 days after the Company's receipt of the Shelf
Request in order to effect the registration under the Securities Act
of:
(A) the Registrable Securities which the Company is
requested to register in the Shelf Request, and
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(B) all other Registrable Securities which the
Company is requested to register by Owners who give written
notice to the Company within 15 business days after written
notice of the Shelf Request from the Company.
The Owner's notice shall state the number of Registrable Securities
requested to be registered, will constitute a Shelf Request hereunder,
and shall specify the intended methods of disposition of the Owner's
Registrable Securities (including whether or not such requested
registration should include underwritten offerings).
(c) Right to Defer Registration. Notwithstanding anything to the
contrary set forth in Sections 2.1(a) and 2.1(b) above, the Company shall not be
obligated to take any action to notify holders or to effect any Immediate
Offering Registration or Shelf Registration pursuant to Section 2.1(a) or 2.1(b)
above if the Company shall have furnished to the Owners requesting registration
a certificate signed by the Chairman or President and the Chief Financial
Officer of the Company stating that, in the good faith judgment of the Board of
Directors (excluding Board members designated by the holders requesting such
registration) of the Company, such request could materially interfere with bona
fide financing, acquisition, or other material business plans of the Company or
would require disclosure of non-public information, the premature disclosure of
which could materially adversely affect the Company. Such certificate shall
contain a general statement of the reasons for such deferral and an estimate of
the anticipated period of deferral, and the Company shall promptly notify the
holders requesting such registration of the expiration or earlier termination of
such deferral. If the Company defers the registration requested under this
Section 2.1, the Company shall promptly (but not later than 90 days following
the occurrence of the event or circumstances permitting the deferral) notify the
holders of Registrable Securities requesting such registration when the events
or circumstances permitting such deferral have ended and at that time shall
proceed with the requested registration and in accordance with this Agreement.
If the Company shall defer the requested registration pursuant to this Section
2.1(c), then any related requested registration may be withdrawn by the holder
of Registrable Securities requesting such registration by giving notice to the
Company at any time within 10 business days after the date the Company notifies
such holder of its willingness to proceed with the requested registration. Upon
such withdrawal, the withdrawn requested registration shall not count as an
exercise of the demand registration rights granted herein. Holders of
Registrable Securities shall not be liable to the Company for any filing or
other expenses incurred as a result of a withdrawal of a requested registration
made pursuant to this Section 2.1(c). The Company shall not defer a requested
registration more than one time in any continuous 12-month period.
(d) Registration of Other Securities. Whenever the Company shall effect
a registration pursuant to this Section 2.1 in connection with an underwritten
offering by one or more holders of Registrable Securities, no securities other
than Registrable Securities shall be included among the securities covered by
such registration unless (i) the managing underwriter of such offering shall
have advised each holder of Registrable Securities to be covered by such
registration in writing that the inclusion of such other securities would not
adversely affect such offering, or (ii) the Requisite Holders of Registrable
Securities to be covered by such registration shall have consented in writing to
the inclusion of such other securities, or (iii) the offering is the Initial
Secondary Offering (in
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which case the only securities included shall be securities to be sold by the
Company and Registrable Securities in accordance with the applicable priority
provisions set forth in this Agreement).
(e) Registration Statement Form. Registrations under this Section 2.1
shall be on such appropriate registration form of the Commission (i) as shall be
selected by the Company and as shall be reasonably acceptable to the Requisite
Holders, and (ii) as shall permit the disposition of such Registrable Securities
in accordance with the intended method or methods of disposition specified in
the request for such registration. The Company agrees to include in any such
registration statement all information which holders of Registrable Securities
being registered shall reasonably request.
(f) Expenses. The Company shall pay all Registration Expenses in
connection with any registration of Registrable Securities requested pursuant to
this Section 2.1 and all Persons on whose behalf securities of the Company are
included in such registration shall pay their own Selling Expenses, with joint
costs allocated on the basis of the respective amounts of the securities then
being registered on their behalf.
(g) Limitations on Requested Registrations. The Company's obligation to
take or continue any action to effect a requested registration under this
Section 2.1 shall be subject to the following limitations:
(i) The number of registrations that the Company is required
to effect:
(A) at the request of Pioneer, shall not exceed one
registration under Section 2.1(k) below and two Demand
Registrations, one of which may be a Shelf Registration,
(B) at the request of the Individual Vista Holders,
shall not exceed one Demand Registration, which may be a Shelf
Registration, but the Company shall not be required to effect
any Shelf Registration which provides for underwritten
take-downs until Pioneer shall no longer own any Registrable
Securities, and
(C) at the request of the holders of Registrable
Securities other than Pioneer, shall not exceed two Immediate
Offering Registrations and one Shelf Registration; provided,
however, that no more than one such registration request shall
be effected on Form S-1 and the remainder shall be effected on
Form S-3 (such references herein to Securities Act
registration forms shall be deemed to also refer to any
successor forms thereto);
provided, that a registration requested pursuant to this Section 2.1
shall not be deemed to have been effected (x) unless a registration
statement with respect thereto has been declared effective and remained
effective for a period of at least 90 days (or, with respect to a Shelf
Registration, until the earlier of the date on which all securities
covered thereby have ceased to be Registrable Securities or the date on
which all of such securities have been disposed
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<PAGE> 5
of in accordance with the intended methods of disposition by the seller
or sellers thereof, subject to the provisions of Section 2.1(l) below),
(y) if, after a registration statement has become effective, such
registration is interfered with by any stop order, injunction or other
order or requirement of the Commission or other governmental agency or
court for any reason, or (z) if the conditions to closing specified in
the purchase agreement or underwriting agreement entered into in
connection with such registration are not satisfied, other than as a
result of the voluntary termination of such offering by the Requisite
Holders;
(ii) Except for the rights of Pioneer to initiate registration
under this Section 2.1 and the rights of the Individual Vista Holders
to initiate registration under the circumstances set forth in Section
2.1(g)(i)(B) above, the Company shall not be required to effect a
Registration or an underwritten takedown off of a Shelf Registration
pursuant to this Section 2.1 unless such registration has been
initiated by the holders of Registrable Securities other than Pioneer
which represent at least 30% of the Registrable Securities then
outstanding, and have an estimated aggregate offering price to the
public of at least $3,000,000;
(iii) The Company shall not be required to effect any
registration pursuant to this Section 2.1 during the applicable waiting
period (defined below) following the filing of a registration statement
under the Securities Act with respect to the public offering of any
class of the Company's equity securities in an Immediate Offering
Registration or an underwritten take-down off a Shelf Registration,
whether such offering is for the account of the Company or the account
of the owners of its equity securities (other than a registration of
securities with respect to an employee benefit, retirement or similar
plan or pursuant to the Midland Agreement); for purposes of this clause
(iii), the "APPLICABLE WAITING PERIOD" shall be a period commencing
upon the filing of the registration statement for such Immediate
Offering Registration or underwritten take-down and extending for a
period of 90 days following the earlier of (A) the date of final
disposition of all securities offered for sale pursuant to such
registration statement in accordance with the intended methods of
disposition by the seller or sellers thereof, or (B) the date of the
termination or withdrawal of such registration statement; provided,
that, if the Company shall have entered into an agreement in connection
with any underwritten public offering of securities that restricts the
registration or sale of the Company's equity securities (a "LOCK-UP
AGREEMENT") for a period longer than 90 days, the applicable waiting
period shall be the lesser of (x) the period specified in the Lock-Up
Agreement, or (y) 180 days; and
(iv) The Company shall not be required to effect any
registration pursuant to this Section 2.1 during the applicable waiting
period (defined below) following the filing of a registration statement
under the Securities Act with respect to the public offering of any
class of the Company's equity securities in a Shelf Registration; for
purposes of this clause (iv), the "APPLICABLE WAITING PERIOD" shall be
a period (A) commencing upon the filing of the registration statement
for such Shelf Registration and extending for a period of 90 days
following the date on which such registration statement becomes
effective, and (B) commencing upon an underwritten take-down from such
Shelf Registration and extending for a period of 90 days thereafter.
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<PAGE> 6
(h) Selection of Underwriters. If a Demand Offering pursuant
to this Section 2.1 involves an underwritten offering, the underwriter
or underwriters thereof shall be selected by the Requisite Holders with
the approval of the Company.
(i) Priority in Requested Registrations.
(i) In the Initial Secondary Offering, including such
an offering pursuant to Section 2.1(k) hereof, Pioneer shall
have the right to include Registrable Securities in such
offering without being subject to any cutback, without
Pioneer's written consent, to the extent of the lesser of (A)
shares with a value (based on the final offering price to the
public) of $50,000,000, or (B) 50 percent of the total number
of shares to be sold in offering, plus 50 percent of any
over-allotment for such offering (the "PIONEER PRIORITY
AMOUNT") and no Prize Holder or Vista Holder (other than an
Individual Vista Holder) shall have any right to include
shares in the Initial Secondary Offering, without Pioneer's
written consent; provided that, if the Initial Secondary
Offering does not include any shares to be sold by the
Company, the limitation in clause (B) above shall not be
applicable and the Pioneer Priority Amount will only be
limited to an amount less than $50,000,000 if the managing
underwriter of such Demand Offering shall advise the Company
and Pioneer in writing that the amount of Registrable
Securities included in the Initial Secondary Offering must be
limited to a lesser amount (which shall be specified in the
notice) in order to prevent the Initial Secondary Offering
from materially and adversely affecting the price or success
of any subsequent offerings to be initiated by the Company
within the period of 180 days to 360 days following the
Initial Secondary Offering, in which case the Pioneer Priority
Amount shall be such lesser amount specified by such managing
underwriter.
(ii) In the first underwritten Demand Offering
following the Initial Secondary Offering (including, without
limitation, a take-down under a Shelf Registration), if the
managing underwriter of such Demand Offering shall advise the
Company in writing (with a copy to the Owners of Registrable
Securities that made the Demand Request with respect to such
Demand Offering) that the inclusion of the number of
securities requested to be included in such Demand Offering
will materially and adversely affect the price or success of
such Demand Offering, the Company will include in such
registration, to the extent of the number of securities which
the Company is so advised can be sold in such Demand Offering,
Registrable Securities requested to be included in such
registration allocated as follows (and any amounts above the
amounts so allocated shall not be included): Pioneer shall
have the right to sell 50 percent of the Registrable
Securities to be sold in such Demand Offering and the
remaining 50 percent of the Registrable Securities to be sold
in such Demand Offering shall be allocated pro rata among the
other Owners of Registrable Securities who elected to
participate in such Demand Offering pursuant to a Demand
Request given in accordance with Section 2.1(a)(ii)(B) hereof
("OTHER DEMAND OWNERS") on the basis of the percentage of the
Registrable Securities of the Company held by each such Other
Demand Owner to the total Registrable Securities of all such
Other Demand Owners); provided, that, if there is any
over-allotment for such Demand Offering, the allocation of
Registrable Securities among Pioneer and each of the Other
Demand Owners that will satisfy such over-allotment shall be
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<PAGE> 7
based on each selling Owner's percentage ownership of all of
the Registrable Securities then owned by all such selling
Owners.
(iii) In the second underwritten Demand Offering
following the Initial Secondary Offering and each underwritten
Demand Offering thereafter (including, without limitation,
take-downs under a Shelf Registration), if the managing
underwriter of such Demand Offering shall advise the Company
in writing (with a copy to the Owners of Registrable
Securities that made the Demand Request with respect to such
Demand Offering) that the inclusion of the number of
securities requested to be included in such Demand Offering
will materially and adversely affect the price or success of
such Demand Offering, the Company will include in such
registration, to the extent of the number of securities which
the Company is so advised can be sold in such Demand Offering,
Registrable Securities requested to be included in such
registration pro rata among the Owners thereof who submitted
such Demand Request (including, without limitation, all such
Owners who elect to participate in such Demand Offering
pursuant to a Demand Request given in accordance with Section
2.1(a)(ii)(B) hereof) on the basis of the percentage of the
Registrable Securities of the Company held by the Owners of
such Registrable Securities (and amounts above the amounts so
allocated shall not be included); provided, however, in the
event the number of Registrable Securities which the Owners of
Registrable Securities requested to be included in a Demand
Offering is reduced by more than 2%, those Owners of
Registrable Securities shall have the right to one additional
demand registration under Section 2.1(g) above.
(j) Holdback Period. If required by the underwriter or
underwriters selected by the Company for an underwritten offering
pursuant to this Section 2.1 (collectively, the "UNDERWRITER"), all
Owners (whether or not they propose to distribute their Registrable
Securities through such underwriting) shall agree not to sell publicly
any of their Registrable Securities for such period as the Underwriter
may reasonably request; provided, that such period shall not exceed 90
continuous days.
(k) Initial Secondary Offering. Notwithstanding the other
provisions of this Agreement, except as set forth in this Section
2.1(k), the Company shall not effect a registration, other than a Shelf
Registration which does not provide for underwritten take-downs, under
this Section 2.1 if an Initial Secondary Offering has not occurred.
After the date of this Agreement, Pioneer shall have the right to
require the Company to effect an Initial Secondary Offering or to
include Pioneer's Registrable Securities in an Initial Secondary
Offering that the Company initiates, whereupon the Company shall be
required to use reasonable efforts to effect such registration in
accordance with this Section 2.1. Any shares included by any Owner
(other than Pioneer) in an offering initiated by the Company or the
offering initiated pursuant to this Section 2.1(k) will be deemed
included pursuant to that Owner's rights under Section 2.2 hereof.
(l) Suspension of the Distribution of the Shares.
(i) In connection with any Shelf Registration, if the
Company determines in good faith that the distribution of any
of the Registrable Securities would materially interfere with
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<PAGE> 8
bona fide financing, acquisition, or other material business
plans of the Company or any of its subsidiaries or would
require disclosure of non-public information, the premature
disclosure of which could materially adversely affect the
Company, and promptly gives the holders of Registrable
Securities included in such registration written notice of
such determination, the Company shall be entitled to require
said holders to suspend their distribution of the Registrable
Securities for a reasonable period of time which, for purposes
of this Section 2.1(l)(i), shall not exceed 90 days. Such
written notice shall contain a general statement of the
reasons for such suspension and an estimate of the anticipated
period of suspension, and the Company shall promptly notify
said holders of the expiration or earlier termination of such
suspension. If the Company shall suspend a Shelf Registration
pursuant to this Section 2.1(l)(i), then the Company shall
extend the effectiveness of the applicable registration
statement by the same number of days comprising the suspension
period. Alternatively, if the Company shall suspend a Shelf
Registration pursuant to this Section 2.1(l)(i) for more than
10 business days, then any related requested registration may
be withdrawn by the holder of Registrable Securities
requesting such registration by giving notice to the Company
at any time within 10 business days after the date the Company
notifies such holder of its willingness to proceed with the
requested registration.
(ii) Also in connection with any Shelf Registration,
if the Company shall file a registration statement (other than
in connection with the registration of securities issuable
pursuant to an employee stock option, stock purchase, dividend
reinvestment or similar plan or pursuant to a merger, exchange
offer or transaction of the type specified in Rule 145(a)
under the Securities Act) with respect to the Company's
securities, and the Company reasonably determines (in the case
of a non-underwritten offering) or the managing underwriter or
underwriters advise the Company (in the case of an
underwritten offering) that a sale or distribution of the
Registrable Securities would adversely affect such offering,
then, upon written notice by the Company, the holders of
Registrable Securities included in such registration shall, to
the extent not inconsistent with applicable law, suspend the
distribution of any of the Registrable Securities or any sale
of the Registrable Securities pursuant to Rule 144 under the
Securities Act during the 10-day period prior to and the
90-day period following the effective date of such
registration statement, with such 90-day period being subject
to early termination by the Company with the approval of the
managing underwriter or underwriters. The Company shall not
effect a suspension pursuant to this Section 2.1(l)(ii) more
than one time in any 12-month period.
(m) Shelf Take-Down Procedures. The Owners' rights to require
a Shelf Registration shall include the right, on or after the Secondary
Offering Date, to require one underwritten offering off that Shelf
Registration (a "TAKE-DOWN") plus an additional number of take-downs
equal to the number of unused Demand Offerings remaining for the Owners
(as set forth in Section 2.1(g) hereof). One or more Owners having
Registrable Securities included in an effective Shelf Registration may
request an underwritten take-down, and the Company shall be obligated
to give notice and opportunity to participate in the take-down to the
other Owners having Registrable Securities included in that Shelf
Registration, in accordance with the same procedures, limitations and
allocations applicable to a Demand Request for an Immediate Offering
Registration (with such
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<PAGE> 9
changes in those procedures, limitations and allocations as are
necessary to reflect that it is a take-down from a Shelf Registration).
No Owner may request a take-down for a number of that Owner's
Registrable Securities that exceeds the number of that Owner's
Registrable Securities already included in the effective Shelf
Registration.
(n) Registration of Warrants. A registration statement filed
pursuant to a Demand Registration or a Shelf Registration and which
registers the resale of any Warrants shall also include the
registration of the issuance of all shares of common stock of the
Company issuable upon the exercise of such Warrants by any holder
thereof who either (i) purchases such Warrants pursuant to such
registration statement or (ii) purchases such Warrants after such
Warrants have been previously purchased by another person pursuant to
such registration statement.
2.2. Incidental Registration.
(a) Right to Include Registrable Securities. If the Company,
at any time after the date of this Agreement, proposes to register any
of its securities under the Securities Act (other than (i) in
connection with a registration of securities issuable under any
employee benefit, retirement or similar plan, or (ii) with respect to a
Rule 145 transaction), whether or not for sale for its own account, and
if notice of such transaction is not already given pursuant to Section
2.1 above, it shall each such time give written notice to all holders
of Registrable Securities, at least 30 days before the filing date of
the registration statement with the Commission, of its intention to
register such shares and of the Owners' rights under this Section 2.2.
Upon the written request of any Owner made within 15 business days
after the receipt of the Company's notice (which request shall specify
that the Owner of Registrable Securities desires to include such
Registrable Securities in an offering pursuant to this Section 2.2 and
shall specify the number of Registrable Securities requested to be
included in such offering), the Company shall use reasonable efforts to
effect the registration under the Securities Act of all Registrable
Securities which the Company has been so requested to register by the
holders thereof ("PIGGYBACK REGISTRATION"), to the extent requisite to
permit the disposition of the Registrable Securities so to be
registered; provided, that if, at any time after giving written notice
of its intention to register any securities and prior to the effective
date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to
register or to delay registration of such securities, the Company may,
at its election, give written notice of such determination to each
holder of Registrable Securities and, thereupon, (i) in the case of a
determination not to register, shall be relieved of its obligation to
register any Registrable Securities in connection with such
registration (but not from its obligation to pay the Registration
Expenses in connection therewith), without prejudice, however, to the
rights of any holder or holders of Registrable Securities entitled to
do so to request that such registration be effected as a registration
under Section 2.1(a) above, and (ii) in the case of a determination to
delay registering, shall be permitted to delay registering any
Registrable Securities, for the same period as the delay in registering
such other securities; and provided further, that no Registrable
Securities shall be included in an underwritten registration except
Registrable Securities of the same class as those being registered
therein. Each holder of Registrable Securities shall be permitted to
withdraw all or part of such holder's Registrable Securities from a
Piggyback Registration at any time before the earlier of the effective
date of the related registration statement and the signing of a
definitive
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<PAGE> 10
underwriting, purchase or agency agreement with the underwriters.
Subject to Section 2.2(c) below, the Company shall use all commercially
reasonable efforts to cause the managing underwriters of a proposed
offering to permit the Registrable Securities requested to be included
in the offering to be included at the same price and on no less
favorable terms and conditions as any similar securities included
therein. No registration effected under this Section 2.2 shall be
deemed to have been effected pursuant to Section 2.1 above or shall
relieve the Company of its obligation to effect any registration upon
request under Section 2.1 above.
(b) Expenses. The Company shall pay all Registration Expenses
in connection with any registration of Registrable Securities requested
pursuant to this Section 2.2, and all Persons on whose behalf
securities of the Company are included in such registration shall pay
their own Selling Expenses, with joint costs allocated on the basis of
the respective amounts of the securities then being registered on their
behalf.
(c) Priority in Incidental Registrations.
(i) If a registration pursuant to this Section 2.2
was initiated as an offering of securities for sale for the
account of the Company (other than the Initial Secondary
Offering, which shall be governed by the priority provisions
set forth in Section 2.1(i)(i) hereof), to be distributed (on
a firm commitment basis) by or through one or more
underwriters, and if the managing underwriter of such
underwritten offering shall inform the Company and the Owners
of Registrable Securities requesting such registration by
letter of its belief that the number of securities requested
to be included in such registration will materially and
adversely affect the price or success of the offering, then
the Company shall include in such registration, to the extent
of the number of securities which the Company is so advised
can be sold in (or during the time of) such offering, first,
all securities proposed by the Company to be sold for its own
account, second, such Registrable Securities requested to be
included in such registration, pro rata on the basis of the
number of such securities so proposed to be sold and so
requested to be included, and third, all other securities of
the Company requested to be included in such registration, pro
rata on the basis of the number of such securities so proposed
to be sold and so requested to be included (and any amounts
above the amounts so allocated shall not be included).
(ii) If a registration pursuant to this Section 2.2
was initiated as an offering of Registrable Securities for
sale for the account of Owners that made a Demand Request
(other than the Initial Secondary Offering and the first
underwritten Demand Offering following the Initial Secondary
Offering, which shall be governed by the priority provisions
set forth in Sections 2.1(i)(i) and 2.1(i)(ii) hereof,
respectively), to be distributed (on a firm commitment basis)
by or through one or more underwriters, and if the managing
underwriter of such underwritten offering shall inform the
Owners of Registrable Securities that made the Demand Request
and the Company by letter of its belief that the number of
securities requested to be included in such registration will
materially and adversely affect the price or success of the
Demand Offering, then the Company shall include in such
registration, to the extent of the number of securities which
the Company is so advised can be sold in (or during
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the time of) such offering, first, all securities proposed by
the Owner of Registrable Securities that made the Demand
Request to be sold for its own account, in accordance with the
provisions of Section 2.1 above (including, without
limitation, all such Owners who elect to participate pursuant
to a Demand Request given in accordance with Section
2.1(a)(ii)(B) hereof), second, all securities proposed by the
Company to be sold for its own account, third, such
Registrable Securities requested to be included in such
registration, pro rata on the basis of the number of such
securities so proposed to be sold and so requested to be
included, and fourth, all other securities of the Company
requested to be included in such registration, pro rata on the
basis of the number of such securities so proposed to be sold
and so requested to be included (and any amounts above the
amounts so allocated shall not be included).
2.3. Demand Registration Procedures. If and whenever the
Company is required to use reasonable efforts to effect the
registration of any Registrable Securities under the Securities Act as
provided in Section 2.1 above, the Company shall as expeditiously as
possible:
(i) prepare and (as soon thereafter as possible or in
any event no later than 60 days after the first Demand
Request) file with the Commission the requisite registration
statement to effect such registration and thereafter use
reasonable efforts to cause such registration statement to
become effective; provided, that (A) a reasonable time before
filing a registration statement or prospectus or other
offering materials, or any amendments or supplements thereto,
the Company will furnish to the Owners of Registrable
Securities to be registered and to one counsel selected by the
holders of a majority of the Registrable Securities included
in such registration (and one separate counsel for each such
Owner if paid for by such Owner), copies of all such documents
proposed to be filed, which documents will be subject to the
review of such counsel, and shall thereafter furnish revised
drafts and definitive versions of all such documents when they
are circulated to the working group for the Demand Offering,
and (B) after the filing of the registration statement, the
Company will promptly notify the counsel to the Owners of
Registrable Securities of comments received from the
Commission or the securities exchange or market or
inter-dealer quotation system, and other governmental
authorities as may be applicable; provided, that, in
connection with a Demand Offering, the Company shall not file
or circulate to potential investors any registration statement
or prospectus, or other offering materials, or any amendments
or supplements thereto, if the Owners of Registrable
Securities who hold a majority of the Registrable Securities
covered by such registration statement, prospectus, or other
offering materials (acting through their counsel), the
managing underwriter, or its counsel shall reasonably object,
in writing, on a timely basis;
(ii) prepare and file with the Commission, any
applicable securities exchange or market or inter-dealer
quotations system such amendments and supplements to such
registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the
Securities Act with respect to the disposition of all
securities covered by such registration statement until such
time as all of such securities have been disposed of in
accordance with the intended methods of disposition by the
seller or sellers thereof set forth in such
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registration statement; provided, however, that the Company
shall not be required to maintain the effectiveness of any
registration statement for more than 90 days or such longer
period as required by Section 2.1(l) hereof in the event of a
suspension of a registration statement (or, with respect to a
Shelf Registration, until the earlier of the date on which all
securities covered thereby have ceased to be Registrable
Securities or the date on which all of such securities have
been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof, subject to the
provisions of Section 2.1(l) above) and comply with the
provisions of the Securities Act, the Exchange Act, and all
other applicable laws with respect to the disposition of all
securities covered by such registration statement or other
offering materials during such period in accordance with the
intended methods of disposition by the Owners of Registrable
Securities set forth in such registration statement or other
offering materials;
(iii) furnish, without charge to each seller of
Registrable Securities covered by such registration statement,
such number of conformed copies of such registration statement
and of each such amendment and supplement thereto (in each
case including, without limitation, all exhibits), such number
of copies of the prospectus contained in such registration
statement (including, without limitation, each preliminary
prospectus and any summary prospectus) and any other
prospectus filed under Rule 424 under the Securities Act, in
conformity with the requirements of the Securities Act, and
such other documents, as such seller may reasonably request;
(iv) use reasonable efforts to obtain the withdrawal
of any order suspending or withdrawing the authorization for
an offering, the effectiveness of a registration statement, or
the lifting of any suspension of the qualification (or
exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, at the earliest
practicable moment;
(v) cooperate with the Owners of Registrable
Securities and the managing underwriter to facilitate the
timely preparation and delivery of certificates representing
Registrable Securities to be sold, which certificates shall
not bear any restrictive legends and shall be in a form
eligible for deposit with The Depository Trust Corporation or
other appropriate book-entry depositary; and enable such
Registrable Securities to be registered in such names as the
managing underwriter may request at least one business day
prior to any sale of Registrable Securities;
(vi) make available for inspection by the Owners of
Registrable Securities, any underwriter participating in any
disposition pursuant to such registration statement or other
offering materials and any attorney, accountant or other
professional retained by any of the Owners of Registrable
Securities or underwriter (collectively, the "INSPECTORS"),
all financial and other records, pertinent corporate documents
and properties of the Company and its subsidiaries as shall be
reasonably necessary to enable them to exercise their due
diligence responsibility; cause the Company's officers,
directors, examiners, accountants, attorneys, employees and
subsidiaries to supply all information reasonably requested by
any such Inspectors in connection with such registration
statement or other offering materials; and
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<PAGE> 13
cooperate and assist in the performance of any due diligence
investigation by any underwriter (including, without
limitation, any qualified independent underwriter) or any of
the Owners of Registrable Securities;
(vii) use reasonable efforts to register or qualify
all Registrable Securities and other securities covered by
such registration statement under such other securities or
blue sky laws of such jurisdictions as each seller thereof
shall reasonably request, to keep such registration or
qualification in effect for so long as such registration
statement remains in effect, and to take any other action
which may be reasonably necessary or advisable to enable such
seller to consummate the disposition in such jurisdictions of
the securities owned by such seller, except that the Company
shall not for any such purpose be required to qualify
generally to do business as a foreign corporation in any
jurisdiction wherein it would not but for the requirements of
this Section 2.3(vii) be obligated to be so qualified or to
consent to general service of process in any such
jurisdiction;
(viii) use reasonable efforts to cause all
Registrable Securities covered by such registration statement
to be registered with or approved by such other governmental
agencies, authorities and the board of directors and
stockholders of the Company as may be necessary to enable the
seller or sellers thereof to consummate the disposition of
such Registrable Securities;
(ix) furnish to each seller of Registrable Securities
a signed counterpart, addressed to such seller (and
underwriters, if any), of:
(A) an opinion of counsel for the Company,
dated the effective date of such registration
statement (and, if such registration includes an
underwritten public offering, dated the date of the
closing under the underwriting agreement), reasonably
satisfactory in form and substance to such seller
(which shall be deemed to be acceptable if it is
accepted by the underwriters), and
(B) a "comfort" letter, dated the effective
date of such registration statement (and, if such
registration includes an underwritten public
offering, dated the date of the closing under the
underwriting agreement), signed by the independent
public accountants who have certified the Company's
financial statements included in such registration
statement,
in each case covering substantially the same matters with
respect to such registration statement (and the prospectus
included therein) and, in the case of the accountants' letter,
with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions
of issuer's counsel and in accountants' letters delivered to
the underwriters in underwritten public offerings of
securities and, in the case of the accountants' letter, such
other financial matters, and, in the case of the legal
opinion, such other legal matters, as such seller may
reasonably request;
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(x) notify each seller of Registrable Securities
promptly: (A) when a registration statement, prospectus, or
other offering material or any supplement or amendment thereto
has been filed, and, with respect to a registration statement
or any post-effective amendment, when the same has become
effective under the Securities Act and each applicable state
law, (B) of any request by the Commission or any other federal
or state governmental authority for amendments or supplements
to a registration statement, or related prospectus (or other
legally required offering material) or for additional
information, (C) of the issuance by the Commission or any
other federal or state governmental body or agency of any
action, including, without limitation, a stop order,
suspending or withdrawing the authorization for the offering
or the effectiveness of a registration statement, or the
initiation of any proceedings for that purpose, (D) if at any
time the representations or warranties of the Company
contained in any agreement relating to an offering of
Registrable Securities cease to be true and correct, (E) of
the receipt by the Company of any notification with respect to
the suspension of the qualification or exemption from
qualification of any of the Registrable Securities for sale in
any jurisdiction or the initiation or threatening of any
proceeding for such purpose, (F) of the discovery that, or of
the happening of any event as a result of which, the
registration statement, related prospectus, other offering
materials or any document incorporated or deemed to be
incorporated therein by reference includes an untrue statement
of a material fact or omits to state any material fact
required to be stated therein or necessary to make the
statements therein not misleading, or that requires the making
of any changes in such registration statement, prospectus, or
other offering materials so that, in the case of the
registration statement, it will not contain any untrue
statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading, and that in the case of the
prospectus, or other offering materials, it will not contain
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances
under which they were made, not misleading or that such
document otherwise fails to comply with applicable laws, and
(G) of the Company's reasonable determination that a
post-effective amendment to a registration statement would be
appropriate;
(xi) at the request of the Requisite Holders,
promptly: (A) prepare and furnish to each seller a reasonable
number of copies of a supplement to or an amendment of the
prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such
prospectus shall not include an untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading, and (B) prepare, file with the Commission, and
furnish to each seller the appropriate post-effective
amendment;
(xii) otherwise use reasonable efforts to comply with
all applicable rules and regulations of the Commission,
including, without limitation, compliance with any required
registrations under the Exchange Act, and make available to
its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least 12 months,
but not more than 18 months, beginning with the first full
calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the
provisions of
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<PAGE> 15
Section 11(a) of the Securities Act, and shall furnish to each
such seller at least five business days prior to the filing
thereof a copy of any amendment or supplement to such
registration statement or prospectus and shall not file any
thereof to which any such seller shall have reasonably
objected on the grounds that such amendment or supplement does
not comply in all material respects with the requirements of
the Securities Act or of the rules or regulations thereunder;
(xiii) provide and cause to be maintained a transfer
agent and registrar for all Registrable Securities covered by
such registration statement from and after a date not later
than the effective date of such registration statement;
(xiv) use reasonable efforts to list all Registrable
Securities covered by such registration statement on any
national securities exchange or inter-dealer quotation system
on which any shares of the capital stock of the Company of the
same class as the Registrable Securities are then listed;
(xv) cooperate with the underwriters with respect to
all roadshows and other marketing activities as may be
reasonably requested by the underwriters; and
(xvi) enter into such agreements and take such other
actions as the Requisite Holders shall reasonably request in
order to expedite or facilitate the disposition of such
Registrable Securities.
The Company may require each seller of Registrable Securities as to which any
registration is being effected to furnish the Company such information regarding
such seller and the distribution of such securities as the Company may from time
to time reasonably request in writing.
Each holder of Registrable Securities agrees, by acquisition of such
Registrable Securities, that upon receipt of any notice from the Company of the
happening of any event of the kind described in clause (B) or (F) of Section
2.3(x) above, such holder will forthwith discontinue such holder's disposition
of Registrable Securities pursuant to the registration statement relating to
such Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 2.3(xi) above and, if
so directed by the Company, will deliver to the Company (at the Company's
expense) all copies, other than permanent file copies, then in such holder's
possession of the prospectus relating to such Registrable Securities current at
the time of receipt of such notice.
2.4. Incidental Offering Procedures. If and whenever the Company is
required to use reasonable efforts to effect the registration of any Registrable
Securities under the Securities Act, as provided in Section 2.2 above, the
Company shall as expeditiously as possible:
(i) a reasonable time before filing a registration statement
or prospectus or any amendments or supplements thereto, furnish to the
Owners of Registrable Securities and to one counsel selected by the
holders of a majority of the Registrable Securities included
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<PAGE> 16
pursuant to Section 2.2 above (and one separate counsel for each such
Owner if paid for by such Owner), copies of all such documents proposed
to be filed, which documents will be subject to the review of the
Owners of such Registrable Securities and to such counsel solely for
the purposes of reviewing such material in connection with the Owner's
decision of whether to continue to participate in the offering in
accordance with the terms of this Agreement and reporting to the
Company on a timely basis any inaccuracies with respect to information
regarding the Owners of such Registrable Securities contained in such
material, and the Company shall thereafter furnish revised drafts and
definitive versions of all such documents to the Owners of such
Registrable Securities and to such counsel when they are circulated to
the working group for the registration, and after the filing of the
registration statement, the Company shall promptly notify the counsel
to the Owners of Registrable Securities of comments received from the
Commission, or the securities exchange or market or inter-dealer
quotation system, and other governmental authorities as may be
applicable;
(ii) use all commercially reasonable efforts (A) to include
the Registrable Securities to be included in the offering in the
registration statement, or other appropriate offering materials for the
type of Piggyback Registration, (B) to include the Registrable
Securities to be included in the Piggyback Registration in any
registration of securities to be sold in the offering otherwise being
made with any governmental authority under state securities or blue sky
laws or other applicable securities laws, and (C) to maintain such
inclusion for such period as such registration statement, or other
appropriate materials for the type of Piggyback Registration and such
registration or qualification are otherwise maintained by the Company
for the Person initiating the Piggyback Registration;
(iii) furnish without charge to the Owners of such Registrable
Securities the number of copies of the registration statement, each
amendment and supplement thereto (in each case including all exhibits
thereto), the prospectus included in the registration statement
(including, without limitation, each summary or preliminary prospectus
or other legally required offering materials), in conformity with the
requirements of the Securities Act and other applicable laws, all
documents incorporated by reference into such prospectus or
registration statement, and such other documents as the Owner of such
Registrable Securities may reasonably request in order to facilitate
the disposition of the Registrable Securities included in the offering;
(iv) notify the Owners of such Registrable Securities (A) of
the issuance by the Commission or any other federal or state
governmental body or agency of any action, including, without
limitation, a stop order, suspending or withdrawing the authorization
for the offering or the effectiveness of a registration statement, or
the initiation of any proceedings for that purpose, and (B) if the
Person initiating the Piggyback Registration determines to cease using
a registration statement, prospectus or other offering document because
of either the issuance by the Commission or any other federal or state
governmental body or agency of a stop order or the discovery of a
material misstatement or omission, to suspend the use of a registration
statement, prospectus or other offering document upon receipt of such
notification;
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<PAGE> 17
(v) notify the counsel to the Owners of such Registrable
Securities promptly (A) when a registration statement, prospectus, or
other offering material for the Piggyback Registration or any
supplement or amendment thereto has been filed, and with respect to a
registration statement or any post-effective amendment, when the same
has become effective under the Securities Act and each applicable state
or foreign law, (B) of any request by the Commission or any other
federal or state governmental authority for amendments or supplements
to such registration statement, or related prospectus (or other legally
required offering material) or for additional information, (C) of the
receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any
of the Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose, and (D)
of the Company's determination that a post-effective amendment to a
registration statement would be appropriate;
(vi) cooperate in good faith to facilitate the timely delivery
of certificates representing the Registrable Securities to be sold;
(vii) use all commercially reasonable efforts to include the
Registrable Securities to be included in the offering in any
underwriting agreement and listing applications as otherwise are
entered into for the securities of the Person initiating the Piggyback
Registration;
(viii) make available for inspection by the Owners of
Registrable Securities all financial and other records, pertinent
corporate documents and properties of the Company and its subsidiaries
as shall be reasonably necessary to enable them to exercise their due
diligence investigation responsibility, if any; cause the Company's
officers, directors, examiners, accountants, attorneys, employees and
subsidiaries to supply all information reasonably requested by any such
Owners of Registrable Securities in connection with such registration
statement; and cooperate and assist in the performance of any due
diligence investigation by such Owners;
(ix) use best efforts to obtain a comfort letter or comfort
letters from the Company's independent public accountants in customary
form and covering such matters covered by comfort letter or comfort
letters, if any, delivered to the managing underwriter, addressed to
each of the Owners of Registrable Securities; and
(x) furnish to each of the Owners of Registrable Securities a
signed legal opinion, addressed to each of the Owners of Registrable
Securities, of counsel for the Company, dated the date of the closing
of the underwriting or purchase agreement for the Piggyback
Registration, in form and substance equivalent to that counsel's
opinion, if any, to the underwriters in the offering.
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<PAGE> 18
2.5. Underwritten Offerings.
(a) Requested Underwritten Offerings. If requested by the underwriters
for any underwritten offering by holders of Registrable Securities pursuant to a
registration requested under Section 2.1 above, the Company and all sellers of
Registrable Securities to be included in such offering will enter into an
underwriting agreement with such underwriters for such offering, such agreement
to be satisfactory in substance and form to the Company and the Requisite
Holders and the underwriters and to contain such representations and warranties
by the Company and such other terms as are generally prevailing in agreements of
this type, including, without limitation, indemnities to the effect and to the
extent provided in Section 2.8 below. A holder of Registrable Securities to be
distributed by such underwriters shall not be required to make any
representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements regarding such
holder, such holder's Registrable Securities and such holder's intended method
of distribution and any other representation required by law and other than
indemnification of the Company and underwriters for liabilities arising from
information furnished in writing by such holder specifically for use in the
registration statement.
(b) Incidental Underwritten Offerings. If requested by the underwriters
for any underwritten offering by the Company or by holders of Registrable
Securities pursuant to a registration pursuant to Section 2.2 above, the Company
and all sellers of Registrable Securities to be included in such offering will
enter into an underwriting agreement with the underwriters for such offering,
such agreement to be satisfactory in substance and form to (i) the Company, and
(ii) the Requisite Holders, if the offering is pursuant to a Demand Request made
by an Owner of Registrable Securities pursuant to Section 2.1 above, and such
underwriters and to contain such representations and warranties by the Company
and such other terms as are generally prevailing in agreements of this type,
including, without limitation, indemnities to the effect and to the extent
provided in Section 2.8 below. A holder of Registrable Securities to be
distributed by such underwriters shall not be required to make any
representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements regarding such
holder, such holder's Registrable Securities and such holder's intended method
of distribution and any other representation required by law and other than
indemnification of the Company and underwriters for liabilities arising from
information furnished in writing by such holder specifically for use in the
registration statement.
2.6. Preparation; Reasonable Investigation. In connection with the
preparation and filing of each registration statement under the Securities Act
pursuant to this Agreement, the Company will give the holders of Registrable
Securities registered under such registration statement, and their counsel and
accountants, the opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and will give each
of them such access to its books and records and such opportunities to discuss
the business of the Company with its officers and the independent public
accountants who have certified its financial statements as shall be necessary,
in the opinion of such holders' counsel, to conduct a reasonable investigation
within the meaning of the Securities Act.
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<PAGE> 19
2.7. Additional Rights of Owners. If any registration statement
prepared under this Agreement refers to any Owner by name or otherwise as the
holder of any securities of the Company, then such Owner shall have the right to
require (a) the insertion therein of language, in form and substance
satisfactory to such Owner, to the effect that the holding by such Owner of such
securities does not necessarily make such Owner a "controlling person" of the
Company within the meaning of the Securities Act and is not to be construed as a
recommendation by such Owner of the investment quality of the Company's debt or
equity securities covered thereby and that such holding does not imply that such
Owner will assist in meeting any future financial requirements of the Company,
or (b) in the event that such reference to such Owner by name or otherwise is
not required by the Securities Act or any rules and regulations promulgated
thereunder, the deletion of the reference to such Owner.
2.8. Indemnification.
(a) Indemnification by the Company. In the event of any registration of
any securities of the Company under the Securities Act, the Company will, and
hereby does, indemnify and hold harmless the seller of any Registrable
Securities covered by such registration statement, and the officers, directors,
agents, attorneys, general and limited partners, affiliates, accountants and
employees of the seller of any such Registrable Securities, each other Person
who participates in the offering or sale of such securities and each other
Person, if any, who controls such seller, within the meaning of the Securities
Act, against any losses, claims, damages or liabilities, joint or several, to
which such seller or any such director or officer or controlling person may
become subject, under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement under which such securities were registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
the Company will reimburse such seller and each such officer, director, agent,
attorney, general and limited partner, affiliate, accountant and employee, and
controlling person for any legal or any other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
liability, action or proceeding; provided, however, that the Company shall not
be liable in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company through an instrument duly executed by such seller specifically stating
that it is for use in the preparation thereof; and provided further, that the
Company shall not be liable to any Person who participates as an underwriter in
the offering or sale of Registrable Securities or any other Person, if any, who
controls such underwriter within the meaning of the Securities Act, in any such
case to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of such Person's failure to
send or give a copy of the final prospectus, as the same may be then
supplemented or amended, to
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<PAGE> 20
the Person asserting an untrue statement or alleged untrue statement or omission
or alleged omission at or prior to the written confirmation of the sale of
Registrable Securities to such Person if such statement or omission was
corrected in such final prospectus. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of such seller
or any such director, officer, underwriter or controlling person and shall
survive the transfer of such securities by such seller.
(b) Indemnification by the Sellers. In the event of any registration of
any securities of the Company under the Securities Act, each of the sellers of
Registrable Securities covered by such registration statement will, and hereby
does, indemnify and hold harmless (in the same manner and to the same extent as
set forth in Section 2.8(a) above) the Company, each director of the Company,
each officer of the Company and each other Person, if any, who controls the
Company within the meaning of the Securities Act, to the same extent as the
foregoing indemnity from the Company to the seller of Registrable Securities,
but only with respect to information furnished in writing to the Company by the
seller of Registrable Securities expressly for use in any registration
statement, prospectus or other offering materials relating to the Registrable
Securities. Such indemnity shall remain in full force and effect, regardless of
any investigation made by or on behalf of the Company or any such director,
officer or controlling Person and shall survive the transfer of such securities
by such seller.
(c) Notices of Claims, etc. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in Section 2.8(a) or (b) above, such indemnified party will,
if a claim in respect thereof is to be made against an indemnifying party, give
written notice to the latter of the commencement of such action; provided,
however, that the failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its obligations under
Sections 2.8(a) and (b) above, except to the extent that the indemnifying party
is actually prejudiced by such failure to give notice. In case any such action
is brought against an indemnified party, unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, the indemnifying party
shall be entitled to participate in and to assume the defense thereof, jointly
with any other indemnifying party similarly notified to the extent that it may
wish, with counsel reasonably satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party for any legal or other expenses subsequently incurred by
the latter in connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release from all liability
in respect to such claim or litigation.
(d) Other Indemnification. Indemnification similar to that specified in
this Section 2.8 (with appropriate modifications) shall be given by the Company
and each seller of Registrable Securities with respect to any required
registration or other qualification of securities under any Federal or state law
or regulation of any governmental authority other than the Securities Act.
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(e) Indemnification Payments. The indemnification required by this
Section 2.8 shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred.
2.9. Adjustments Affecting Registrable Securities. The Company will not
effect or permit to occur any combination or subdivision which would adversely
affect the ability of the holders of Registrable Securities to include such
Registrable Securities in any registration of its securities contemplated by
this Agreement or the marketability of such Registrable Securities under any
such registration.
2.10. Holdback Agreement. If the Company, at any time pursuant to
Section 2.1 or 2.2 above, shall register under the Securities Act Registrable
Securities held by Owners for sale to the public pursuant to an underwritten
offering, the Company shall not, without the prior written consent of the
Majority Holders, effect any public sale or distribution of securities similar
to those being registered, or any securities convertible into or exercisable or
exchangeable for such securities, for such period as shall be determined by the
managing underwriters, which period shall not begin more than 10 days prior to
the effectiveness of the registration pursuant to which such public offering
shall be made and shall not last more than 90 days after the closing of the sale
of securities pursuant to such registration.
2.11. Lock-Up Period. If the Company at any time shall register any of
its securities under the Securities Act in a primary underwritten offering (a)
pursuant to an Initial Secondary Offering or (b) pursuant to any other
registration, the Owners shall not sell, make any short sale of, grant any
option for the purchase of, or otherwise dispose of any Registrable Securities
(other than those Registrable Securities included in such registration) without
the prior written consent of the Company for a period as shall be determined by
the managing underwriter of such offering, which period cannot begin more than
10 days prior to the effectiveness of such registration and cannot last more
than 180 days after the effective date of such registration for the Company's
Initial Secondary Offering and 90 days for all other registrations (provided,
however, that the Owners shall not be prevented from selling their respective
Registrable Securities pursuant to this Section 2.11 more than once in any 12
consecutive month period).
2.12. Third Party Registration Rights. The Company has not granted
demand or piggyback registration rights to any party other than the Owners of
Registrable Securities, except pursuant to the Midland Agreement.
2.13 Decisions within a Group of Holders. Any time a specified group of
Owners (e.g. the Vista Holders, the Individual Vista Holders or the Prize
Holders) has certain rights under this Section 2, any decision or election to be
made by that group of Owners shall be made by a majority in interest of the
members of that group, except that, while Hill is a holder of Registrable
Securities, all decisions of the Individual Vista Holders shall be made by Hill.
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3. Definitions. As used herein, unless the context otherwise requires,
the following terms have the following respective meanings:
COMMISSION: The Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act.
EXCHANGE ACT: The Securities Exchange Act of 1934, or any similar
Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Exchange Act shall include
a reference to the comparable section, if any, of any such similar
Federal statute.
HILL: C. Randall Hill, one of the Individual Vista Holders.
INDIVIDUAL VISTA HOLDERS: The Vista Holders other than Natural Gas
Partners II, L.P. and Natural Gas Partners III, L.P.
INITIAL SECONDARY OFFERING: The first offering and sale by the
Company of newly issued shares of the common stock of the Company,
by Pioneer of shares of the common stock of the Company in an
underwritten offering, or both, in the United States following the
date of this Agreement pursuant to a registration statement filed
and declared effective under the Securities Act (other than a
registration of securities with respect to an employee benefit,
retirement or similar plan, a Rule 145 transaction or pursuant to
the Midland Agreement).
MAJORITY HOLDERS: At any time, the holder or holders of more than
50% of all Registrable Securities then outstanding.
MIDLAND AGREEMENT: That certain Registration Rights Agreement for
Midland Holders dated October 28, 1998, between the Company and
certain holders of warrants to purchase shares of common stock of
the Company.
PERSON: A corporation, an association, a partnership, a limited
liability company, a business, an individual, a governmental or
political subdivision thereof or a governmental agency.
PIONEER: Pioneer Natural Resources USA, Inc., a Delaware
corporation.
PRIZE HOLDERS: Pioneer and those other Owners who are identified as
such on Exhibit A hereto, all of which were stockholders of Prize
prior to consummation of the Merger.
REGISTRABLE SECURITIES: Any of the common stock of the Company owned
by an Owner or issuable to an Owner upon conversion of Series A
Preferred Shares or upon
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<PAGE> 23
exercise of any Warrants, any Warrants owned by an Owner and any
securities issued or issuable with respect to any such common stock
or Warrants by way of distribution or in connection with any
reorganization or other recapitalization, merger, consolidation or
otherwise. As to any particular Registrable Securities, once issued,
such securities shall cease to be Registrable Securities when (a) a
registration statement with respect to the sale of such securities
shall have become effective under the Securities Act and such
securities shall have been disposed of in accordance with such
registration statement, (b) the Owner shall have sold such
securities to the public pursuant to Rule 144 (or any successor
provision) under the Securities Act, (c) such securities have been
otherwise transferred, new certificates for them not bearing a
legend restricting further transfer shall have been delivered by the
Company and subsequent disposition of such securities shall not
require registration or qualification under the Securities Act or
any similar state law then in force, (d) such securities represent
less than 5% of the issued and outstanding common stock of the
Company and are able to be sold under Rule 144(k) (or successor
Rule) under the Securities Act without restriction, or (e) such
securities shall have ceased to be outstanding.
REGISTRATION EXPENSES: All expenses incident to the Company's
performance of or compliance with Section 2.1 and 2.2 above,
including, without limitation, all registration, filing and National
Association of Securities Dealers fees, all fees and expenses of
complying with applicable laws (including, without limitation,
securities or blue sky laws), all word processing, duplicating and
printing expenses, messenger and delivery expenses, the fees and
disbursements of counsel for the Company and of its independent
public accountants, including, without limitation, the expenses of
any special audits or "cold comfort" letters required by or incident
to such performance and compliance, the fees and disbursements of
one special counsel to the holders of Registrable Securities,
premiums and other costs of policies of insurance against
liabilities arising out of the public offering of the Registrable
Securities being registered, the fees and expenses of any special
experts, including independent petroleum engineers, retained by the
Company in connection with such offering, the fees and expenses of
any qualified independent underwriter or other independent appraiser
participating in any offering pursuant to the Conduct Rules of the
National Association of Securities Dealers, Inc., all travel
expenses of the Company's officers and employees and any other
expenses of the Company in connection with attending or hosting
meetings with prospective purchasers of the offered securities, and
any fees and disbursements of underwriters customarily paid by
issuers or sellers of securities, but excluding Selling Expenses, if
any; provided, that, in any case where Registration Expenses are not
to be borne by the Company, such expenses shall not include salaries
of Company personnel or general overhead expenses of the Company,
auditing fees, premiums or other expenses relating to liability
insurance required by underwriters of the Company or other expenses
for the preparation of financial statements or other data normally
prepared by the Company in the ordinary course of its business or
which the Company would have incurred in any event.
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REQUISITE HOLDERS: With respect to any registration of Registrable
Securities, any holder or holders of more than 50% of the
Registrable Securities to be so registered.
SECONDARY OFFERING DATE: The first anniversary date of the Initial
Secondary Offering, or such earlier date on which an investment
banking firm selected by mutual agreement of the Company and Pioneer
determines that market conditions are favorable for another
secondary offering of Registrable Securities.
SECURITIES ACT: The Securities Act of 1933, or any similar Federal
statute, and the rules and regulations of the Commission thereunder,
as the same shall be in effect at the time. References to a
particular section of the Securities Act shall include a reference
to the comparable section, if any, of any such similar Federal
statute.
SELLING EXPENSES: Underwriting discounts and commissions and stock
transfer taxes relating to Registrable Securities owned by selling
holders being registered by the Company and the fees and
disbursements paid to representatives retained by holders of
Registrable Securities to be registered (including, without
limitation, the fees and disbursements of legal counsel to the
holders of such Registrable Securities, other than the one special
counsel referred to in the definition of Registration Expenses).
SERIES A PREFERRED SHARES: The shares of the Company's Series A 6%
Convertible Preferred Stock issued in the Merger to Pioneer as
holder of shares of Prize's Series A 6% Convertible Preferred Stock.
VISTA HOLDERS: Those Owners who are identified as such on Exhibit A
hereto, all of whom were stockholders of the Company prior to
consummation of the Merger.
WARRANTS: The warrants owned by the Vista Holders as of the date
hereof that are exercisable to purchase shares of common stock of
the Company.
4. Rule 144 and Rule 144A: The Company shall file the reports required
to be filed by it under the Securities Act and the Exchange Act and the rules
and regulations adopted by the Commission thereunder and shall take such further
action as any holder of Registrable Securities may reasonably request, all to
the extent required from time to time to enable such holder to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by (a) Rule 144 under the Securities Act, as such
Rule may be amended from time to time, or (b) any similar rule or regulation
hereafter adopted by the Commission. Upon the request of any holder of
Registrable Securities, the Company shall deliver to such holder a written
statement as to whether it has complied with such requirements. After any sale
of Registrable Securities pursuant to this Section 4, the Company shall, to the
extent allowed by law, cause any restrictive legends to be removed and any
transfer restrictions to be rescinded with respect to such
-24-
<PAGE> 25
Registrable Securities. In order to permit the holders of Registrable Securities
to sell the same if they so desire, and Pioneer to sell Series A Preferred
Shares if it so desires, pursuant to Rule 144A promulgated by the Commission (or
any successor to such rule) ("RULE 144A"), the Company shall comply with all
rules and regulations of the Commission applicable in connection with the use of
Rule 144A. Prospective transferees of Registrable Securities and Series A
Preferred Shares that are Qualified Institutional Buyers (as defined in Rule
144A) which would be purchasing such Registrable Securities and Series A
Preferred Shares in reliance upon Rule 144A may request from the Company
information regarding the business, operations and assets of the Company. Within
five business days after receipt by the Company of any such request, the Company
shall deliver to any such prospective transferee copies of annual audited and
quarterly unaudited financial statements of the Company and such other
information as may be required to be supplied by the Company for it to comply
with Rule 144A.
5. Amendments and Waivers. This Agreement may be amended and the
Company may take any action herein prohibited or omit to perform any act herein
required to be performed by it, only if the Company shall have obtained the
written consent to such amendment, action or omission to act, of the Majority
Holders; provided, however, that any such amendment or consent that would have a
material adverse effect on a particular Owner but would not have a similar
material adverse effect on all Owners generally or would otherwise remove an
Owner as a party to this Agreement shall require the consent of such Owner. Each
holder of any Registrable Securities at the time or thereafter outstanding shall
be bound by any consent authorized by this Section 5, whether or not such
Registrable Securities shall have been marked to indicate such consent.
6. Nominees for Beneficial Owners. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election, be treated as the holder of such
Registrable Securities for purposes of any request or other action by any holder
or holders of Registrable Securities pursuant to this Agreement or any
determination of any number or percentage of Registrable Securities held by any
holder or holders of Registrable Securities contemplated by this Agreement. If
the beneficial owner of any Registrable Securities so elects, the Company may
require assurances reasonably satisfactory to it of such owner's beneficial
ownership of such Registrable Securities.
7. Notices. All communications provided for hereunder shall be sent by
first-class mail, postage prepaid, return receipt requested, and addressed (a)
if to a party other than the Company, to such party at the address furnished to
the Company by such party, or (b) if to the Company, at 20 East 5th Street,
Suite 1400, Tulsa, OK 74103, Attention: Chairman, or at such other address, or
to the attention of such other officer, as the Company shall have furnished to
each holder of Registrable Securities at the time outstanding by a nationally
recognized commercial delivery service, charges prepaid, or by facsimile (a) if
to a party other than the Company, to such party at the facsimile number
furnished to the Company by such party, or (b) if to the Company, to (918)
582-1547; provided, however, that any such communication to the Company may
also, at the option of any of the parties hereunder, be either delivered to the
Company at its address set forth above or to any officer of the Company.
-25-
<PAGE> 26
8. Assignment. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
successors and assigns. In addition, and whether or not any express assignment
shall have been made, the provisions of this Agreement which are for the benefit
of the parties hereto other than the Company shall also be for the benefit of
and enforceable by any subsequent holder of any Registrable Securities, subject
to the provisions respecting the minimum numbers or percentages of Registrable
Securities required in order to be entitled to certain rights, or take certain
actions, contained herein. Pioneer shall be able to assign its rights in
connection with a transfer of its shares other than a transfer which makes such
shares cease to be Registrable Securities. In the event of an assignment by
Pioneer of its Registrable Securities, the rights of Pioneer hereunder (a) shall
not be expanded as a result, and (b) shall be exercised by the holders of a
majority in interest of the Registrable Securities originally held by Pioneer.
9. Termination. This Agreement shall terminate when no Registrable
Securities remain outstanding.
10. Descriptive Headings. The descriptive headings of the several
sections and paragraphs of this Agreement are inserted for reference only and
shall not limit or otherwise affect the meaning hereof. References herein to
Sections are references to Sections of this Agreement, except as otherwise
indicated.
11. Specific Performance. The parties hereto recognize and agree that
money damages may be insufficient to compensate the holders of any Registrable
Securities for breaches by the Company of the terms hereof and, consequently,
that the equitable remedy of specific performance of the terms hereof will be
available in the event of any such breach.
12. Governing Law. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of Delaware.
13. Counterparts. This Agreement may be executed simultaneously in any
number of counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
14. Entire Agreement. This Agreement constitutes the entire agreement
among the parties regarding the subject matter hereof and supersedes all prior
understandings and agreements regarding such matters, including, without
limitation, the Prior Prize Agreement and the Prior Vista Agreement.
-26-
<PAGE> 27
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement or have caused this Agreement to be executed and delivered by their
respective officers thereunto duly authorized as of the date first above
written.
PRIZE ENERGY CORP.
By: /s/ Philip B. Smith
------------------------------------------
Philip B. Smith
Chairman and Chief Executive Officer
NATURAL GAS PARTNERS V, L.P.
By: G.F.W. Energy V, L.P., general partner
By: GFW V, L.L.C., general partner
By: /s/ Kenneth A. Hersh
------------------------------------------
Kenneth A. Hersh, Authorized Member
/s/ Philip B. Smith
- ---------------------------------------------
Philip B. Smith, Trustee of the Philip B.
Smith Revocable Trust Dated July 25, 1994
/s/ Philip B. Smith
- ---------------------------------------------
Philip B. Smith, Trustee of the Scott C. Smith
Irrevocable Trust Dated January 15, 1996
/s/ Philip B. Smith
- ---------------------------------------------
Philip B. Smith, Trustee of the Laura E. Smith
Irrevocable Trust Dated January 15, 1996
/s/ Lon C. Kile
- ---------------------------------------------
Lon C. Kile
/s/ Monica L. Griffin
- ---------------------------------------------
Monica L. Griffin
PIONEER NATURAL RESOURCES
USA, INC.
By: /s/ Mark L. Withrow
- ---------------------------------------------
Mark L. Withrow
Executive Vice President
VISTA ENERGY RESOURCES, INC.
By: /s/ C. Randall Hill
------------------------------------------
C. Randall Hill
Chairman and Chief Executive Officer
NATURAL GAS PARTNERS II, L.P.
By: G.F.W. Energy II, L.P., general partner
By: GFW II, L.L.C., general partner
By: /s/ Kenneth A. Hersh
------------------------------------------
Kenneth A. Hersh, Authorized Member
NATURAL GAS PARTNERS III, L.P.
By: Rainwater Energy Investors, L.P., general partner
By: GFW III, L.L.C., general partner
By: /s/ Kenneth A. Hersh
------------------------------------------
Kenneth A. Hersh, Authorized Member
/s/ Thomas O. Hicks
- ---------------------------------------------
Thomas O. Hicks, Individually
/s/ Thomas O. Hicks
- ---------------------------------------------
Thomas O. Hicks, Trustee of each of the Thomas O. Hicks, Jr. 1984 Trust, the
Mack H. Hicks 1984 Trust, the John A. Hicks 1984 Trust, and the Robert B. Hicks
1984 Trust
/s/ John R. Muse
- ---------------------------------------------
John R. Muse
-27-
<PAGE> 28
/s/ Jack D. Furst
- ---------------------------------------------
Jack D. Furst
/s/ Lawrence D. Stuart, Jr.
- ---------------------------------------------
Lawrence D. Stuart, Jr.
/s/ R. Scott Cohen
- ---------------------------------------------
R. Scott Cohen
/s/ Jerred G. Blanchard, Jr.
- ---------------------------------------------
Jerred G. Blanchard, Jr.
/s/ David A. Spuria
- ---------------------------------------------
David A. Spuria, as Trustee of the Roberts
Children's Trust
/s/ John P. Lewis
- ---------------------------------------------
John P. Lewis
/s/ Warren L. Gray
- ---------------------------------------------
Warren L. Gray
/s/ R. Cory Richards
- ---------------------------------------------
R. Cory Richards
/s/ Steven D. Gray
- ---------------------------------------------
Steven D. Gray
/s/ C. Randall Hill
- ---------------------------------------------
C. Randall Hill
/s/ Leo Gallegos
- ---------------------------------------------
Leo Gallegos
/s/ John Dollahan
- ---------------------------------------------
John Dollahan
/s/ D. Keith Mills
- ---------------------------------------------
D. Keith Mills
/s/ Russell Wickman
- ---------------------------------------------
Russell Wickman
-28-
<PAGE> 29
EXHIBIT A
OWNERS
<TABLE>
<CAPTION>
PRIZE HOLDERS VISTA HOLDERS
<S> <C>
Natural Gas Partners V, L.P. Natural Gas Partners II, L.P.
Philip B. Smith, Trustee of the Philip B. Natural Gas Partners III, L.P
Smith Revocable Trust Dated July 25, 1994
Philip B. Smith, Trustee of the Scott C. Smith Thomas O. Hicks, Individually
Irrevocable Trust Dated January 15, 1996
Philip B. Smith, Trustee of the Laura E. Thomas O. Hicks, Trustee of each of the
Smith Irrevocable Trust Dated January 15, 1996 Thomas O. Hicks, Jr. 1984 Trust, the
Mack H. Hicks 1984 Trust, the John A. Hicks
Lon C. Kile 1984 Trust, and the Robert B. Hicks 1984 Trust
Monica L. Griffin John R. Muse
Pioneer Natural Resources USA, Inc. Jack D. Furst
Lawrence D. Stuart, Jr.
R. Scott Cohen
Jerred G. Blanchard, Jr.
David A. Spuria, as Trustee of the Roberts
Children's Trust
John P. Lewis
Warren L. Gray
R. Cory Richards
Steven D. Gray
C. Randall Hill
Leo Gallegos
John Dollahan
D. Keith Mills
Russell Wickman
</TABLE>
A-1
<PAGE> 1
EXHIBIT 4.2
CERTIFICATE OF DESIGNATION, VOTING POWERS AND
RIGHTS OF SERIES A 6% CONVERTIBLE
PREFERRED STOCK OF VISTA ENERGY RESOURCES, INC.
Vista Energy Resources, Inc., a corporation organized and existing under
the laws of the State of Delaware (the "CORPORATION"), DOES HEREBY CERTIFY:
That, pursuant to authority conferred upon the Board of Directors by the
Corporation's Certificate of Incorporation, as amended, and pursuant to the
provisions of Section 151 of the Delaware General Corporation Law, as amended,
the Board of Directors, by written consent dated as of February 8, 2000,
unanimously adopted the following resolution providing for the creation and
issuance of a series of shares of the Corporation's authorized preferred stock
designated as "Series A 6% Convertible Preferred Stock":
RESOLVED, that a new series of the Corporation's authorized but unissued
preferred stock be, and the same hereby is, established and designated, and that
the designation and amount thereof, and the relative rights, preferences,
qualifications, limitations and restrictions thereof, are as follows:
SECTION 1. DESIGNATION, NUMBER OF SHARES AND STATED VALUE OF SERIES A
PREFERRED STOCK. There is hereby authorized and established a series of the
Corporation's preferred stock, par value $0.01 per share, that shall be
designated as "Series A 6% Convertible Preferred Stock" ("SERIES A PREFERRED"),
and the number of shares constituting such series shall be 5,000,000. Such
number of shares may be increased, but not decreased, by resolution adopted by
the Board of Directors of the Corporation. The "STATED VALUE" per share of
Series A Preferred initially shall be equal to $7.81 (which amount shall be
proportionately adjusted in the case of recapitalizations, stock splits, stock
dividends, combinations of shares or similar matters directly affecting the
Series A Preferred).
SECTION 2. DEFINITIONS. In addition to the definitions set forth elsewhere
herein, the following terms shall have the meanings indicated:
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a day on
which banking institutions in New York, New York, are authorized or obligated by
law or executive order to close.
"CLOSING PRICE" with respect to a particular security on any Trading Day
shall mean the last reported sales price, regular way, for such security on such
Trading Day, or, in case no sale takes place on such day, the average of the
closing bid and ask prices, regular way, on such Trading Day, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the American Stock Exchange or
the New York Stock Exchange or, if not listed or admitted to trading on the
American Stock Exchange or the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which such security is
listed or
<PAGE> 2
admitted to trading or, if such security is not listed or admitted to trading on
any national securities exchange, the last quoted price as reported by The
Nasdaq Stock Market or such other system then in use.
"COMMON STOCK" shall mean the common stock, par value $0.01 per share, of
the Corporation.
"CONVERSION PRICE" shall mean the conversion price per share of Common
Stock into which Series A Preferred is convertible, as such conversion price may
be adjusted pursuant to Section 9 hereof. The initial Conversion Price shall be
$7.81.
"JUNIOR SECURITIES" means the Common Stock or any other series of stock
issued by the Corporation ranking junior to the Series A Preferred in payment of
dividends or distributions or upon liquidation, dissolution or winding-up of the
Corporation.
"MARKET PRICE" per share of Common Stock as of any date shall mean (i) if
the Common Stock is listed or admitted to trading on a national securities
exchange or The Nasdaq Stock Market, the average of the daily Closing Prices for
a period of 30 consecutive Trading Days ending on such date, or (ii) if the
Common Stock is not then so listed or admitted, the fair market value per share
of the Common Stock as reasonably determined by an investment banking firm
mutually acceptable to the Corporation and the holders of shares of Series A
Preferred.
"ORIGINAL ISSUE DATE" shall mean the date on which shares of Series A
Preferred are first issued.
"PARITY SECURITY" means any class or series of stock issued by the
Corporation ranking on a parity with the Series A Preferred in payment of
dividends or distributions or upon liquidation, dissolution or winding-up of the
Corporation.
"PAYABLE-IN-KIND" or "PAID-IN-KIND" when used in reference to any dividend
payable on the shares of Series A Preferred means payment of the dividend by
issuance of that number of additional shares of Series A Preferred that has an
aggregate Stated Value equal to the dollar amount of such dividend then payable.
In lieu of any fractional share of Series A Preferred Stock to which a holder of
Series A Preferred Stock would otherwise be entitled, such holder shall receive
the nearest whole share of Series A Preferred Stock (i.e. if less than .5
rounded down, and if .5 or more rounded up). Shares of Series A Preferred issued
as dividends Payable-in-Kind shall be duly authorized, validly issued and
nonassessable and, upon issuance, shall have rights (including without
limitation dividend, voting, conversion and redemption rights) identical to the
outstanding shares of Series A Preferred in respect of which they are issued.
"PERSON" means any individual, corporation, association, partnership, joint
venture, limited liability company, trust, estate, or other entity or
organization.
-2-
<PAGE> 3
"SENIOR SECURITIES" means any class or series of stock, or any class or
series of debt or debt security convertible or exchangeable into any class or
series of stock, issued by the Corporation ranking senior to the Series A
Preferred in payment of dividends or distributions or upon liquidation,
dissolution or winding-up of the Corporation.
"TRADING DAY" with respect to any security means (i) if such security is
listed or admitted for trading on any national securities exchange, a day on
which such national securities exchange is open for trading, or (ii) if such
security is not listed or admitted to trading on any national securities
exchange, a Business Day.
"UNDERLYING COMMON STOCK" means at any time, with respect to any share of
Series A Preferred, the aggregate number of shares of Common Stock into which
such share is then convertible pursuant to Section 9 hereof.
SECTION 3. DIVIDENDS AND DISTRIBUTIONS.
(a) The holders of outstanding shares of Series A Preferred shall be
entitled to receive, as and when declared by the Corporation, out of funds
of the Corporation legally available for the payment of dividends,
preferential quarterly dividends at the times and at the rates provided for
in this Section 3. Dividends on shares of the Series A Preferred shall be
cumulative and shall accrue whether or not there shall be (at the time such
dividend becomes payable or at any other time) profits, surplus or other
funds of the Corporation legally available for the payment of dividends.
(b) Dividends shall accrue on each outstanding share of Series A
Preferred at the rate of six percent (6%) per annum of the Stated Value
(the "DIVIDEND RATE") of such share. Dividends shall be payable quarterly,
in arrears, as of the last Business Day of each December, March, June and
September, commencing with March 2000 (each, a "REGULAR DIVIDEND PAYMENT
DATE"). Dividends shall also be payable on any Redemption Date and on the
final distribution date relating to the dissolution, liquidating or winding
up of the Corporation (each such date, together with each Regular Dividend
Payment Date, is a "DIVIDEND PAYMENT DATE").
(c) Dividends on outstanding shares of Series A Preferred shall be
Payable-in-Kind during the period (the "EXCLUSIVE PIK PERIOD") beginning on
the Original Issue Date and ending on the earlier of (i) the Dividend
Payment Date on December 31, 2001, and (ii) the liquidation, dissolution or
winding up of the Corporation (in connection with the bankruptcy or
insolvency of the Corporation or otherwise). After the Exclusive PIK
Period, dividends on the shares of Series A Preferred shall be
Payable-in-Kind or, at the Corporation's option, payable in cash.
(d) The amount of dividends payable on each Dividend Payment Date
shall be determined by applying the Dividend Rate from but excluding the
immediately preceding
-3-
<PAGE> 4
Dividend Payment Date (or from but excluding the date of issuance of shares
of Series A Preferred, with respect to the first dividend period) to and
including the Dividend Payment Date.
(e) Notwithstanding the foregoing or anything else herein to the
contrary, however, dividends payable on any Redemption Date (as defined in
Section 6(c) hereof) or the final distribution date relating to the
dissolution, liquidation or winding up of the Corporation, shall be payable
in cash only. If a Dividend Payment Date does not occur on a Regular
Dividend Payment Date, dividends shall be calculated on the basis of the
actual number of days elapsed from but excluding the immediately preceding
Regular Dividend Payment Date to and including such non-Regular Dividend
Payment Date. Dividends payable on the shares of Series A Preferred for any
period of less than a full quarterly dividend period shall be computed on
the basis of a 360-day year comprised of twelve 30-day months.
(f) Dividends payable on each Dividend Payment Date shall be paid to
record holders of the shares of Series A Preferred as they appear on the
books of the Corporation at the close of business on the 10th Business Day
immediately preceding the respective Dividend Payment Date or on such other
record date as may be fixed by the Board of Directors of the Corporation in
advance of a Dividend Payment Date, provided that no such record date shall
be less than 10 nor more than 60 calendar days preceding such Dividend
Payment Date.
(g) So long as any shares of Series A Preferred are outstanding:
(i) No dividend or other distribution shall be declared or paid,
or set apart for payment, on or in respect of, any Junior Securities
(other than dividends or distributions payable in shares of Junior
Securities or in rights to purchase Junior Securities), nor shall any
Junior Securities be redeemed, purchased or otherwise acquired for any
consideration (or any money be paid to a sinking fund or otherwise set
apart for the purchase or redemption of any such Junior Securities)
unless full cumulative dividends on all outstanding shares of Series A
Preferred and any Parity Securities have been or contemporaneously are
declared and paid for all dividend periods terminating on or prior to
the date set for payment of such dividend.
(ii) No dividend or other distribution, except as described in
the next succeeding sentence, shall be declared or paid, or set apart
for payment, on or in respect of, Series A Preferred or any Parity
Securities for any period unless full cumulative dividends on all
outstanding shares of Series A Preferred and any Parity Securities
have been or contemporaneously are declared and paid for all dividend
periods terminating on or prior to the date set for payment of such
dividend. When dividends are not paid in full, as aforesaid, on the
shares of Series A Preferred and any Parity Securities, all dividends
declared upon such Parity Securities shall be
-4-
<PAGE> 5
declared and paid pro rata so that the amounts of dividends per share
declared and paid on the shares of Series A Preferred and such Parity
Securities shall in all cases bear to each other the same ratio that
unpaid dividends per share on the Series A Preferred and on such
Parity Securities bear to each other.
(iii) No shares of Series A Preferred or any Parity Securities
shall be redeemed, purchased or otherwise acquired for any
consideration (or any money be paid to a sinking fund or otherwise set
apart for the purchase or redemption of any such Parity Security) by
the Corporation unless the full cumulative dividends on all
outstanding shares of Series A Preferred shall have been or
contemporaneously are declared and paid for all dividend periods
terminating on or prior to the date on which such redemption, purchase
or other payment is to occur.
(iv) No dividend or other distribution of cash or debt shall be
declared or paid, or set apart for payment, on or in respect of, any
Junior Securities, nor shall any Junior Securities be redeemed,
purchased or otherwise acquired for any cash or debt consideration (or
any money or debt paid to a sinking fund or otherwise set apart for
the purchase or redemption of any Junior Securities) unless full
cumulative dividends on all outstanding shares of Series A Preferred
have been or contemporaneously are declared and paid in cash for all
dividend periods terminating on or prior to the date set for payment
of such dividend or distribution.
(v) No dividend or other distribution of cash or debt shall be
declared or paid, or set apart for payment, on or in respect of, any
Parity Securities unless full cumulative dividends on all outstanding
shares of Series A Preferred have been or contemporaneously are
declared and paid in cash for all dividend periods terminating on or
prior to the date set for payment of such dividend or distribution. No
Parity Securities be redeemed, purchased or otherwise acquired for any
cash or debt consideration (or any money or debt paid to a sinking
fund or otherwise set apart for the purchase or redemption of any
Parity Securities) unless the Series A Preferred shall have been
called for redemption pursuant to Section 6 hereof and the full
Redemption Price (as defined in Section 6(b) hereof) shall have been
or contemporaneously is paid in cash on or prior to the date set for
payment of such dividend or distribution.
SECTION 4. CERTAIN COVENANTS AND RESTRICTIONS. So long as any shares of
Series A Preferred are outstanding:
(a) The Corporation shall at all times reserve and keep available for
issuance upon the conversion of the shares of Series A Preferred as
provided in Section 6 and Section 9 hereof, respectively, such number of
its authorized but unissued shares of Common Stock as will be sufficient to
permit the conversion of all outstanding shares of Series A Preferred and
all other securities and instruments convertible into shares of Common
Stock, and shall
-5-
<PAGE> 6
take all reasonable action within its power required to increase the
authorized number of shares of Common Stock necessary to permit the
conversion of all outstanding shares of Series A Preferred and all such
other securities and instruments convertible into shares of Common Stock.
(b) The Corporation covenants and agrees that all shares of Common
Stock that may be issued upon exercise of the conversion rights of shares
of Series A Preferred will, upon issuance, be duly authorized, valid
issued, fully-paid and nonassessable.
(c) Prior to the delivery of any securities which the Corporation
shall be obligated to deliver upon payment of dividends Payable-in-Kind or
conversion of the Series A Preferred, the Corporation will endeavor to
comply with all federal and state securities laws and regulations
thereunder requiring the registration of such securities with, or any
approval of or consent to the delivery of such securities by, any
governmental authority.
(d) The Corporation shall pay all taxes and other governmental charges
(other than any income or franchise taxes), documentary stamp or similar
issue or transfer taxes that may be imposed with respect to the issue or
delivery of the Series A Preferred (or any other securities issued on
account of the Series A Preferred pursuant hereto) or shares of Common
Stock upon conversion of Series A Preferred or payment of dividends
Payable-in-Kind as provided herein or otherwise. The Corporation shall not
be required, however, to pay any tax or other charge imposed in connection
with any transfer involved in the issue of any certificate for shares of
Common Stock in any name other than that of the registered holder of the
shares of the Series A Preferred surrendered in connection with the
conversion thereof or otherwise, and, in such case, the Corporation shall
not be required to issue or deliver any stock certificate until such tax or
other charge has been paid, or it has been established to the Corporation's
satisfaction that no tax or other charge is due.
SECTION 5. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding-up of the
Corporation (in connection with the bankruptcy or insolvency of the
Corporation or otherwise), whether voluntary or involuntary, before any
payment or distribution of the assets of the Corporation (whether capital
or surplus) shall be made to or set apart for the holders of shares of any
Junior Securities, the holders of the shares of Series A Preferred shall be
entitled to receive an amount per share in cash equal to the Stated Value
per share held by them, plus an amount in cash equal to the full cumulative
dividends accrued and unpaid thereon, to the date of such payment, whether
or not declared. No payment on account of any such liquidation, dissolution
or winding-up of the Corporation shall be paid to the holders of the shares
of Series A Preferred or the holders of any Parity Securities unless there
shall be paid at the same time to the holders of the shares of Series A
Preferred and the holders of any Parity Securities proportionate amounts
determined ratably in proportion to the full preferential amounts to which
the holders of all outstanding shares of Series A Preferred and the holders
-6-
<PAGE> 7
of all such outstanding Parity Securities are respectively entitled with
respect to such distribution (but only to the extent of such preferential
amounts). For purposes of this Section 5, neither a consolidation or merger
of the Corporation with one or more partnerships, corporations or other
entities nor a sale, lease, exchange or transfer of all or any substantial
part of the Corporation's assets for cash, securities or other property
shall be deemed to be a liquidation, dissolution or winding-up of the
Corporation, whether voluntary or involuntary.
(b) After payment of the full amount of the liquidation preference to
which the holders of shares of Series A Preferred are entitled, such
holders will not be entitled to any further participation in any
distribution of assets of the Corporation.
(c) Written notice of any liquidation, dissolution or winding-up of
the Corporation, stating the payment date or dates when and the place or
places where the amounts distributable in such circumstances shall be
payable, shall be given by first class mail, postage prepaid, not less than
15 days prior to any payment date stated therein, to the holders of record
of the shares of Series A Preferred at their respective addresses as the
same shall appear in the records of the Corporation.
SECTION 6. REDEMPTION. The outstanding shares of Series A Preferred are
subject to redemption in accordance with the following provisions:
(a) Subject to the terms hereof, the Corporation may at its option
elect to redeem outstanding shares of Series A Preferred, in whole or in
part (pro-rata among the outstanding shares), on any Business Day if both
(i) the average of the Closing Prices of the Corporation's Common Stock
during any period of at least 30 consecutive Trading Days during the
preceding 60 Trading Days shall have exceeded 120% of the Conversion Price,
and (ii) the Closing Price per share of the Corporation's Common Stock on
the Trading Day immediately preceding the day on which such notice is given
shall have equaled or exceeded 110% of the Conversion Price.
(b) The redemption price per share for Series A Preferred (the
"REDEMPTION PRICE") shall be equal to the Stated Value plus an amount equal
to the aggregate dollar amount of all accrued and unpaid dividends through
the Redemption Date. The Redemption Price shall be paid in cash from any
source of funds legally available therefor.
(c) The Business Day designated by the Corporation for the redemption
of shares of Series A Preferred is referred to herein as the "REDEMPTION
DATE." Not less than 60 days nor more than 75 days prior to the Redemption
Date, a notice specifying the time and place of such redemption shall be
given by first class mail, postage prepaid, to the holders of record of the
shares of Series A Preferred to be redeemed at their respective addresses
as the same shall appear on the books of the Corporation (but no failure to
mail such notice or any defect therein shall affect the validity of the
proceedings for redemption except as to the
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<PAGE> 8
holder to whom the Corporation has failed to mail such notice or except as
to the holder whose notice was defective), calling upon each such holder of
record to surrender to the Corporation on the Redemption Date at the place
designated in such notice such holder's certificate or certificates
representing the then outstanding shares of Series A Preferred held by such
holder. Each such notice of redemption shall specify the Redemption Date,
the Redemption Price, the place or places of payment, that payment will be
made upon presentation and surrender of the shares of Series A Preferred,
that dividends will cease to accrue on such shares on and after the
Redemption Date, the then-effective Conversion Price pursuant to Section 9
hereof, and that the right of holders to convert shares of Series A
Preferred will terminate at the close of business on the Business Day
immediately preceding the Redemption Date (unless the Corporation defaults
in the payment of the Redemption Price). On or after the Redemption Date,
each holder of shares of Series A Preferred called for redemption shall
surrender such holder's certificate or certificates for such shares to the
Corporation at the place designated in the redemption notice and shall
thereupon be entitled to receive payment of the Redemption Price in the
manner set forth in Section 6(b) above. If the redemption is delayed for
any reason, dividends shall continue to accrue on the shares of Series A
Preferred outstanding, and shall be added to and become a part of the
Redemption Price of such shares, until the Redemption Price, as so
adjusted, for such shares is paid in full.
(d) Notwithstanding the foregoing, if notice of redemption has been
given pursuant to Sections 6(a) and 6(c) hereof and any holder of the
Series A Preferred shall, before the close of business on the Business Day
immediately preceding the Redemption Date, give notice to the Corporation
pursuant to Section 9(b) hereof of the conversion of any or all of the
shares to be redeemed held by that holder, then (i) the Corporation shall
not have the right to redeem those shares for which the conversion notice
has been given, (ii) the holder shall not be entitled to payment of the
Redemption Price with respect to those shares, (iii) the conversion of
those shares shall become effective as provided in Section 9 hereof, and
(iv) any funds that have been deposited for the payment of the Redemption
Price of those shares shall be returned to the Corporation immediately
after such conversion.
SECTION 7. SHARES TO BE RETIRED. All shares of Series A Preferred
repurchased, redeemed, converted or otherwise acquired by the Corporation shall
be retired and cancelled and shall be restored to the status of authorized but
unissued shares of Preferred Stock, without designation as to series, and may
thereafter be reissued (subject to the provisions of Section 8 hereof).
SECTION 8. VOTING RIGHTS.
(a) Except as otherwise provided in this Section 8 or required by law
or any provision of the Certificate of Incorporation of the Corporation,
the holders of the shares of Series A Preferred shall vote together with
the shares of Common Stock as a single class at any annual or special
meeting of stockholders of the Corporation upon the following basis:
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<PAGE> 9
each holder of shares of Series A Preferred shall be entitled to such
number of votes for the shares of Series A Preferred held by such holder on
the record date fixed for such meeting as shall be equal to the whole
number of shares of Underlying Common Stock with respect to such shares of
Series A Preferred immediately after the close of business on the record
date fixed for such meeting. In all cases where the holders of separate
classes or series of the Corporation's capital stock have the right to vote
separately as a class, the holders of Series A Preferred shall be entitled
to one vote for each such share held by them.
(b) For so long as any shares of Series A Preferred remain
outstanding, the Corporation shall not, without the affirmative vote or
consent of the holders of a majority of the shares of Series A Preferred
voting together as a single class, authorize, create or issue, or increase
the authorized or issued amount of, any class or series of stock of Senior
Securities, Parity Securities or Series A Preferred (except through payment
of dividends Payable-in-Kind on the Series A Preferred), or any security
convertible into or exchangeable for Senior Securities or Parity Securities
or reclassify or modify any Junior Securities so as to become Parity
Securities or Senior Securities.
(c) Shares of Series A Preferred acquired by a subsidiary of the
Corporation shall have no voting rights.
(d) For so long as any shares of Series A Preferred remain
outstanding, the Corporation shall not, without the affirmative vote or
consent of the majority (unless a higher percentage shall then be specified
by law) of the shares of Series A Preferred voting together as a single
class, merge or consolidate with or into any other Person or permit any
other Person to merge with or into the Corporation, unless each share of
Series A Preferred shall remain outstanding and unaffected or shall be
converted into or exchanged for convertible preferred stock of the
surviving entity (and, in the case of triangular mergers, with conversion
rights into the common equity of the ultimate parent entity) having powers,
preferences and relative participating, optional and other rights, and
qualifications, limitations and restrictions thereof identical to a share
of Series A Preferred, and unless the affirmative vote or consent of the
holders of all the shares of Series A Preferred voting together as a single
class shall have been obtained if such exchange, merger or consolidation
shall result in the existence of Senior Securities or Parity Securities
(treating securities issued by the surviving entity as having been issued
by the Corporation) other than those previously approved pursuant to
Section 8(b) hereof; provided, however, that the voting rights with respect
to this Section 8(d) shall be exercisable only by the original holder of
the Series A Preferred and such voting rights shall terminate on the first
date on which such original holder no longer owns shares of Series A
Preferred which constitute at least 14.03% of the total issued and
outstanding shares of Common Stock of the Corporation (based upon the
number of shares of Common Stock into which the shares of Series A
Preferred are then convertible and deeming the shares of Series A Preferred
to be converted into issued and outstanding shares of Common Stock for the
purpose of such computation).
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<PAGE> 10
SECTION 9. CONVERSION RIGHTS. Holders of shares of Series A Preferred shall
have the right to convert all or a portion of such shares into shares of Common
Stock, as follows:
(a) Subject to and upon compliance with the provisions of this Section
9, shares of Series A Preferred shall be convertible at the option of the
holder thereof into duly authorized, validly issued, fully paid and
non-assessable shares of Common Stock. The number of shares of Common Stock
deliverable upon conversion of one share of Series A Preferred shall be
determined by dividing the Stated Value of such share of Series A Preferred
by the Conversion Price then in effect (i.e., prior to any adjustment of
the Conversion Price, one share of Common Stock will be issued for each
share of Series A Preferred surrendered for conversion). In lieu of any
fractional share of Common Stock to which a holder of Series A Preferred
Stock would otherwise be entitled, such holder shall receive the nearest
whole share of Common Stock (i.e., if less than .5 rounded down, and if .5
or more rounded up). A holder of Series A Preferred may provisionally
convert any shares of Series A Preferred that are the subject of a pending
registration with the Securities and Exchange Commission. Unless the holder
states an earlier time in the conversion notice to the Corporation, a
provisional conversion will be effective only as of the closing of the
holder's sale of Common Stock issuable upon conversion of Series A
Preferred made pursuant to such an effective registration statement (and
only with respect to the shares so sold); otherwise, such shares of Series
A Preferred shall be outstanding as Series A Preferred for all purposes
hereunder (including accrual and payment of dividends) during any period in
which a provisional conversion is pending.
(b) The conversion of shares of Series A Preferred may be effected by
the holder thereof by the surrender of the certificate for such shares to
the Corporation at the principal office of the Corporation. If the
conversion is to be provisional as provided in Section 9(a) above, the
holder shall also deliver a notice to the Corporation with a statement to
that effect. If any shares of Series A Preferred are called for redemption
pursuant to Section 6 hereof, such right of conversion shall cease and
terminate as to the shares called for redemption at the close of business
on the Business Day immediately preceding the Redemption Date, unless the
Corporation shall default in the payment of the Redemption Price, in which
event such conversion right shall remain in effect until full payment of
the Redemption Price has been made.
(c) As promptly as practicable after the surrender of shares of Series
A Preferred for conversion (unless the shares are surrendered in a
provisional conversion as provided in Section 9(a) hereof), the Corporation
shall issue and deliver or cause to be issued and delivered to the holder
of such shares certificates representing the number of fully paid and
non-assessable shares of Common Stock into which such shares of Series A
Preferred have been converted in accordance with the provisions of this
Section 9. In lieu of any fractional share of Common Stock to which a
holder of Series A Preferred Stock would otherwise be entitled, such holder
shall receive the nearest whole share of Common Stock (i.e., if less than
.5 rounded down, and if .5 or more rounded up). Subject to the following
provisions of this
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<PAGE> 11
Section 9, and, except with respect to provisional conversions, such
conversion shall be deemed to have been made as of the close of business on
the date on which the shares of Series A Preferred shall have been
surrendered for conversion in the manner herein provided, so that all
rights of the holder of the shares of Series A Preferred so surrendered
shall cease at such time, and the person or persons entitled to receive the
shares of Common Stock upon conversion thereof shall be treated for all
purposes as having become the record holder or holders of such shares of
Common Stock at such time; provided, however, that any such surrender
(other than for provisional conversion) on any date when the stock transfer
books of the Corporation are closed shall be deemed to have been made, and
shall be effective to terminate the rights of the holder or holders of the
shares of Series A Preferred so surrendered for conversion and to
constitute the person or persons entitled to receive such shares of Common
Stock as the record holder or holders thereof for all purposes, at the
opening of business on the next succeeding day on which such transfer books
are open and such conversion shall be at the Conversion Price in effect at
such time. If shares are surrendered for provisional conversion, the
Corporation shall either (i) reissue certificates for the number of shares
of Series A Preferred surrendered for provisional conversion, if the sale
of the underlying Common Stock (as provided in Section 9(a) above) does not
occur, or (ii) issue certificates for the number of shares of Common Stock
into which the shares provisionally surrendered have been converted to the
order of the purchaser thereof, if the sale of the underlying Common Stock
(as provided in Section 9(a) above) does occur. If, following the delivery
of a notice of redemption by the Corporation pursuant to Section 6 hereof,
but not otherwise, a holder of shares of Series A Preferred elects to
exercise its rights of conversion under this Section 9, such holders of
shares of Series A Preferred who surrender their shares of Series A
Preferred for conversion shall be entitled to payment in cash by the
Corporation of all accrued and unpaid dividends to the date the Series A
Preferred are surrendered for conversion (or deemed to have been converted,
in the case of shares provisionally converted), prorated for any portion of
the then current dividend period during which the Series A Preferred are
surrendered for conversion, whether or not any dividend in respect of the
then-current dividend period has been declared or set aside. The
Corporation shall make that payment as promptly as practicable following
the surrender of certificates for shares of Series A Preferred for
conversion as provided herein (or following the sale of the underlying
Common Stock, in the case of shares that are provisionally converted and
subsequently sold as provided in Section 9(a) hereof) and, when applicable,
shall accompany the certificates for Common Stock into which such shares of
Series A Preferred have been converted.
(d) Before taking any action which would cause an adjustment reducing
the Conversion Price below the then par value of the shares of Common Stock
deliverable upon conversion of the shares of Series A Preferred, the
Corporation will take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Corporation may validly and legally
issue fully paid and non-assessable shares of Common Stock at such adjusted
Conversion Price.
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<PAGE> 12
(e) The Conversion Price shall be subject to adjustment from time to
time as follows:
(i) In case at any time the Corporation shall (A) subdivide the
outstanding shares of Common Stock into a greater number of shares, or
(B) combine the outstanding shares of Common Stock into a smaller
number of shares, the Conversion Price in effect immediately prior
thereto shall be adjusted proportionately so that the adjusted
Conversion Price shall bear the same relation to the Conversion Price
in effect immediately prior to such event as the total number of
shares of Common Stock outstanding immediately prior to such event
shall bear to the total number of shares of Common Stock outstanding
immediately after such event. Such adjustment shall become effective
immediately after the effective date of a subdivision or combination.
(ii) In case at any time the Corporation shall declare, order,
pay or make any dividend or other distribution to holders of the
Common Stock payable in shares of Common Stock, then, in each such
case, subject to Section 9(e)(v) hereof, the Conversion Price in
effect immediately prior to the close of business on the record date
fixed for determination of holders of any class of securities entitled
to receive such dividend or distribution shall be reduced to a price
(calculated to the nearest .001 of a cent) determined by multiplying
such Conversion Price by a fraction:
(A) the numerator of which shall be the number of shares of
Common Stock outstanding immediately prior to such dividend or
distribution; and
(B) the denominator of which shall be the number of shares
of Common Stock outstanding immediately after such dividend or
distribution.
Shares of Common Stock owned by or held for the account of the
Corporation shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made on the date such
dividend is paid or such distribution is made and shall become
effective retroactive to the record date for the determination of
stockholders entitled to receive such dividend or distribution.
(iii) In case at any time the Corporation shall declare, order,
pay or make any dividend or other distribution to all holders of the
Common Stock, other than a dividend payable in shares of Common Stock
(including, without limitation, dividends or distributions payable in
cash, evidences of indebtedness, rights, options or warrants to
subscribe or purchase any Common Stock or other securities, or any
other securities or other property, but excluding any rights to
purchase any stock or other securities if such rights are not
separable from the Common Stock except upon the occurrence of a
contingency beyond the control of the Corporation), then, and in
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<PAGE> 13
each such case, subject to Section 9(e)(v) hereof, the Conversion
Price in effect immediately prior to the close of business on the
record date fixed for the determination of holders of Common Stock
entitled to receive such dividend or distribution shall be reduced to
a price (calculated to the nearest .001 of a cent) determined by
multiplying such Conversion Price by a fraction:
(A) the numerator of which shall be the Market Price per
share of Common Stock in effect as of such record date or, if the
Common Stock trades on an ex-dividend basis, on the Trading Day
immediately prior to the date of commencement of ex-dividend
trading, less the value of such dividend or distribution (as
determined in good faith by the Board of Directors of the
Corporation) applicable to one share of Common Stock; and
(B) the denominator of which shall be such Market Price per
share of Common Stock as of such record date or, if the Capital
Stock trades on an ex-dividend basis, on the Trading Day
immediately prior to the date of commencement of ex-dividend
trading.
Such adjustment shall be made on the date such dividend is paid or
such distribution is made and shall become effective retroactive to
the record date for the determination of stockholders entitled to
receive such dividend or distribution. In case at any time the
Corporation shall declare, order, pay or make a dividend or rights to
purchase any stock or other securities that are not separable from the
Common Stock except upon the occurrence of a contingency beyond the
control of the Corporation, the Corporation shall make provision so
that the holder of any share of Series A Preferred thereafter
surrendered for conversion shall be entitled to receive the number of
shares of Common Stock and rights to purchase stock or other
securities that such holder would have owned or have been entitled to
receive after the occurrence of any of such events had the share of
Series A Preferred been surrendered for conversion immediately before
the occurrence of such event or the record date therefor, whichever is
earlier. If any such rights are redeemed, the holder of Series A
Preferred shall have the right to receive, in lieu of any such rights,
any cash, property or securities paid in respect of such redemption.
(iv) In case at any time the Corporation issues or sells any
shares of Common Stock or any rights, options or warrants to subscribe
for or purchase shares of Common Stock or shares having the same
rights, privileges and preferences as the Common Stock ("EQUIVALENT
COMMON STOCK") or securities convertible into Common Stock or
equivalent common stock, at a price per share of Common Stock or
equivalent common stock (or having a conversion price per share, if a
security is convertible into shares of Common Stock or equivalent
common stock) less than the Market Price of the Common Stock as of the
date of such issue or sale, then upon such issue or sale the
Conversion Price shall be reduced to such Conversion Price
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<PAGE> 14
determined by multiplying the Conversion Price in effect immediately
prior to such issue or sale by a fraction, (y) the numerator of which
shall be the sum of the number of shares of Common Stock outstanding
immediately prior to such issue or sale plus the number of shares of
Common Stock which the aggregate offering price of the total number of
shares of Common Stock and/or equivalent common stock so to be offered
(and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such Market Price and
(z) the denominator of which shall be the sum of the number of shares
of Common Stock outstanding immediately prior to such issue or sale
plus the number of additional shares of Common Stock and/or equivalent
common stock to be offered for subscription or purchase (or into which
the convertible securities so to be offered are initially
convertible). In case such subscription price may be paid in a
consideration part of or all of which shall be in a form other than
cash, the value of such consideration shall be determined in good
faith by the Board of Directors of the Corporation. Shares of Common
Stock owned by or held for the account of the Corporation shall not be
deemed outstanding for the purpose of any such computation. Such issue
or sale adjustment shall be made successively upon the issuance or
sale of shares of Common Stock or equivalent common stock or any
rights, options or warrants to subscribe for or purchase Common Stock
or equivalent common stock or securities convertible into common stock
or equivalent common stock. Notwithstanding the foregoing, no
adjustment of the Conversion Price pursuant to this Section 9(e)(iv)
shall be made upon (A) the conversion or redemption of shares of
Series A Preferred; (B) the payment of any stock dividend on the
Series A Preferred; (C) the issuance of options to officers, directors
and employees of the Corporation and its subsidiaries to purchase
shares of Common Stock, including any such options as are issued and
outstanding as of the Original Issue Date, provided that, with respect
to all such options, the number of shares of Common Stock that may be
subject to such options shall be limited to 15% of the Corporation's
fully diluted shares of Common Stock based upon securities outstanding
as of the Original Issue Date; (D) the issuance and sale of Common
Stock upon exercise of any rights or options referenced in the
immediately preceding clause (C) or in Section 9(e)(iii) above; or (E)
the issuance and sale of Common Stock in an underwritten public
offering.
(v) If the amount of any adjustment of the Conversion Price
required pursuant to this Section 9(e) would be less than 1% of the
Conversion Price in effect at the time such adjustment is otherwise so
required to be made, such amount shall be carried forward and an
adjustment with respect thereto made at the time of and together with
any subsequent adjustment which, together with such amount and any
other amount or amounts so carried forward, shall aggregate at least
1% of such Conversion Price. All calculations under this Section 9(e)
shall be made to the nearest .001 of a cent.
(vi) Except as herein otherwise expressly provided, for all
purposes of this
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<PAGE> 15
Section 9(e) the term "Common Stock" shall mean the Common Stock
and any shares of stock or other class of capital stock of the
Corporation which is not preferred as to dividends or assets over
any other class of capital stock of the Corporation and which is
not subject to redemption, or which is issued to the holders of
shares of Common Stock upon any reclassification thereof.
Notwithstanding anything in this Section 9(e), there will be no
adjustment hereunder as a result of the reverse stock split
contemplated in Section 5.17 of the Agreement and Plan of Merger dated
October 8, 1999, to which the Corporation is a party, which reverse
stock split shall be deemed to have occurred prior to effectiveness of
this Certificate.
(f) In case at any time after the Original Issue Date, the
Corporation shall be a party to any transaction (including without
limitation a merger, consolidation, statutory share exchange, sale of
all or substantially all of the Corporation's assets or
recapitalization of the Common Stock), in each case as a result of
which shares of Common Stock (or any other securities of the
Corporation then issuable upon conversion of the Series A Preferred)
shall be converted into the right to receive stock, securities or
other property (including without limitation cash or any combination
thereof) (each of the foregoing transactions being referred to as a
"FUNDAMENTAL CHANGE TRANSACTION"), then the shares of Series A
Preferred remaining outstanding will thereafter no longer be subject
to conversion into Common Stock (or such other securities) pursuant to
this Section 9, but instead each share shall be convertible into the
kind and amount of stock and other securities and property receivable
(including without limitation cash) upon the consummation of such
Fundamental Change Transaction by a holder of that number of shares or
fraction thereof of Common Stock (or such other securities) into which
one share of Series A Preferred was convertible immediately prior to
such Fundamental Change Transaction assuming such holder of Common
Stock failed to exercise any right of election as to the kind of
consideration to be received in such Fundamental Change Transaction.
The Corporation shall not be a party to any Fundamental Change
Transaction after which shares of the Series A Preferred shall remain
outstanding unless the terms of such Fundamental Change Transaction
are consistent with the provisions of this Section 9(f), and it shall
not consent or agree to the occurrence of any such Fundamental Change
Transaction until the Corporation has entered into an agreement with
the successor or purchasing entity, as the case may be, for the
benefit of the holders of the shares of Series A Preferred which will
contain provisions enabling the holders of shares of the Series A
Preferred which remain outstanding after such Fundamental Change
Transaction to convert such shares into the consideration received by
holders of Common Stock (or any other securities of the Corporation
then issuable upon conversion of the Series A Preferred) at the
Conversion Price immediately after such Fundamental Change
Transaction. In the event that at any time, as a result of an
adjustment made pursuant to this Section 9, the Series A Preferred
shall become subject to conversion into any securities other than
shares of Common Stock, thereafter the number of such other securities
so issuable upon conversion of the shares of Series A Preferred shall
be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with
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<PAGE> 16
respect to the shares of Series A Preferred contained in this Section
9. The provisions of this Section 9(f) shall similarly apply to
successive Fundamental Change Transactions.
(g) Upon the occurrence of any event requiring an adjustment of
the Conversion Price, then, and in any such case, the Corporation
shall promptly deliver to the holders of shares of Series A Preferred
a notice stating the Conversion Price resulting from such adjustment
and the method of calculation thereof and setting forth a brief
statement of the facts requiring such adjustment and upon which such
adjustment is based.
(h) In case at any time:
(i) the Corporation shall declare or pay to all holders of
Common Stock any dividend (whether payable in Common Stock, cash,
securities or other property);
(ii) there shall be any capital reorganization, or
reclassification of the Common Stock of the Corporation or
consolidation or merger of the Corporation with, or sale of all
or substantially all of its assets to, another corporation or
other entity;
(iii) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Corporation;
(iv) there shall be any other Fundamental Change
Transaction; or
(v) there shall occur any other event that would cause an
adjustment to the Conversion Price of the Series A Preferred;
then, in any one or more of such cases, the Corporation shall give to
the holder of shares of Series A Preferred (A) at least 15 days prior
to any event referred to in clause (i) or (v) above and at least 30
days prior to any event referred to in clause (ii), (iii) or (iv)
above, written notice of the date on which the books of the
Corporation shall close or records shall be taken for such dividend or
distribution or for determining rights to vote in respect of any such
organization, reclassification, consolidation, merger, sale,
dissolution, liquidation, winding-up or Fundamental Change
Transaction, and (B) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution,
liquidation, winding-up or Fundamental Change Transaction known to the
Corporation, at least 30 days prior written notice of the date, or if
not then known, a reasonable approximation thereof by the Corporation)
when the same shall take place. Such notice in accordance with the
foregoing clause (A) shall also specify, in the case of any such
dividend or distribution, the date on which such holders of Common
Stock shall be entitled thereto, and such notice in accordance with
the foregoing clause (B) shall also specify the date on which such
holders of Common Stock shall be entitled to exchange their Common
Stock, securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale,
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<PAGE> 17
dissolution, liquidation, winding-up or Fundamental Change
Transaction, as the case may be.
(i) Whenever the Conversion Price is adjusted as provided herein,
the Corporation shall prepare and mail to the record holders of Series
A Preferred an officer's certificate signed by the Chairman of the
Board, President, or Chief Financial Officer of the Corporation
setting forth the Conversion Price after the adjustment, the method of
calculation thereof, and a brief statement of the facts requiring the
adjustment and upon which the adjustment is based. If the calculation
of the adjustment requires a determination by the Corporations' Board
of Directors, the certificate shall attach and certify to the
resolution of the Board of Directors relating to the determination.
(j) All shares of Common Stock issuable upon the conversion set
forth in this Section 9 shall be duly authorized, validly issued,
fully-paid and nonassessable.
SECTION 10. RANKING. Without limiting the definition of Junior Securities,
the following securities and obligations of the Corporation shall rank junior to
the Series A Preferred with respect to the payments required or permitted to be
made to the holders thereof pursuant to their respective governing instruments
and payments required to be made to the holders of the Series A Preferred
pursuant hereto: the shares of Common Stock. No Senior Securities or Parity
Securities are outstanding or authorized on the date hereof or will be
outstanding or authorized on the Original Issue Date.
SECTION 11. RECORD HOLDERS. The Corporation may deem and treat the record
holder of any shares of Series A Preferred as the true and lawful owner thereof
for all purposes, and the Corporation shall not be affected by any notice to the
contrary.
SECTION 12. NOTICES. Except as may otherwise be provided by law or provided
for herein, all notices referred to herein shall be in writing, and all notices
hereunder shall be deemed to have been given upon receipt, in the case of a
notice of conversion given to the Corporation as contemplated in Section 9(b)
hereof, or, in all other cases, upon the earlier of receipt of such notice or
three Business Days after the mailing of such notices sent by first-class mail,
postage prepaid, addressed: If to the Corporation, to its principal executive
offices (Attention: Corporate Secretary) or to any agent of the Corporation
designated as permitted hereby; or if to a holder of the Series A Preferred, to
such holder at the address of such holder as listed in the stock record books of
the Corporation (which shall include the records of the Transfer Agent), or to
such other address as the Corporation or holder, as the case may be, shall have
designated by notice similarly given.
SECTION 13. REGISTRATION OF TRANSFER. Upon the surrender of any certificate
representing the Series A Preferred to the Corporation or its transfer agent,
the Corporation shall, or shall cause its transfer agent to, at the request of
the record holder of such certificate, execute and deliver (at the Corporation's
expense) a new certificate or certificates in exchange therefor, of Series A
Preferred representing in the aggregate the number of shares of Series A
Preferred represented by the
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<PAGE> 18
surrendered certificate. Each such new certificate shall be registered in such
name and shall represent such number of shares of Series A Preferred as is
requested by the holder of the surrendered certificate and shall be
substantially identical in form to the surrendered certificate, and dividends
shall accrue on the Series A Preferred represented by such new certificate from
the date as of which dividends have been fully paid on the Series A Preferred
represented by the surrendered certificate.
SECTION 14. REPLACEMENT. Upon receipt of evidence satisfactory to the
Corporation (an affidavit of the registered holder shall be satisfactory) of the
ownership and the loss, theft, destruction or mutilation of any certificate
evidencing shares of Series A Preferred, and, in the case of any such loss,
theft or destruction, upon receipt of indemnity reasonably satisfactory to the
Corporation (provided, that, if the holder is a financial institution or other
institutional investor, its own agreement shall be satisfactory), or, in the
case of any such mutilation, upon surrender of such certificate, the Corporation
shall (at its own expense) execute and deliver in lieu of such certificate a new
certificate of like kind representing the number of shares of Series A Preferred
of such class represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of the lost, stolen, destroyed or mutilated
certificate, and dividends shall accrue on the Series A Preferred represented by
such new certificate from the date to which dividends have been fully paid on
the Series A Preferred represented by the lost, stolen, destroyed or mutilated
certificate.
SECTION 15. SUCCESSORS AND TRANSFEREES. The provisions applicable to shares
of Series A Preferred shall bind and inure to the benefit of and be enforceable
by the Corporation, the respective successors to the Corporation, and by any
record holder of shares of Series A Preferred.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
executed as of the 8th day of February, 2000.
VISTA ENERGY RESOURCES, INC.
By:/s/ C. Randall Hill
--------------------------
C. Randall Hill
Chairman and Chief Executive Officer
-18-
<PAGE> 1
EXHIBIT 10.1
AMENDED AND RESTATED CREDIT AGREEMENT
dated as of
February 8, 2000
among
PRIZE ENERGY RESOURCES, L.P.,
VISTA RESOURCES PARTNERS, L.P.
and
MIDLAND RESOURCES, INC.,
as Borrowers,
PRIZE ENERGY CORP.,
as Parent Guarantor,
The Financial Institutions Listed on Schedule 1 hereto,
as Banks,
BANKBOSTON, N.A.,
as Administrative Agent,
FIRST UNION NATIONAL BANK,
as Syndication Agent,
CIBC INC.,
as Documentation Agent,
and
BANK ONE, TEXAS, N.A.,
as Lead Manager
$400,000,000
BANCBOSTON ROBERTSON STEPHENS INC.,
as Sole Lead Arranger and Book Manager
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I AMENDMENT AND RESTATEMENT.......................................................................3
ARTICLE II TERMS DEFINED...................................................................................3
SECTION 2.1. Definitions............................................................................3
SECTION 2.2. Accounting Terms and Determinations...................................................27
ARTICLE III REVOLVER/TERM FACILITIES.......................................................................28
SECTION 3.1. Commitment............................................................................28
SECTION 3.2. Method of Borrowing...................................................................32
SECTION 3.3. Method of Requesting Letters of Credit................................................33
SECTION 3.4. Notes.................................................................................34
SECTION 3.5. Interest Rates; Payments..............................................................34
SECTION 3.6. Mandatory Repayments..................................................................36
SECTION 3.7. Mandatory Prepayment Following Certain Events.........................................36
SECTION 3.8. Voluntary Prepayments.................................................................37
SECTION 3.9. Mandatory Reduction of Commitments....................................................37
SECTION 3.10. Mandatory Termination of Commitments; Termination Date and Maturity...................37
SECTION 3.11. Voluntary Reduction of Total Commitment...............................................37
SECTION 3.12. Application of Payments...............................................................38
SECTION 3.13. Commitment Fee........................................................................38
SECTION 3.14. Letter of Credit Fees.................................................................38
SECTION 3.15. Administrative Agency and Other Fees..................................................38
ARTICLE IV GENERAL PROVISIONS.............................................................................39
SECTION 4.1. Delivery and Endorsement of Notes.....................................................39
SECTION 4.2. General Provisions as to Payments.....................................................39
SECTION 4.3. Funding Losses........................................................................40
SECTION 4.4. Foreign Lenders, Participants, and Assignees..........................................40
SECTION 4.5. Non-Receipt of Funds by Administrative Agent..........................................41
SECTION 4.6. Joint and Several Liability; Rights of Contribution...................................41
ARTICLE V BORROWING BASE.................................................................................43
SECTION 5.1. Reserve Reports; Proposed Borrowing Base..............................................43
SECTION 5.2. Periodic Determinations of the Borrowing Base; Procedures and Standards...............43
SECTION 5.3. Special Determinations of the Borrowing Base..........................................44
SECTION 5.4 Asset Disposition Adjustment..........................................................44
SECTION 5.5. Borrowing Base Deficiency.............................................................44
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
SECTION 5.6. Initial Borrowing Base................................................................45
ARTICLE VI COLLATERAL.....................................................................................45
SECTION 6.1. Security..............................................................................45
SECTION 6.2. Title Opinions........................................................................46
SECTION 6.3. Guarantees............................................................................46
ARTICLE VII CONDITIONS TO BORROWINGS.......................................................................47
SECTION 7.1. Conditions to Amendment and Restatement, Initial Borrowing and Participation in
Letter of Credit Exposure.............................................................47
SECTION 7.2. Conditions to each Borrowing and each Letter of Credit................................51
SECTION 7.3. Agreements Regarding Initial Borrowing................................................52
SECTION 7.4. Materiality of Conditions.............................................................53
ARTICLE VIII REPRESENTATIONS AND WARRANTIES.................................................................53
SECTION 8.1. Existence and Power...................................................................53
SECTION 8.2. Corporate, Limited Liability Company, Partnership and Governmental Authorization;
Contravention.........................................................................53
SECTION 8.3. Binding Effect........................................................................53
SECTION 8.4. Financial Information.................................................................54
SECTION 8.5. Litigation............................................................................54
SECTION 8.6. ERISA.................................................................................54
SECTION 8.7. Taxes and Filing of Tax Returns.......................................................55
SECTION 8.8. Title to Properties; Liens............................................................55
SECTION 8.9. Mineral Interests.....................................................................55
SECTION 8.10. Business; Compliance..................................................................56
SECTION 8.11. Licenses, Permits, Etc................................................................56
SECTION 8.12. Compliance with Law...................................................................56
SECTION 8.13. Ownership Interests...................................................................56
SECTION 8.14. Full Disclosure.......................................................................57
SECTION 8.15. Organizational Structure; Nature of Business..........................................57
SECTION 8.16. Environmental Matters.................................................................57
SECTION 8.17. Burdensome Obligations................................................................58
SECTION 8.18. Government Regulations................................................................58
SECTION 8.19. Fiscal Year...........................................................................58
SECTION 8.20. No Default............................................................................58
SECTION 8.21. Insider...............................................................................58
SECTION 8.22. Gas Balancing Agreements and Advance Payment Contracts................................59
SECTION 8.23. Closing Documents; Material Agreements................................................59
ARTICLE IX AFFIRMATIVE COVENANTS..........................................................................60
SECTION 9.1. Information...........................................................................60
SECTION 9.2. Business of Credit Parties............................................................62
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
SECTION 9.3. Maintenance of Existence..............................................................62
SECTION 9.4. Right of Inspection...................................................................62
SECTION 9.5. Maintenance of Insurance..............................................................63
SECTION 9.6. Payment of Taxes and Claims...........................................................63
SECTION 9.7. Compliance with Laws and Documents....................................................63
SECTION 9.8. Operation of Properties and Equipment.................................................64
SECTION 9.9. Further Assurances....................................................................64
SECTION 9.10. Environmental Law Compliance and Indemnity............................................64
SECTION 9.11. Title Data............................................................................65
SECTION 9.12. ERISA Reporting Requirements..........................................................65
ARTICLE X NEGATIVE COVENANTS..............................................................................67
SECTION 10.1. Incurrence of Debt....................................................................67
SECTION 10.2. Restricted Payments...................................................................67
SECTION 10.3. Negative Pledge.......................................................................67
SECTION 10.4. Consolidations and Mergers............................................................68
SECTION 10.5. Asset Dispositions....................................................................68
SECTION 10.6. Amendments to Material Documents......................................................69
SECTION 10.7. Use of Proceeds.......................................................................69
SECTION 10.8. Investments...........................................................................69
SECTION 10.9. Transactions with Affiliates..........................................................69
SECTION 10.10. ERISA. ..............................................................................70
SECTION 10.11. Hedge Transactions....................................................................70
SECTION 10.12. Operating Leases......................................................................70
SECTION 10.13. Speculative Hedge Transactions........................................................70
SECTION 10.14. Fiscal Year...........................................................................70
SECTION 10.15. Change in Business....................................................................70
SECTION 10.16. Acquisition...........................................................................71
SECTION 10.17. Gas Balancing Agreements..............................................................71
ARTICLE XI FINANCIAL COVENANTS.............................................................................71
ARTICLE XII DEFAULTS........................................................................................71
SECTION 12.1. Events of Default.....................................................................71
ARTICLE XIII AGENTS..........................................................................................74
SECTION 13.1. Appointment and Authorization.........................................................74
SECTION 13.2. Agents and Affiliates.................................................................74
SECTION 13.3. Action by Agents......................................................................74
SECTION 13.4. Consultation with Experts.............................................................75
SECTION 13.5. Liability of Agents...................................................................75
SECTION 13.6. Delegation of Duties..................................................................75
SECTION 13.7. Indemnification.......................................................................75
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
SECTION 13.8. Credit Decision.......................................................................75
SECTION 13.9. Successor Agents......................................................................76
ARTICLE XIV PROTECTION OF YIELD; CHANGE IN LAWS.............................................................76
SECTION 14.1. Basis for Determining Interest Rate Applicable to Eurodollar Tranches Inadequate......76
SECTION 14.2. Illegality of Eurodollar Tranches.....................................................77
SECTION 14.3. Increased Cost of Eurodollar Tranche..................................................77
SECTION 14.4. Adjusted Base Rate Tranche Substituted for Affected Eurodollar Tranche................78
SECTION 14.5. Capital Adequacy......................................................................79
SECTION 14.6. Taxes.................................................................................80
SECTION 14.7. Discretion of Banks as to Manner of Funding...........................................80
ARTICLE XV MISCELLANEOUS...................................................................................81
SECTION 15.1. Notices...............................................................................81
SECTION 15.2. Waivers and Amendments; Acknowledgments...............................................81
SECTION 15.3. Expenses; Documentary Taxes; Indemnification..........................................83
SECTION 15.4. Right and Sharing of Set-Offs.........................................................83
SECTION 15.5. Survival..............................................................................84
SECTION 15.6. Limitation on Interest................................................................85
SECTION 15.7. Invalid Provisions....................................................................85
SECTION 15.8. Waiver of Consumer Credit Laws........................................................86
SECTION 15.9. Successors and Assigns................................................................86
SECTION 15.10. Applicable Law and Jurisdiction.......................................................87
SECTION 15.11. Counterparts; Effectiveness...........................................................88
SECTION 15.12. No Third Party Beneficiaries..........................................................88
SECTION 15.13. COMPLETE AGREEMENT....................................................................89
SECTION 15.14. WAIVER OF JURY TRIAL, PUNITIVE DAMAGES, ETC. .........................................89
SECTION 15.15. Confidential Information..............................................................89
</TABLE>
EXHIBITS
Exhibit A Form of Assignment and Amendment to Mortgages
Exhibit B Form of Certificate of Ownership Interests
Exhibit C Form of Facility Guaranty
Exhibit D Form of Note
Exhibit E Form of Parent Pledge Agreement
Exhibit F Form of Subsidiary Pledge Agreement
Exhibit G Form of Request for Borrowing
Exhibit H Form of Request for Letter of Credit
Exhibit I Form of Rollover Notice
Exhibit J Form of Financial Officer's Certificate
iv
<PAGE> 6
Exhibit K Form of Assignment and Assumption Agreement
SCHEDULES*
Schedule 1 Financial Institutions
Schedule 2 Existing Mortgages
Schedule 3 Litigation
Schedule 4 Organizational Structure
Schedule 5 Permitted Investments
Schedule 6 Debt
- ------------
* Omitted. The Registrant agrees to furnish supplementally a copy of any such
omitted Schedules to the Securities and Exchange Commission upon its
request.
v
<PAGE> 7
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement") is
entered into effective as of the 8th day of February, 2000, among Prize Energy
Resources, L.P., a Delaware limited partnership ("Prize LP"), Vista Resources
Partners, L.P., a Texas limited partnership ("Vista LP"), Midland Resources,
Inc., a Texas corporation ("Midland" and, collectively with Prize LP and Vista
LP, "Borrowers" and each individually, a "Borrower"), Prize Energy Corp.
(formerly known as Vista Energy Resources, Inc.), a Delaware corporation
("Parent"), BankBoston, N.A., a national banking association, as Administrative
Agent ("Administrative Agent"), First Union National Bank, a national banking
association, as Syndication Agent ("Syndication Agent"), CIBC Inc., a Delaware
corporation, as Documentation Agent ("Documentation Agent"), Bank One, Texas,
N.A., a national banking association, as Lead Manager ("Lead Manager"), and the
financial institutions listed on Schedule 1 hereto as Banks (individually a
"Bank" and collectively "Banks").
W I T N E S S E T H
WHEREAS, Prize LP, as borrower, Prize Natural Resources, Inc. (formerly
known as Prize Energy Corp.), a Delaware corporation ("Former Prize"), as parent
guarantor, BankBoston, N.A., as administrative agent ("Prize Administrative
Agent"), First Union National Bank, as syndication agent, CIBC Inc., as
documentation agent, Bank One, Texas, N.A., as lead arranger, and the financial
institutions listed on Schedule 1 thereto as banks (collectively referred to
herein as "Existing Prize Banks") are parties to that certain Senior Credit
Agreement dated as of June 29, 1999, as heretofore amended, pursuant to which
Existing Prize Banks provided certain loans and other extensions of credit to
Prize LP (the "Existing Prize Credit Agreement"); and
WHEREAS, Vista LP and Midland, as borrowers, Parent, as guarantor,
BankBoston, N.A., as administrative agent ("Vista Administrative Agent"), and
the other agents and financial institutions described therein as lenders
(collectively referred to herein as "Existing Vista Lenders") are parties to
that certain Credit Agreement dated as of December 18, 1998, as heretofore
amended, pursuant to which Existing Vista Lenders provided certain loans and
other extensions of credit to Vista LP and Midland (the "Existing Vista Credit
Agreement"); and
WHEREAS, pursuant to that certain Merger Certificate (as hereinafter
defined), PEC Acquisition Corp., a Delaware corporation, which is a wholly owned
Subsidiary of Parent ("PECAC") has merged with and into Former Prize with Former
Prize being the surviving corporation as a wholly-owned Subsidiary of Parent;
and
WHEREAS, pursuant to an Assumption Agreement (the "Prize Assumption
Agreement") of even date herewith by and among Borrowers, Prize Administrative
Agent and Existing Prize Banks, Borrowers assumed and agreed to perform, as
primary obligors, all obligations of Prize LP under the Existing Prize Credit
Agreement; and
1
<PAGE> 8
WHEREAS, pursuant to an Assumption Agreement (the "Vista Assumption
Agreement") of even date herewith by and among Borrowers, Vista Administrative
Agent, and Existing Vista Lenders, Borrowers assumed and agreed to perform, as
primary obligors, all obligations of Vista LP and Midland under the Existing
Vista Credit Agreement and all related Loan Documents (as defined in the
Existing Vista Credit Agreement); and
WHEREAS, immediately prior to the execution of this Agreement, certain
Existing Prize Banks have entered into Assignment and Assumption Agreements
(collectively, the "Bank Assignments") with each of The Bank of Nova Scotia
("Scotia"), Christiania Bank ("Christiania"), and MeesPierson Capital Corp.
("MeesPierson," and, together with Scotia and Christiania, collectively referred
to herein as the "New Banks"), pursuant to which the Existing Prize Banks
assigned to the New Banks, and each of the New Banks (i) acquired from the
Existing Prize Banks a portion of the Loan and Letter of Credit Exposure held by
the Existing Prize Banks under and as defined in the Existing Prize Credit
Agreement and each of the Loan Papers (as defined in the Existing Prize Credit
Agreement), (ii) assumed and agreed to perform a portion of each Existing Prize
Bank's obligations under the Existing Prize Credit Agreement and the other Loan
Papers (as defined therein), and (iii) became a party to, and a "Bank" under,
the Existing Prize Credit Agreement and such other Loan Papers; and
WHEREAS, after giving effect to the Bank Assignments and the amendment
and restatement of the Existing Prize Credit Agreement pursuant to the terms
hereof, the Commitment Percentage (as herein defined) of each Bank (including
each Existing Prize Bank and each New Bank) hereunder will be as set forth on
Schedule 1 hereto; and
WHEREAS, immediately after giving effect to the Merger (as hereinafter
defined), the Bank Assignments, the Vista Assumption Agreement, and the Prize
Assumption Agreement, Borrowers desire to amend and restate the Existing Prize
Credit Agreement in the form of this Agreement and desire to obtain Borrowings
(as hereinafter defined) (a) to refinance the indebtedness assumed by Borrowers
under the Existing Prize Credit Agreement and the Existing Vista Credit
Agreement, (b) to increase from $250,000,000 to $400,000,000 the aggregate
Commitment of Banks, and (c) for other purposes permitted herein; and
WHEREAS, subject to and upon the terms and conditions herein contained,
Agents (as hereinafter defined) and Banks are in agreement with Borrowers'
requests; and
WHEREAS, in connection with the refinancing of the indebtedness
outstanding under the Existing Vista Credit Agreement, and as a condition
precedent to the effectiveness of this Agreement, Vista Administrative Agent
will execute and deliver to Administrative Agent hereunder those certain
Assignments and Amendments to Mortgages (as hereinafter defined) dated of even
date herewith pursuant to which all indebtedness outstanding thereunder and all
liens securing payment thereof will be assigned to Administrative Agent
hereunder; and
2
<PAGE> 9
WHEREAS, pursuant to Article XIII of this Agreement, BankBoston, N.A.
has been appointed Administrative Agent for Banks hereunder, First Union
National Bank has been appointed Syndication Agent for Banks hereunder, CIBC
Inc. has been appointed Documentation Agent for Banks hereunder and Bank One,
Texas, N.A. has been appointed Lead Manager for Banks hereunder; and
WHEREAS, pursuant to certain separate agreements among BankBoston,
N.A., BancBoston Robertson Stephens Inc. ("BRSI"), Borrowers and their
Affiliates (as hereinafter defined), BRSI has been appointed the sole lead
arranger and book manager for the credit facility provided herein.
NOW, THEREFORE, in consideration of the premises, the representations,
warranties, covenants and agreements contained herein, and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Parent, Borrowers, Administrative Agent, Syndication Agent,
Documentation Agent, Lead Manager and Banks hereby agree as follows:
ARTICLE I
AMENDMENT AND RESTATEMENT
Subject to the satisfaction of each condition precedent contained in
Section 7.1 hereof, the Existing Prize Credit Agreement shall be amended and
restated in the form of this Agreement.
ARTICLE II
TERMS DEFINED
SECTION 2.1. Definitions. The following terms, as used herein, have the
following meanings:
"Adjusted Base Rate" means, on any day, the greater of (a) the Base
Rate in effect on such day, or (b) the sum of (i) the Federal Funds Rate in
effect on such day, plus (ii) one half of one percent (.5%). Each change in the
Adjusted Base Rate shall become effective automatically and without notice to
Borrowers or any Bank upon the effective date of each change in the Federal
Funds Rate or the Base Rate, as the case may be.
"Adjusted Base Rate Borrowing" means any Borrowing which will
constitute an Adjusted Base Rate Tranche.
"Adjusted Base Rate Tranche" means the portion of the principal of the
Loan bearing interest with reference to the Adjusted Base Rate.
3
<PAGE> 10
"Adjusted LIBOR Rate" applicable to any Interest Period, means a rate
per annum equal to the quotient obtained (rounded upwards, if necessary, to the
next higher 1/16 of 1%) by dividing (a) the applicable LIBOR Rate by (b) 1.00
minus the Eurodollar Reserve Percentage.
"Administrative Agent" means BankBoston, N.A. in its capacity as
Administrative Agent for Banks hereunder or any successor thereto.
"Advance Payment Contract" means any contract whereby any Credit Party
either (a) receives or becomes entitled to receive (either directly or
indirectly) any payment (an "Advance Payment") to be applied toward payment of
the purchase price of Hydrocarbons produced or to be produced from Mineral
Interests owned by any Credit Party and which Advance Payment is paid or to be
paid in advance of actual delivery of such production to or for the account of
the purchaser regardless of such production, or (b) grants an option or right of
refusal to the purchaser to take delivery of such production in lieu of payment,
and, in either of the foregoing instances, the Advance Payment is, or is to be,
applied as payment in full for such production when sold and delivered or is, or
is to be, applied as payment for a portion only of the purchase price thereof or
of a percentage or share of such production; provided that inclusion of the
standard "take or pay" provision in any gas sales or purchase contract or any
other similar contract shall not, in and of itself, constitute such contract as
an Advance Payment Contract for the purposes hereof.
"Affiliate" means, as to any Person, any Subsidiary of such Person, or
any other Person which, directly or indirectly, controls, is controlled by, or
is under common control with, such Person. For the purposes of this definition,
"control" (including with correlative meanings, the terms "controlled by" and
"under common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or partnership interests, or by contract or
otherwise.
"Agent" means Administrative Agent, Syndication Agent, Documentation
Agent, Lead Manager, Sole Lead Arranger or Book Manger and "Agents" means
Administrative Agent, Syndication Agent, Documentation Agent, Lead Manager, Sole
Lead Arranger and Book Manager, collectively.
"Agreement" means this Amended and Restated Credit Agreement, including
the Schedules and Exhibits hereto, as the same may be amended or supplemented
from time to time.
"Applicable Environmental Law" means any Law, statute, ordinance, rule,
regulation, order or determination of any Governmental Authority or any board of
fire underwriters (or other body exercising similar functions), affecting any
real or personal property owned, operated or leased by any Credit Party or any
other operation of any Credit Party in any way pertaining to health, safety or
the environment, including, without limitation, all applicable zoning ordinances
and building codes, flood disaster Laws and health, safety and environmental
Laws and regulations, and further including, without limitation, (a) the
Comprehensive Environmental Response, Compensation, and
4
<PAGE> 11
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986 (as amended from time to time, herein referred to as
"CERCLA"), (b) the Resource Conservation and Recovery Act of 1976, as amended by
the Used Oil Recycling Act of 1980, the Solid Waste Recovery Act of 1976, as
amended by the Solid Waste Disposal Act of 1980, and the Hazardous and Solid
Waste Amendments of 1984 (as amended from time to time, herein referred to as
"RCRA"), (c) the Safe Drinking Water Act, as amended, (d) the Toxic Substances
Control Act, as amended, (e) the Clean Air Act, as amended, (f) the Occupational
Safety and Health Act of 1970, as amended, (g) the Laws, rules and regulations
of any state having jurisdiction over any real or personal property owned,
operated or leased by any Credit Party or any other operation of any Credit
Party which relates to health, safety or the environment, as each may be amended
from time to time, and (h) any federal, state or municipal Laws, ordinances or
regulations which may now or hereafter require removal of asbestos or other
hazardous wastes or impose any liability related to asbestos or other hazardous
wastes. The terms "hazardous substance," "petroleum," "release" and "threatened
release" have the meanings specified in CERCLA, and the terms "solid waste" and
"disposal" (or "disposed") have the meanings specified in RCRA; provided,
however, in the event either CERCLA or RCRA is amended so as to broaden the
meaning of any term defined thereby, such broader meaning shall apply subsequent
to the effective date of such amendment with respect to all provisions of this
Agreement; and provided further that, to the extent the Laws of the state in
which any real or personal property owned, operated or leased by any Credit
Party is located establish a meaning for "hazardous substance," "petroleum,"
"release," "solid waste" or "disposal" which is broader than that specified in
either CERCLA or RCRA, such broader meaning shall apply in so far as such
broader meaning is applicable to the real or personal property owned, operated
or leased by any such Credit Party and located in such state.
"Applicable Margin" means, on any date, with respect to each Eurodollar
Tranche, an amount determined by reference to the ratio of Outstanding Credit to
the Borrowing Base on such date in accordance with the table below:
<TABLE>
<CAPTION>
Ratio of Outstanding Applicable Margin for
Credit to Borrowing Base Eurodollar Tranches
<S> <C>
< .50 to 1 1.250%
> or = .50 to 1 < .75 to 1 1.500%
> or = .75 to 1 < .90 to 1 1.750%
> or = .90 to 1 1.875%
</TABLE>
"Approved Petroleum Engineer" means Netherland, Sewell & Associates,
Inc., or such other reputable firm of independent petroleum engineers as shall
be selected by Borrowers and approved by Required Banks, such approval not to be
unreasonably withheld.
5
<PAGE> 12
"Asset Disposition" means any sale, assignment, lease, license,
transfer, exchange or other disposition by any Credit Party of any Borrowing
Base Property.
"Assignee" has the meaning given such term in Section 15.9(c).
"Assignment and Amendment to Mortgages" means an Assignment of Liens
and Amendment to Mortgage to be entered into among Vista LP, Midland, Vista
Administrative Agent, and Administrative Agent, substantially in the form of
Exhibit A hereto, pursuant to which the Existing Vista Mortgages shall be
assigned to Administrative Agent for the ratable benefit of each Bank to secure
the Obligations.
"Assignment and Assumption Agreement" has the meaning given such term
in Section 15.9(c).
"Authorized Officer" means, as to any Person, its Chairman,
Vice-Chairman, President, Executive Vice President(s), Senior Vice President(s)
or Vice President(s) duly authorized to act on behalf of such Person.
"Availability" means, at any time: (a) the Borrowing Base in effect at
such time, minus (b) the Outstanding Credit at such time.
"Bank" means any financial institution listed on Schedule 1 hereto as
having a Commitment, and its successors and assigns, and "Banks" means all
Banks.
"Bank Assignments" has the meaning set forth in the recitals hereto.
"BankBoston" means BankBoston, N.A., a national banking association, in
its capacity as a Bank.
"Base Rate" means, for any day, the floating rate of interest
established from time to time by Administrative Agent as its "Prime Commercial
Lending Rate" of interest, which rate is not the lowest rate of interest which
Administrative Agent charges, each change in the Base Rate to become effective
without notice to Borrower on the effective date of each such change.
"Book Manager" means BancBoston Robertson Stephens Inc. in its capacity
as book manager for the credit facility hereunder or any successor thereto.
"Borrower(s)" has the meaning set forth in the initial paragraph
hereof.
"Borrowing" means any disbursement to Borrower under, or to satisfy the
obligations of any Credit Party under, any of the Loan Papers.
"Borrowing Base" means the Borrowing Base as determined in accordance
with Section 5.2.
6
<PAGE> 13
"Borrowing Base Deficiency" means, as of any date, the amount, if any,
by which (a) the Outstanding Credit on such date, exceeds (b) the Borrowing Base
in effect on such date; provided, that, for purposes of computing the existence
and amount of any Borrowing Base Deficiency, Letter of Credit Exposure will not
be deemed to be outstanding to the extent funds have been deposited with
Administrative Agent to secure such Letter of Credit Exposure pursuant to
Section 3.1(b).
"Borrowing Base Properties" means all Mineral Interests evaluated by
Banks for purposes of establishing the Borrowing Base. The Borrowing Base
Properties on the Closing Date are described in the legal description of Mineral
Interests attached to the Certificate of Ownership Interests, and constitute all
of the Mineral Interests described in the Initial Reserve Reports.
"Borrowing Date" means the Eurodollar Business Day or the Domestic
Business Day, as the case may be, upon which the proceeds of any Borrowing are
made available to any Borrower or to satisfy the obligations of any Credit
Party.
"BRSI" means BancBoston Robertson Stephens Inc., a Massachusetts
corporation which is an Affiliate of BankBoston.
"Capital Lease" means, for any Person as of any date, any lease of
property, real or personal, which would be capitalized on a balance sheet of the
lessee prepared as of such date in accordance with GAAP.
"Certificate of Ownership Interests" means a Certificate of Ownership
Interests in the form of Exhibit B attached hereto to be executed and delivered
by an Authorized Officer of each Borrower pursuant to Section 7.1(a)(vii).
"Change of Control" means the occurrence of any of the following
whether voluntarily or involuntary, including by operation of law: (a) any
Credit Party (other than Parent and OGP) shall cease to be a wholly-owned
Subsidiary of Parent, (b) NGP, together with its Affiliates, shall cease, for
any reason, to be the legal and beneficial owner of at least twenty percent
(20%) of the total voting power of all classes of capital stock then outstanding
of Parent entitled (without regard to the occurrence of any contingency) to vote
in elections of directors of Parent, (c) any Person or group (as defined in
Section 13(d)(3) or 14(d)(2) of the Exchange Act) shall become the legal and
beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of a greater
percentage of the total voting power of all classes of capital stock then
outstanding of Parent entitled (without regard to the occurrence of any
contingency) to vote in elections of directors of Parent than the percentage of
such voting power then owned by NGP and its Affiliates, or (d) both Philip B.
Smith and Lon C. Kile shall cease for any reason to be high ranking executive
officers of Parent.
"Christiania" has the meaning set forth in the recitals hereto.
"Closing Date" means February 8, 2000.
7
<PAGE> 14
"Closing Documents" means the Merger Documents and all other material
documents, instruments and agreements executed or delivered by Parent, Vista LP,
Midland, Existing Vista Lenders, Existing Vista Administrative Agent, PECAC,
Former Prize, Prize LP, Existing Prize Banks, or Existing Prize Administrative
Agent in connection with or otherwise pertaining to the Merger or the Closing
Transactions.
"Closing Transactions" means the transactions to occur on the Closing
Date pursuant to the Closing Documents and this Agreement, including, without
limitation: (a) the Merger; (b) the assumption by Borrowers of the obligations
of Borrowers under the Existing Credit Agreements; (c) the termination of the
Existing Vista Credit Agreement, including, without limitation: (i) the
refinancing of all Debt of Vista LP and Midland outstanding under the Existing
Vista Credit Agreement with proceeds of the Loan, (ii) the cancellation of all
letters of credit outstanding thereunder, and (iii) the assignment of all Liens
(including, without limitation, the Existing Vista Mortgages) securing the
obligations of Vista LP and Midland under the Existing Vista Credit Agreement to
Administrative Agent to secure the Obligations; and (e) the payment of all fees
and expenses of Administrative Agent, Book Manager, Sole Lead Arranger and their
Affiliates in connection with the credit facilities provided herein.
"CMLTD" means, with respect to any Person as of any date, that portion
of the Long Term Debt of such Person which is scheduled or anticipated to come
due within twelve months of such date.
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations and rulings issued thereunder.
"Commitment" means, with respect to any Bank, the commitment of such
Bank to lend its Commitment Percentage of the Total Commitment to Borrowers
pursuant to Section 3.1, as such Commitment may be terminated and/or reduced
from time to time in accordance with the provisions hereof. On the Closing Date,
the amount of each Bank's Commitment is the amount set forth opposite such
Bank's name on Schedule 1 hereto; provided, that, after giving effect to any
Assignment and Assumption Agreement, the Commitment of each Bank shall be the
amount set forth in the amended Schedule 1 prepared by Administrative Agent and
circulated to Borrowers and Banks pursuant to Section 15.9(c).
"Commitment Fee Percentage" means, for any day, the percentage
determined pursuant to the table below based on the ratio of the Outstanding
Credit on such date to the Borrowing Base in effect on such date:
<TABLE>
<CAPTION>
Ratio of Outstanding Commitment Fee
Credit to Borrowing Base Percentage
<S> <C>
< .50 to 1 .250%
> or = .50 to 1 < .75 to 1 .375%
> or = .75 to 1 < .90 to 1 .375%
> or = .90 to 1 .500%
</TABLE>
8
<PAGE> 15
"Commitment Percentage" means, with respect to any Bank at any time,
the Commitment Percentage for such Bank set forth on Schedule 1 hereto (as the
same may be amended and reflected in an amended Schedule 1 prepared and
circulated by Administrative Agent to Borrowers and Banks pursuant to Section
15.9(c) hereof).
"Consolidated Current Assets" means, for any Person at any time, the
sum of (a) the current assets of such Person and its Consolidated Subsidiaries
at such time determined in accordance with GAAP, plus (b) in the case of Parent
and Borrowers, and prior to the Revolver Conversion Date, the Availability at
such time.
"Consolidated Current Liabilities" means, for any Person at any time,
the current liabilities of such Person and its Consolidated Subsidiaries at such
time determined in accordance with GAAP, but, in the case of Parent, excluding
CMLTD of Parent and its Consolidated Subsidiaries at such time.
"Consolidated EBITDA" means, for any Person for any period, the
Consolidated Net Income of such Person for such period, plus each of the
following determined for such Person and its Consolidated Subsidiaries on a
consolidated basis for such period: (a) any provision for (or less any benefit
from) income or franchise Taxes included in determining Consolidated Net Income;
(b) Consolidated Net Interest Expense deducted in determining Consolidated Net
Income; (c) depreciation, depletion and amortization expense deducted in
determining Consolidated Net Income; and (d) other noncash charges deducted in
determining Consolidated Net Income to the extent not already included in
clauses (b) and (c) of this definition.
"Consolidated Net Income" means, for any Person as of any period, the
net income (or loss) of such Person and its Consolidated Subsidiaries for such
period determined in accordance with GAAP, but excluding: (a) the income of any
other Person (other than its Consolidated Subsidiaries) in which such Person or
any of its Subsidiaries has an ownership interest, unless received by such
Person or its Consolidated Subsidiaries in a cash distribution; (b) any
after-tax gains attributable to asset dispositions; (c) to the extent not
included in clauses (a) and (b) above, any after-tax (i) extraordinary gains
(net of extraordinary losses) or (ii) non-cash nonrecurring gains; and (d) non-
cash or nonrecurring charges.
"Consolidated Net Interest Expense" means, for any Person for any
period, the remainder of the following for such Person and its Consolidated
Subsidiaries for such period: (a) interest expense, minus (b) interest income.
9
<PAGE> 16
"Consolidated Net Worth" shall mean, at any time and from time to time,
the net worth of Parent and its Subsidiaries on a consolidated basis determined
in accordance with GAAP.
"Consolidated Subsidiary" or "Consolidated Subsidiaries" means, for any
Person, at any time, any Subsidiary or other entity the accounts of which would
be consolidated with those of such Person in its consolidated financial
statements as of such time.
"Conversion Date" has the meaning set forth in Section 3.5(c).
"Credit Parties" means, collectively, Parent, each Borrower and any
Subsidiary of Parent, and "Credit Party" means any one of the foregoing.
"Current Financials" means (a) the most recent annual audited
consolidated balance sheet of Parent and the related consolidated statements of
operations and cash flow delivered to Banks hereunder, and (b) the most recent
quarterly unaudited consolidated balance sheet of Parent and the related
consolidated statements of operations and cash flow delivered to Banks
hereunder. Until superseded by the delivery by Parent to Banks of more recent
financial statements pursuant to Sections 9.1(a) and 9.1(b), "Current
Financials" shall mean Parent's pro forma combined condensed balance sheet as of
September 30, 1999, and Parent's pro forma combined condensed statement of
operations for the nine (9) months then ended, copies of which have been
provided to Banks.
"Dated Assets" has the meaning set forth in Section 4.6(c).
"Dated Liabilities" has the meaning set forth in Section 4.6(c).
"Debt" of any Person means, without duplication, (a) all obligations of
such Person for borrowed money, (b) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (c) all other
indebtedness (including obligations under Capital Leases, other than Capital
Leases which are usual and customary oil and gas leases) of such Person on which
interest charges are customarily paid or accrued, (d) all Guarantees by such
Person, (e) the unfunded or unreimbursed portion of all letters of credit issued
for the account of such Person, (f) any amount owed by such Person representing
the deferred purchase price for property or services acquired by such Person
other than trade payables incurred in the ordinary course of business which are
not more than ninety (90) days past the invoice date, (g) all obligations of
such Person secured by a Lien on any property or asset owned or held by that
Person regardless of whether the indebtedness secured thereby shall have been
assumed by that Person or is non-recourse to the credit of that Person, and (h)
all liability of such Person as a general partner of a partnership for
obligations of such partnership of the nature described in (a) through (g)
preceding.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
10
<PAGE> 17
"Default Rate" means, in respect of any principal of the Loan or any
other amount payable by any Borrower under any Loan Paper which is not paid when
due (whether at stated maturity, by acceleration, or otherwise), a rate per
annum during the period commencing on the due date until such amount is paid in
full equal to the sum of (i) two percent (2%), plus (ii) the Adjusted Base Rate
as in effect from time to time (provided, that if such amount in default is
principal of a Eurodollar Borrowing and the due date is a day other than the
last day of an Interest Period therefor, the "Default Rate" for such principal
shall be, for the period from and including the due date and to but excluding
the last day of the Interest Period therefor, the sum of (a) two percent (2%),
plus (b) the Applicable Margin, plus (c) the LIBOR Rate for such Borrowing for
such Interest Period as provided in Section 3.5, and thereafter, the rate
provided for above in this definition).
"Determination" means any Periodic Determination or Special
Determination (including, without limitation, any Determination pursuant to
Section 5.4).
"Determination Date" means (a) with respect to any Periodic
Determination, each April 1 and October 1, commencing April 1, 2000, and (b)
with respect to any Special Determination, the first day of the first month
which is not less than twenty (20) Domestic Business Days following the date of
a request for a Special Determination. The Closing Date shall also constitute a
Determination Date for purposes of this Agreement.
"Distribution" by any Person, means (a) with respect to any stock
issued by such Person or any partnership, joint venture, limited liability
company, membership or other equity ownership interest of such Person, the
retirement, redemption, purchase, or other acquisition for value of any such
stock, partnership, joint venture, limited liability company, membership or
other equity ownership interest; (b) the declaration or payment of any dividend
or other distribution on or with respect to any stock, partnership, joint
venture, limited liability company, membership or other equity ownership
interest of any Person; and (c) any other payment by such Person with respect to
such stock, partnership, joint venture, limited liability company, membership or
other equity ownership interest.
"Documentation Agent" means CIBC Inc. in its capacity as Documentation
Agent for Banks hereunder or any successor thereto.
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which national banks in Boston, Massachusetts, are authorized by
Law to close.
"Domestic Lending Office" means, as to each Bank, its office identified
on Schedule 1 hereto as its Domestic Lending Office or such other office as such
Bank may hereafter designate as its Domestic Lending Office by notice to
Borrowers and Administrative Agent.
"Environmental Complaint" means any complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, proceeding,
judgment, letter or other communication from any federal, state or municipal
authority or any other party against any Credit Party involving (a) a
11
<PAGE> 18
Hazardous Discharge from, onto or about any real property owned, leased or
operated at any time by any Credit Party, (b) a Hazardous Discharge caused, in
whole or in part, by any Credit Party or by any Person acting on behalf of or at
the instruction of any Credit Party, or (c) any violation of any Applicable
Environmental Law by any Credit Party.
"Environmental Liability" means any liability, loss, fine, penalty,
charge, Lien, damage, cost, or expense of any kind that results directly or
indirectly, in whole or in part (a) from the violation of any Applicable
Environmental Law, (b) from the release or threatened release of any Hazardous
Substance, (c) from removal, remediation, or other actions in response to the
release or threatened release of any Hazardous Substance, (d) from actual or
threatened damages to natural resources, (e) from the imposition of injunctive
relief or other orders, (f) from personal injury, death, or property damage
which occurs as a result of any Credit Party's use, storage, handling, or the
release or threatened release of a Hazardous Substance, or (g) from any
environmental investigation performed at, on, or for any real property owned by
any Credit Party.
"Equity" means shares of capital stock or a partnership, profits,
capital or member interest, or options, warrants or any other right to
substitute for or otherwise acquire the capital stock or a partnership, profits,
capital or member interest of any Credit Party.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rulings and regulations issued thereunder as from time to time
in effect.
"ERISA Affiliate" means any corporation or trade or business under
common control with any Credit Party as determined under section 4001(a)(14) of
ERISA.
"ERISA Event" means, with respect to any Credit Party and any ERISA
Affiliate, (a) a "reportable event" as defined in section 4043 of ERISA (other
than a reportable event not subject to the provision for thirty (30) days notice
to the PBGC under regulations issued under section 4043 of ERISA), (b) the
withdrawal of any Credit Party or any ERISA Affiliate from a Plan during a plan
year in which it was a "substantial employer" as defined in section 4001(a)(2)
of ERISA, (c) the filing of a notice of intent to terminate a Plan under section
4041(c) of ERISA, (d) the institution of proceedings to terminate a Plan by the
PBGC, (e) the failure to make required contributions which could result in the
imposition of a Lien under section 412 of the Code or section 302 of ERISA, or
(f) any other event or condition which might reasonably be expected to
constitute grounds under section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan.
"Eurodollar Borrowing" means any Borrowing which will constitute a
Eurodollar Tranche.
"Eurodollar Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
12
<PAGE> 19
"Eurodollar Lending Office" means, as to each Bank, its office, branch
or affiliate located at its address identified on Schedule 1 hereto as its
Eurodollar Lending Office or such other office, branch or affiliate of such Bank
as it may hereafter designate as its Eurodollar Lending Office by notice to
Borrower and Administrative Agent.
"Eurodollar Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in New York, New York, in respect of "Eurocurrency liabilities"
(or in respect of any other category of liabilities which includes deposits by
reference to which the interest rate on Eurodollar Tranches is determined or any
category of extensions of credit or other assets which includes loans by a
non-United States office of any Bank to United States residents). The Adjusted
LIBOR Rate shall be adjusted automatically on and as of the effective date of
any change in the Eurodollar Reserve Percentage.
"Eurodollar Tranche" means, with respect to any Interest Period, any
portion of the principal amount outstanding under the Loan which bears interest
at a rate computed by reference to the Adjusted LIBOR Rate for such Interest
Period.
"Event of Default" has the meaning set forth in Section 12.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing Credit Agreements" means, collectively, the Existing Prize
Credit Agreement and the Existing Vista Credit Agreement.
"Existing Mortgages" means, collectively, the Existing Prize Mortgages
and the Existing Vista Mortgages.
"Existing Prize Banks" has the meaning set forth in the recitals
hereto.
"Existing Prize Credit Agreement" has the meaning set forth in the
recitals hereto.
"Existing Prize Mineral Interests" means the Mineral Interests owned by
Prize LP on the Closing Date prior to giving effect to the Closing Transactions.
"Existing Prize Mortgages" means the mortgages, deeds of trust,
security agreements, assignments, pledges and other documents, instruments and
agreements described on Part A of Schedule 2 hereto which establish Liens on the
Existing Prize Mineral Interests to secure Prize LP's obligations under the
Existing Prize Credit Agreement.
"Existing Vista Credit Agreement" has the meaning set forth in the
recitals hereto.
13
<PAGE> 20
"Existing Vista Lenders" has the meaning set forth in the recitals
hereto.
"Existing Vista Mineral Interests" means the Mineral Interests owned by
Vista LP and Midland on the Closing Date prior to giving effect to the Closing
Transactions.
"Existing Vista Mortgages" means the mortgages, deeds of trust,
security agreements, assignments, pledges and other documents, instruments and
agreements described on Part B of Schedule 2 hereto which establish Liens on the
Existing Vista Mineral Interests to secure Vista's and Midland's obligations
under the Existing Vista Credit Agreement.
"Exhibit" refers to an exhibit attached to this Agreement and
incorporated herein by reference, unless specifically provided otherwise.
"Facility Guaranty" means a Guaranty substantially in the form of
Exhibit C attached hereto to be executed by Parent and each existing and future
Subsidiary of Parent (other than Borrowers, Vista LLC and PEC) in favor of
Banks, pursuant to which Parent and each such Subsidiary of Parent guarantees
payment and performance in full of the Obligations.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/16 of 1%) equal to the weighted average
of the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Domestic Business Day next
succeeding such day; provided that (a) if the day for which such rate is to be
determined is not a Domestic Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Domestic Business
Day as so published on the next succeeding Domestic Business Day, and (b) if
such rate is not so published on such next succeeding Domestic Business Day, the
Federal Funds Rate for any day shall be the average rate charged to
Administrative Agent on such day on such transactions as determined by
Administrative Agent.
"Fiscal Quarter" means the three (3) month periods ending March 31,
June 30, September 30 or December 31 of each Fiscal Year.
"Fiscal Year" means a twelve (12) month period ending December 31.
"Former Prize" has the meaning set forth in the recitals hereto.
"GAAP" means those generally accepted accounting principles and
practices which are recognized as such by the American Institute of Certified
Public Accountants acting through its Accounting Principles Board or by the
Financial Accounting Standards Board or through other appropriate boards or
committees thereof and which are consistently applied for all periods after the
Closing Date so as to properly reflect the financial condition, and the results
of operations and changes in financial position, of a Person and its
Consolidated Subsidiaries, except that any accounting principle or practice
required to be changed by said Accounting Principles Board or
14
<PAGE> 21
Financial Accounting Standards Board (or other appropriate board or committee of
said Boards) in order to continue as a generally accepted accounting principle
or practice may be so changed.
"Gas Balancing Agreement" means any agreement or arrangement whereby
any Credit Party, or any other party having an interest in any Hydrocarbons to
be produced from Mineral Interests in which any Credit Party owns an interest,
has a right to take more than its proportionate share of production therefrom.
"Governmental Authority" means any court or governmental department,
commission, board, bureau, agency or instrumentality of any nation or of any
province, state, commonwealth, nation, territory, possession, county, parish or
municipality, whether now or hereafter constituted or existing.
"Guarantee" or "Guaranty" by any Person means any obligation,
contingent or otherwise, of such Person directly or indirectly guaranteeing any
Debt of any other Person and, without limiting the generality of the foregoing,
any obligation, direct or indirect, contingent or otherwise, of such Person (a)
to purchase or pay (or advance or supply funds for the purchase or payment of)
such Debt (whether arising by virtue of partnership arrangements, by agreement
to keep-well, to purchase assets, goods, securities or services, to take-or-pay,
or to maintain financial statement conditions, by "comfort letter" or other
similar undertaking of support or otherwise) or (b) entered into for the purpose
of assuring in any other manner the obligee of such Debt of the payment thereof
or to protect such obligee against loss in respect thereof (in whole or in
part); provided that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.
"Hazardous Discharge" means any releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
disposing or dumping of any Hazardous Substance from or onto any real property
owned, leased or operated at any time by any Credit Party or any real property
owned, leased or operated by any other party.
"Hazardous Substance" means any pollutant, toxic substance, hazardous
waste, compound, element or chemical that is defined as hazardous, toxic,
noxious, dangerous or infectious pursuant to any Applicable Environmental Law or
which is otherwise regulated by any Applicable Environmental Law.
"Hedge Transaction" means any commodity, interest rate, currency or
other swap, option, collar, futures contract, advance payment contract or other
contract pursuant to which a Person hedges risks related to commodity prices,
interest rates, currency exchange rates, securities prices or financial market
conditions. Hedge Transactions expressly include Oil and Gas Hedge Transactions.
"Hedge Transaction Letters of Credit" means Letters of Credit issued to
secure Borrowers' obligations to counterparties under Oil and Gas Hedge
Transactions.
15
<PAGE> 22
"Hydrocarbons" means oil, gas, casinghead gas, drip gasolines, natural
gasoline, condensate, distillate, and all other liquid and gaseous hydrocarbons
produced or to be produced in conjunction therewith, and all products,
by-products and all other substances derived therefrom or the processing
thereof.
"Immaterial Title Deficiencies" means, with respect to Borrowing Base
Properties, defects or clouds on title, discrepancies in reported net revenue
and working interest ownership percentages and other Liens, defects,
discrepancies and similar matters which do not, individually or in the
aggregate, affect Borrowing Base Properties with a Recognized Value greater than
four percent (4%) of the Recognized Value of all such Borrowing Base Properties.
"Indirect Subsidiary" has the meaning given such term in the definition
of "Subsidiary Pledge Agreement."
"Initial Borrowing Base" means a Borrowing Base in the amount of
$250,000,000, which shall be in effect during the period commencing on the
Closing Date and continuing until the first Determination after the Closing
Date.
"Initial Reserve Reports" means the following reserve reports which
contain an evaluation of the Borrowing Base Properties: (a) reserve report dated
as of October 1, 1999, prepared by Former Prize's in-house staff with respect to
the Existing Prize Mineral Interests, and (b) reserve report dated as of October
1, 1999, prepared by Parent's in-house staff with respect to the Existing Vista
Mineral Interests.
"Interest Option" has the meaning given such term in Section 3.5(c).
"Interest Period" means, with respect to each Eurodollar Tranche, the
period commencing on the Borrowing Date or Conversion Date applicable to such
Tranche and ending one (1), two (2), three (3), or, if available to all Banks,
six (6) or twelve (12) months thereafter, as Borrower may elect in the
applicable Request for Borrowing; provided that: (a) any Interest Period which
would otherwise end on a day which is not a Eurodollar Business Day shall be
extended to the next succeeding Eurodollar Business Day unless such Eurodollar
Business Day falls in another calendar month, in which case such Interest Period
shall end on the next preceding Eurodollar Business Day; (b) any Interest Period
which begins on the last Eurodollar Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the calendar month at
the end of such Interest Period) shall, subject to clause (c) below, end on the
last Eurodollar Business Day of a calendar month; (c) if any Interest Period
includes a date on which any payment of principal of the Loan subject to such
Eurodollar Tranche is required to be made hereunder, but does not end on such
date, then (i) the principal amount of each Eurodollar Tranche required to be
repaid on such date shall have an Interest Period ending on such date, and (ii)
the remainder of each such Eurodollar Tranche shall have an Interest Period
determined as set forth above; and (d) no Interest Period shall extend past the
expiration of the Termination Date.
16
<PAGE> 23
"Investment" means, with respect to any Person, any loan, advance,
extension of credit, capital contribution to, investment in or purchase of the
stock securities of, or interests in, any other Person; provided, that
"Investment" shall not include current customer and trade accounts which are
payable in accordance with customary trade terms.
"Laws" means all applicable statutes, laws, ordinances, regulations,
orders, writs, injunctions or decrees of any state, commonwealth, nation,
territory, possession, county, township, parish, municipality or Governmental
Authority, and "Law" means any of the foregoing.
"Lead Manager" means Bank One, Texas, N.A. in its capacity as Lead
Manager for Banks hereunder or any successor thereto.
"Lending Office" means, as to any Bank, its Domestic Lending Office or
its Eurodollar Lending Office, as the context may require.
"Letter of Credit Application" has the meaning given such term in
Section 3.1(b).
"Letter of Credit Exposure" of any Bank means, collectively, such
Bank's aggregate participation in (a) the unfunded portion of Letters of Credit
outstanding at any time, and (b) the funded but unreimbursed (by Borrowers)
portion of Letters of Credit outstanding at such time.
"Letter of Credit Fee" means, with respect to any Letter of Credit
(other than Supplemental Letters of Credit) issued hereunder, a fee in an amount
equal to a per annum percentage of the average daily aggregate amount of Letter
of Credit Exposure of all Banks during the Fiscal Quarter (or portion thereof)
ending on the date such payment is due determined by reference to the ratio of
Outstanding Credit to the Borrowing Base in effect as of the date such fee is
due pursuant to Section 3.14. The amount of such fee which accrues during each
Fiscal Quarter shall be a per annum percentage of the average daily aggregate
Letter of Credit Exposure in accordance with the table below:
<TABLE>
<CAPTION>
Ratio of Outstanding
Credit to Borrowing Base Letter of Credit Fee %
- ------------------------ ----------------------
<S> <C>
< .50 to 1 1.250%
> or = .50 to 1 < .75 to 1 1.500%
> or = .75 to 1 < .90 to 1 1.750%
> or = .90 to 1 1.875%
</TABLE>
"Letter of Credit Fronting Fee" means, with respect to any Letter of
Credit (including Supplemental Letters of Credit) issued hereunder, a fee equal
to the greater of (a) $150 or (b) .125% of the stated amount of any such Letter
of Credit.
17
<PAGE> 24
"Letter of Credit Issuer" has the meaning set forth in Section 3.1(b).
"Letter of Credit Period" means the period commencing on the Closing
Date and ending nine (9) Domestic Business Days prior to the Termination Date.
"Letters of Credit" means, collectively, letters of credit issued for
the account of Borrowers pursuant to Section 3.1(b) and, except as expressly
provided to the contrary herein, Section 3.1(d).
"LIBOR Rate" means, for any Eurodollar Tranche for any Interest Period
therefor, the rate per annum determined by Administrative Agent (rounded upward,
if necessary, to the next higher 1/16 of 1%) appearing on Telerate page 3750 (or
any successor page) as the London interbank offered rate for deposits in dollars
at approximately 11:00 a.m. (London time) two (2) Eurodollar Business Days prior
to the first day of such Interest Period for a term comparable to such Interest
Period. If for any reason such rate is not available, the term "LIBOR Rate"
shall mean, for any Eurodollar Tranche for any Interest Period therefor, the
rate per annum (rounded upwards, if necessary to the nearest 1/16 of 1%)
appearing on Reuters Screen LIBO Page as the London interbank offered rate for
deposits in dollars at approximately 11:00 a.m. (London time) two (2) Eurodollar
Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period, provided, however, if more than one rate is
specified on Reuters Screen LIBO Page, the applicable rate shall be the
arithmetic mean of all such rates (rounded upwards, if necessary, to the nearest
1/16 of 1%).
"Lien" means with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For purposes of this Agreement, a Credit Party shall be deemed to own subject to
a Lien any asset which is acquired or held subject to the interest of a vendor
or lessor under any conditional sale agreement, Capital Lease or other title
retention agreement relating to such asset.
"Loan" means the revolving credit/term loan in an amount outstanding at
any time not to exceed the amount of the Total Commitment then in effect, less
the amount of the Letter of Credit Exposure then outstanding, to be made by
Banks to Borrowers pursuant to the Commitments of each Bank.
"Loan Papers" means this Agreement, the Notes, each Facility Guaranty
now or hereafter executed, the Mortgages, the Assignments and Amendments to
Mortgages, each Parent Pledge Agreement now or hereafter executed, each
Subsidiary Pledge Agreement now or hereafter executed, and all other
certificates, documents or instruments delivered in connection with this
Agreement, as the foregoing may be amended from time to time.
"Long Term Debt" means Debt which matures more than one year from the
date it is incurred, or which can be extended at the option of the obligor(s) to
a date more than one year from the date it is incurred.
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<PAGE> 25
"Margin Regulations" mean Regulations T, U and X of the Board of
Governors of the Federal Reserve System, as in effect from time to time.
"Margin Stock" means "margin stock" as defined in Regulation U.
"Material Adverse Change" means any circumstance or event that has had
or would reasonably be expected to have a Material Adverse Effect.
"Material Adverse Effect" means a material adverse effect on (a) the
assets, liabilities, financial condition, results of operations or prospects of
any Credit Party, individually or taken as a whole, (b) the right or ability of
any Credit Party to fully, completely and timely perform its obligations under
the Loan Papers, (c) the validity or enforceability of any Loan Paper against
any Credit Party (to the extent a party thereto), or (d) the validity,
perfection or priority of any Lien on a material portion of the assets intended
to be created under or pursuant to any Loan Paper to secure the Obligations.
"Material Agreement" means any material written or enforceable oral
agreement, contract, commitment, or understanding to which a Person is a party,
by which such Person is directly or indirectly bound, or to which any assets of
such Person may be subject, which is not cancelable by such Person upon notice
of thirty (30) days or less without liability for further payment other than
nominal penalty.
"Material Gas Imbalance" means, with respect to all Gas Balancing
Agreements to which any Credit Party is a party or by which any Mineral Interest
owned by any Credit Party is bound, a net gas imbalance to Borrower or any other
Credit Party, individually or taken as a whole, in excess of $2,000,000
(calculated at $1.00 per MMBTU).
"Maximum Lawful Rate" means, for each Bank, the maximum rate (or, if
the context so permits or requires, an amount calculated at such rate) of
interest which, at the time in question would not cause the interest charged on
the portion of the Loan owed to such Bank at such time to exceed the maximum
amount which such Bank would be allowed to contract for, charge, take, reserve,
or receive under applicable Law after taking into account, to the extent
required by applicable Law, any and all relevant payments or charges under the
Loan Papers.
"MeesPierson" has the meaning set forth in the recitals hereto.
"Merger" means the merger of PECAC with and into Former Prize pursuant
to, and in accordance with, the Merger Documents, with Former Prize being the
surviving corporation as a wholly-owned Subsidiary of Parent.
"Merger Agreement" means that certain Agreement and Plan of Merger
dated as of October 8, 1999, among Parent, PECAC and Former Prize.
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"Merger Certificate" means that certain Certificate of Merger dated as
of February 8, 2000, executed by Former Prize, filed on the Closing Date with
the Secretary of State of Delaware, and certified copies of which shall
subsequently be filed in such jurisdictions as Administrative Agent shall
require.
"Merger Documents" means (a) the Merger Agreement, (b) the Merger
Certificate, and (c) all other material documents, instruments and agreements
executed or delivered by Parent, Former Prize, and/or PECAC pursuant to the
Merger Agreement or the Merger Certificate, or in connection with the Merger.
"Midland" has the meaning set forth in the initial paragraph hereof.
"Mineral Interests" means rights, estates, titles, and interests in and
to oil and gas leases and any oil and gas interests, royalty and overriding
royalty interests, production payments, net profits interests, oil and gas fee
interests, and other rights therein, including, without limitation, any
reversionary or carried interests relating to the foregoing, together with
rights, titles, and interests created by or arising under the terms of any
unitization, communitization, and pooling agreements or arrangements, and all
properties, rights and interests covered thereby, whether arising by contract,
by order, or by operation of Law, which now or hereafter include all or any part
of the foregoing. The term "Mineral Interests" shall expressly include the
Existing Prize Mineral Interests and the Existing Vista Mineral Interests.
"Mortgage Required Reserve Value" means Proved Mineral Interests that
have a Recognized Value of not less than eighty percent (80%) of the Recognized
Value of all Proved Mineral Interests held by Borrowers and their Subsidiaries.
"Mortgages" means all mortgages, deeds of trust, amended and restated
mortgages, amendments to mortgages, security agreements, pledge agreements and
similar documents, instruments and agreements creating, evidencing, perfecting
or otherwise establishing the Liens required by Article VI hereof as may have
been heretofore or may hereafter be granted or assigned to Administrative Agent
to secure payment of the Obligations or any part thereof. All Mortgages shall be
in form and substance satisfactory to Administrative Agent in its sole
discretion. The term "Mortgages" expressly includes the Assignment and Amendment
to Mortgages, the Existing Mortgages, and any amendments to, or restatements of,
the Existing Mortgages.
"Net Cash Proceeds" means the remainder of (a) the gross proceeds
received by any Credit Party from any Asset Disposition less (b) underwriter
discounts and commissions, investment banking fees, legal, accounting and other
professional fees and expenses, and other usual and customary transaction costs,
in each case only to the extent paid or payable by a Credit Party in cash and
related to such Asset Disposition.
"New Banks" has the meaning set forth in the recitals hereto.
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"NGP" means, collectively, Natural Gas Partners II, L.P., Natural Gas
Partners III, L.P., and Natural Gas Partners V, L.P., each of which is a
Delaware limited partnership.
"Note" means a promissory note of Borrowers, payable to the order of a
Bank, in substantially the form of Exhibit D hereto, evidencing the joint and
several obligation of Borrowers to repay to such Bank its Commitment Percentage
of the Loan, together with all modifications, extensions, renewals and
rearrangements thereof, and "Notes" means all of such Notes.
"Obligations" means, collectively, all present and future indebtedness,
obligations and liabilities, and all renewals and extensions thereof, or any
part thereof, of each Credit Party to any Bank or to any Affiliate of any Bank
(a) arising pursuant to the Loan Papers, and all interest accrued thereon and
costs, expenses and reasonable attorneys' fees incurred in the enforcement or
collection thereof, and (b) arising under or in connection with any Hedge
Transaction entered into between any Credit Party and any Bank or any Affiliate
of any Bank, regardless of whether such indebtedness, obligations and
liabilities are direct, indirect, fixed, contingent, liquidated, unliquidated,
joint, several or joint and several.
"OGP" means Oklahoma Gas Processing, Inc., a Delaware corporation.
"Oil and Gas Hedge Transactions" means Hedge Transactions pursuant to
which any Person hedges the price to be received by it for future production of
Hydrocarbons.
"Operating Lease" means any lease, sublease, license or similar
arrangement (other than a Capital Lease and other than leases with a primary
term of one year or less or which can be terminated by the lessee upon notice of
one year or less without incurring a penalty) pursuant to which a Person leases,
subleases or otherwise is granted the right to occupy, take possession of, or
use property whether real, personal or mixed; provided, that "Operating Lease"
shall not include oil, gas or mineral leases entered into or assigned to any
Credit Party in the ordinary course of such Credit Party's business.
"Outstanding Credit" means, at any time, the sum of (i) the aggregate
outstanding Letter of Credit Exposure (other than Supplemental Letter of Credit
Exposure) on such date, including the aggregate Letter of Credit Exposure
related to Letters of Credit (other than Supplemental Letters of Credit) to be
issued on such date, plus (ii) the aggregate outstanding principal balance of
the Loan on such date, including the amount of any Borrowing to be made on such
date.
"Parent" has the meaning set forth in the initial paragraph hereof.
"Parent Pledge Agreement" means a Pledge Agreement substantially in the
form of Exhibit E attached hereto to be executed by Parent, pursuant to which
Parent shall pledge to Administrative Agent, for the ratable benefit of Banks,
one hundred percent (100%) of the issued and outstanding Equity owned by Parent
of each existing or hereafter created or acquired Subsidiary of Parent to secure
the Obligations.
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"Participant" has the meaning given such term in Section 15.9(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"PEC" means PEC (Delaware), Inc., a Delaware corporation.
"PECAC" has the meaning set forth in the recitals hereto.
"Periodic Determination" means any determination of the Borrowing Base
pursuant to Section 5.2.
"Permitted Encumbrances" means with respect to any asset:
(a) Liens securing the Obligations in favor of Banks or their
Affiliates under the Loan Papers;
(b) minor defects in title which do not secure the payment of
money and otherwise have no material adverse effect on the value or operation of
oil and gas properties, and for the purposes of this Agreement, a minor defect
in title shall include, without limitation: (i) those instances where record
title to an oil and gas lease is in a predecessor in title to any Borrower or
any of its Subsidiaries, but where any Borrower or any of its Subsidiaries, by
reason of a farmout or other instrument is presently entitled to receive an
assignment of its interest or other evidence of title and the appropriate Person
is proceeding diligently to obtain such assignment, and (ii) easements,
rights-of-way, servitudes, permits, surface leases and other similar rights in
respect of surface operations, and easements for pipelines, streets, alleys,
highways, telephone lines, power lines, railways and other easements and
rights-of-way, on, over or in respect of any of the properties of any Borrower
(or its Subsidiaries, as applicable) that are customarily granted in the oil and
gas industry; so long as, with respect to any of such minor defects in title,
the same are minor defects which are customary and usual in the oil and gas
industry and which are customarily accepted by a reasonably prudent operator
dealing with its properties;
(c) inchoate statutory or operators' liens securing
obligations for labor, services, materials and supplies furnished to Mineral
Interests which are not delinquent (except to the extent permitted by Section
9.6);
(d) mechanic's, materialmen's, warehouseman's, journeyman's
and carrier's liens and other similar liens arising by operation of Law or
statute in the ordinary course of business which are not delinquent (except to
the extent permitted by Section 9.6);
(e) production sales contracts, Gas Balancing Agreements and
joint operating agreements; provided, that the amount of all gas imbalances
known to any Authorized Officer of
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Borrower and the amount of all production which has been paid for but not
delivered shall have been disclosed or otherwise taken into account in the
Reserve Reports delivered to Banks hereunder;
(f) Liens for Taxes or assessments not yet due or not yet
delinquent, or, if delinquent, that are being contested in good faith in the
normal course of business by appropriate action, as permitted by Section 9.6;
(g) all rights to consent by, required notices to, filings
with, or other actions by, Governmental Authorities in connection with the sale
or conveyance of oil and gas leases or interests therein if any Borrower or the
applicable Subsidiary is entitled to such consent, the same are customarily
obtained subsequent to such sale or conveyance and the appropriate Person is
proceeding diligently to obtain such consent, notice or filing and has not been
advised and has no reason to believe that such consent will not be forthcoming
in a timely manner;
(h) the terms and provisions of any of the oil and gas leases
and amendments thereto pursuant to which any Borrower (or its Subsidiaries, as
applicable) derives its interests;
(i) lease burdens payable to third parties which are granted
in the ordinary course of business in the oil and gas industry and which are
deducted in the calculation of discounted present value in the Reserve Reports
including, without limitation, any royalty, overriding royalty, carried interest
or reversionary working interest and which have been disclosed to the
Administrative Agent in writing; provided, however, that no Borrower shall be
required to disclose such lease burdens unless the same are lease burdens which
are not customarily and usually found in the oil and gas industry or unless the
same are lease burdens which obligate a Borrower and/or its Subsidiaries, as
applicable, in a fashion not customarily and usually found in the oil and gas
industry;
(j) all applicable Laws, rules and orders of Governmental
Authorities having jurisdiction over the affairs of any Borrower, which do not
secure a monetary obligation that is currently past due; and
(k) Liens encumbering assets securing Debt incurred to finance
the purchase of such assets, including, without limitation, the interests of a
lessor under a Capital Lease; provided, that (i) the principal amount of the
Debt secured by a purchased asset shall not exceed one hundred percent (100%) of
the purchase price of such asset, (ii) such Liens shall not extend to or
encumber any other asset of any Borrower or any of its Subsidiaries, (iii) such
Liens shall attach to such purchased asset substantially simultaneously with the
purchase of such asset, and (iv) the aggregate amount of all Debt secured by
such Liens shall not exceed $2,500,000.
"Permitted Investment" means, with respect to any Credit Party, (a)
readily marketable direct obligations of the United States of America, (b) fully
insured time deposits and certificates of deposit with maturities of one (1)
year or less of any commercial bank operating in the United States having
capital and surplus in excess of $400,000,000, (c) commercial paper of a
domestic issuer if at the time of purchase such paper is rated in one of the two
highest ratings categories of Standard and
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Poor's Corporation or Moody's Investors Service, (d) Investments by any Credit
Party in a Subsidiary of Parent that has provided a Facility Guaranty and the
Equity of which has been pledged to Administrative Agent pursuant to a Parent
Pledge Agreement or a Subsidiary Pledge Agreement, (e) Investments described on
Schedule 5 hereto, (f) money market funds in any commercial bank operating in
the United States having capital and surplus in excess of $400,000,000 or
otherwise approved in writing by Administrative Agent, and (g) Investments (in
addition to those contemplated by subsections (a), (b), (c), (d), (e) and (f) of
this definition) measured at cost on a cumulative basis from and after the date
of this Agreement not exceeding an amount equal to ten percent (10%) of
Consolidated Net Worth at any time.
"Person" means an individual, a corporation, a partnership, a limited
liability company, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Plan" means at any time an employee pension benefit plan which is now
or was previously covered by Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Code.
"Prize Administrative Agent" has the meaning set forth in the recitals
hereto.
"Prize Assumption Agreement" has the meaning set forth in the recitals
hereto.
"Prize LP" has the meaning set forth in the initial paragraph hereof.
"Proved Mineral Interests" means, collectively, Proved Producing
Mineral Interests, Proved Nonproducing Mineral Interests, and Proved Undeveloped
Mineral Interests.
"Proved Nonproducing Mineral Interests" means all Mineral Interests
which constitute proved developed nonproducing reserves.
"Proved Producing Mineral Interests" means all Mineral Interests which
constitute proved developed producing reserves.
"Proved Undeveloped Mineral Interests" means all Mineral Interests
which constitute proved undeveloped reserves.
"Recognized Value" means, with respect to Mineral Interests, the
portion of the Borrowing Base which BankBoston attributes to such Mineral
Interests for purposes of the most recent redetermination of the Borrowing Base
pursuant to Article V hereof (or for purposes of determining the Initial
Borrowing Base in the event no such redetermination has occurred), based upon
the discounted present value of the estimated net cash flow to be realized from
the production of Hydrocarbons from such Mineral Interests.
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"Refinancing Borrowing" has the meaning given such term in Section 7.3.
"Refunding Borrowing" means a Borrowing made solely for the purpose of
refinancing a Eurodollar Tranche on the expiration of the Interest Period
applicable thereto or for the purpose of converting all or any part of an
Adjusted Base Rate Tranche to a Eurodollar Tranche, in each case in the manner
contemplated by Section 3.5(c) and which does not result in any increase in the
outstanding principal balance of the Loan. Refunding Borrowings may be Adjusted
Base Rate Borrowings or Eurodollar Borrowings.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as in effect from time to time.
"Rentals" means amounts payable by a lessee under an Operating Lease.
"Request for Borrowing" has the meaning set forth in Section 3.2(a).
"Request for Letter of Credit" has the meaning given such term in
Section 3.3(a).
"Required Banks" means (a) as long as the Commitments are in effect,
Banks having an aggregate Commitment Percentage which is greater than sixty-six
and two-thirds percent (66 2/3%) of the Total Commitment, and (b) following
termination of the Commitments, Banks holding greater than sixty-six and
two-thirds percent (66 2/3%) of the Outstanding Credit.
"Reserve Report" means an unsuperseded engineering analysis of the
Mineral Interests owned by Borrowers in form and substance acceptable to
Administrative Agent and Required Banks prepared in accordance with customary
and prudent practices in the petroleum engineering industry and Financial
Accounting Standards Board Statement 69. Each Reserve Report required to be
delivered by February 28 of each year pursuant to Section 5.1 shall be audited
or prepared by the Approved Petroleum Engineer. Each other Reserve Report shall
be prepared by Borrowers' in-house staff. Notwithstanding the foregoing, in
connection with any Special Determination requested by Borrowers, the Reserve
Report shall be in form and substance acceptable to Borrowers, Administrative
Agent and Required Banks. Until superseded, each of the Initial Reserve Reports
shall be considered a Reserve Report.
"Restricted Payment" means, with respect to any Person, including any
Borrower, any Distribution by such Person and the retirement, redemption or
prepayment prior to the scheduled maturity by such Person or any of the
Affiliates of such Person of any Debt of such Person, excluding, however, the
following: (i) the Obligations, and (ii) any Distribution by any Credit Party to
another Credit Party to cover the overhead and general and administrative costs
of a Credit Party.
"Revolver Conversion Date" means June 29, 2002.
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"Revolving Credit Period" means the period commencing on the Closing
Date and ending on the Revolver Conversion Date.
"Rollover Notice" has the meaning given such term in Section 3.5(c).
"Schedule" means a "schedule" attached to this Agreement and
incorporated herein by reference, unless specifically indicated otherwise.
"Scotia" has the meaning set forth in the recitals hereto.
"Section" or "Article" refers to a "section," "subsection" or "article"
of this Agreement unless specifically indicated otherwise.
"Sole Lead Arranger" means BancBoston Robertson Stephens Inc. in its
capacity as sole lead arranger for the credit facility hereunder or any
successor thereto.
"Special Determination" means any determination of the Borrowing Base
pursuant to Section 5.3.
"Subsidiary" means, for any Person, any corporation or other entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions (including that of a general partner) are at the time directly or
indirectly owned, collectively, by such Person and any Subsidiaries of such
Person. The term Subsidiary shall include Subsidiaries of Subsidiaries (and so
on).
"Subsidiary Pledge Agreement" means a Pledge Agreement substantially in
the form of Exhibit F attached hereto (with applicable conforming changes) to be
executed by each existing and future Subsidiary of Parent to the extent such
Subsidiary owns any outstanding Equity of any other Subsidiary of Parent (an
"Indirect Subsidiary"), pursuant to which such Subsidiary shall pledge to
Administrative Agent, for the ratable benefit of Banks, all of the issued and
outstanding Equity owned by such Subsidiary of such Indirect Subsidiary to
secure the Obligations.
"Supplemental Letter of Credit Exposure" of BankBoston means the sum of
(a) the unfunded portion of Supplemental Letters of Credit outstanding at any
time, plus (b) the funded but unreimbursed portion of Supplemental Letters of
Credit outstanding at such time.
"Supplemental Letter of Credit Fee" means, with respect to any
Supplemental Letter of Credit issued hereunder, a fee equal to one percent (1%)
per annum of the average daily aggregate amount of Supplemental Letter of Credit
Exposure of BankBoston during the Fiscal Quarter (or portion thereof) ending on
the date such payment is due pursuant to Section 3.14.
"Supplemental Letters of Credit" has the meaning specified in Section
3.1(d).
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"Syndication Agent" means First Union National Bank, in its capacity as
Syndication Agent for Banks hereunder or any successor thereto.
"Taxes" means all taxes, assessments, filing or other fees, levies,
imposts, duties, deductions, withholdings, stamp taxes, interest equalization
taxes, capital transaction taxes, foreign exchange taxes or other charges, or
other charges of any nature whatsoever, from time to time or at any time imposed
by Law or any federal, state or local governmental agency. "Tax" means any one
of the foregoing.
"Termination Date" means June 29, 2006.
"Title Required Reserve Value" means Proved Mineral Interests that have
a Recognized Value of not less than seventy percent (70%) of the Recognized
Value of all Proved Mineral Interests held by Borrowers and their Subsidiaries.
"Total Commitment" means the Commitments of all Banks in an initial
aggregate amount of $400,000,000 as such amount may be reduced from time to time
pursuant to Sections 3.9 and 3.11.
"Tranche" means an Adjusted Base Rate Tranche or a Eurodollar Tranche
and "Tranches" means Adjusted Base Rate Tranches or Eurodollar Tranches or any
combination thereof.
"Vista Administrative Agent" has the meaning set forth in the recitals
hereto.
"Vista Assumption Agreement" has the meaning set forth in the recitals
hereto.
"Vista LLC" means Vista LLC, a Delaware limited liability company.
"Vista LP" has the meaning set forth in the initial paragraph hereof.
SECTION 2.2. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared, in accordance with GAAP,
applied on a basis consistent with the most recent audited consolidated
financial statements of Parent and its Consolidated Subsidiaries delivered to
Banks except for changes in which Parent's independent certified public
accountants concur and which are disclosed to Administrative Agent on the next
date on which financial statements are required to be delivered to Banks
pursuant to Sections 9.1(a) and (b); provided that, unless Borrowers and
Required Banks shall otherwise agree in writing, no such change shall modify or
affect the manner in which compliance with the covenants contained in Article XI
are computed such that all such computations shall be conducted utilizing
financial information presented consistently with prior periods.
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ARTICLE III
REVOLVER/TERM FACILITIES
SECTION 3.1. Commitment. (a) Each Bank severally agrees, subject to
Section 3.1(c) and the other terms and conditions set forth in this Agreement,
to lend to Borrowers from time to time prior to the Termination Date, amounts
not to exceed in the aggregate at any one time outstanding, the amount of such
Bank's Commitment reduced by an amount equal to such Bank's Letter of Credit
Exposure. Each Borrowing shall (i) be in an aggregate principal amount of
$500,000 or any larger integral multiple of $100,000, and (ii) be made from each
Bank ratably in accordance with its respective Commitment Percentage. Subject to
the foregoing limitations and the other provisions of this Agreement, Borrowers
may borrow under this Section 3.1(a), repay amounts borrowed under this Section
3.1(a) and request new Borrowings under this Section 3.1(a); provided, that,
from and after the Revolver Conversion Date, the only Borrowings permitted
hereunder shall be Refunding Borrowings.
(b) Administrative Agent, or such Bank designated by
Administrative Agent which (without obligation to do so) consents to the same
("Letter of Credit Issuer"), will issue Letters of Credit, from time to time
during the Letter of Credit Period upon request by any Borrower, for the account
of Borrowers, so long as (i) the sum of (A) the total Letter of Credit Exposure
then existing, and (B) the amount of the requested Letter of Credit, does not
exceed $10,000,000, and (ii) Borrowers would be entitled to a Borrowing under
Sections 3.1(a) and (c) in the amount of the requested Letter of Credit. Not
less than three (3) Domestic Business Days prior to the requested date of
issuance of any such Letter of Credit, such Borrower shall execute and deliver
to Letter of Credit Issuer, Letter of Credit Issuer's customary letter of credit
application ("Letter of Credit Application"). Each Letter of Credit shall be in
form and substance acceptable to Letter of Credit Issuer. No Letter of Credit
shall have an expiration date later than the earlier of (i) nine (9) Domestic
Business Days prior to the Termination Date, or (ii) one (1) year from the date
of issuance. Upon the date of issuance of a Letter of Credit, Letter of Credit
Issuer shall be deemed to have sold to each other Bank, and each other Bank
shall be deemed to have unconditionally and irrevocably purchased from Letter of
Credit Issuer, a non-recourse participation in the related Letter of Credit and
Letter of Credit Exposure equal to such Bank's Commitment Percentage of such
Letter of Credit and Letter of Credit Exposure. Upon request of any Bank,
Administrative Agent shall provide notice to each Bank by telephone,
teletransmission or telex setting forth each Letter of Credit issued and
outstanding pursuant to the terms hereof and specifying the Letter of Credit
Issuer, beneficiary and expiration date of each such Letter of Credit, each
Bank's participation percentage of each such Letter of Credit and the actual
dollar amount of each Bank's participation held by Letter of Credit Issuer(s)
thereof for such Bank's account and risk. In connection with the issuance of
Letters of Credit under this Section 3.1(b), Borrowers shall pay to
Administrative Agent in respect of such Letters of Credit (a) the applicable
Letter of Credit Fee in accordance with Section 3.14, and (b) at the time of
issuance of each Letter of Credit, the applicable Letter of Credit Fronting Fee.
Administrative Agent shall distribute the Letter of Credit Fee to Banks in
accordance with their respective Commitment Percentages, and Administrative
Agent shall distribute the Letter of Credit
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Fronting Fee to the Letter of Credit Issuer for its own account. Any (y)
material amendment or modification, or (z) renewal or extension of any Letter of
Credit shall be deemed to be the issuance of a new Letter of Credit for purposes
of this Section 3.1(b). Notwithstanding anything to the contrary contained
herein, Borrowers shall pay to Letter of Credit Issuer in connection with any
amendment or modification of any nature, such Letter of Credit Issuer's usual
and customary fees for amendments or modifications to, and processing of,
Letters of Credit.
Upon the occurrence of an Event of Default, an amount equal to
the aggregate existing Letter of Credit Exposure of all Banks shall, without
demand upon or notice to any Borrower, be deemed to have been paid or disbursed
by Letter of Credit Issuer (notwithstanding that such amount may not in fact
have been so paid or disbursed) and be deemed forthwith due and owing by
Borrowers as of the date of any such occurrence of an Event of Default, and
Borrowers' obligation to pay such amount shall be joint and several, and
absolute and unconditional, without regard to whether any beneficiary of any
Letter of Credit has attempted to draw down all or a portion of such amount
under the terms of a Letter of Credit. Furthermore, upon the occurrence of an
Event of Default, Borrowers shall, on the next succeeding Domestic Business Day,
deposit with Administrative Agent such funds as Administrative Agent may
request, up to a maximum amount equal to the aggregate existing Letter of Credit
Exposure of all Banks. Any funds so deposited shall be held by Administrative
Agent for the ratable benefit of all Banks as security for the outstanding
Letter of Credit Exposure and the other Obligations, and Borrowers will, in
connection therewith, execute and deliver such security agreements in form and
substance satisfactory to Administrative Agent which it may, in its discretion,
require. As drafts or demands for payment are presented under any Letter of
Credit, Administrative Agent shall apply such funds to satisfy such drafts or
demands. When all Letters of Credit have expired and the Obligations have been
repaid in full (and the Commitments of all Banks have terminated) or such Event
of Default has been cured to the satisfaction of Required Banks, Administrative
Agent shall release to Borrowers any remaining funds deposited under this
Section 3.1(b). Whenever Borrowers are required to make deposits under this
Section 3.1(b) and fail to do so on the day such deposit is due, Administrative
Agent or any Bank may, without notice to any Borrower, make such deposit
(whether by application of proceeds of any collateral for the Obligations, by
transfers from other accounts maintained with any Bank or otherwise) using any
funds then available to any Bank of any Borrower, any guarantor, or any other
Person liable for all or any part of the Obligations.
Notwithstanding anything to the contrary contained herein,
Borrowers hereby jointly and severally agree to reimburse each Letter of Credit
Issuer immediately upon demand by such Letter of Credit Issuer, and in
immediately available funds, for any payment or disbursement made by such Letter
of Credit Issuer under any Letter of Credit issued by it. Payment shall be made
by Borrowers with interest on the amount so paid or disbursed by Letter of
Credit Issuer from and including the date payment is made under any Letter of
Credit to and including the date of payment, at the lesser of (i) the Maximum
Lawful Rate, or (ii) the Default Rate. The obligations of Borrowers under this
paragraph will continue until all Letters of Credit have expired and all
reimbursement obligations with respect thereto have been paid in full by
Borrowers and until all other Obligations shall have been paid in full.
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The reimbursement obligations of Borrowers under this Section
3.1(b) shall be joint and several, absolute, unconditional and irrevocable, and
shall be performed strictly in accordance with the terms of the Loan Papers
(including any Letter of Credit Application executed pursuant to this Section
3.1(b)) under and in all circumstances whatsoever and each Borrower hereby
waives any defense to the payment of such reimbursement obligations based on any
circumstance whatsoever, including without limitation, in any case, the
following circumstances: (i) any lack of validity or enforceability of any
Letter of Credit; (ii) the existence of any claim, set-off, counterclaim,
defense or other rights which any Borrower or any other Person may have at any
time against any beneficiary of any Letter of Credit, Administrative Agent, any
Bank or any other Person, whether in connection with any Letter of Credit or any
unrelated transaction; (iii) any statement, draft or other documentation
presented under any 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 whatsoever; (iv) payment by Administrative Agent under
any Letter of Credit against presentation of a draft or other document that does
not comply with the terms of such Letter of Credit; or (v) any other
circumstance whatsoever, whether or not similar to any of the foregoing.
As among Borrowers on the one hand, and each Agent and each Bank, on
the other hand, Borrowers assume all risks of the acts and omissions of, or
misuse of Letters of Credit by, the beneficiary of such Letters of Credit. In
furtherance and not in limitation of the foregoing, no Agent, Letter of Credit
Issuer nor any Bank shall be responsible for:
(i) the form, validity, sufficiency, accuracy, genuineness or
legal effect of any document submitted by any Person in connection with
the application for and issuance of and presentation of drafts with
respect to any Letter of Credit, even if it should prove to be in any
or all respects invalid, insufficient, inaccurate, fraudulent or
forged;
(ii) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign the
Letter of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason;
(iii) the failure of the beneficiary of the Letter of Credit
to comply duly with conditions required in order to draw upon such
Letter of Credit;
(iv) errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher;
(v) errors in interpretation of technical terms;
(vi) any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under any Letter of Credit
or of the proceeds thereof;
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(vii) the misapplication by the beneficiary of the Letter of
Credit of the proceeds of any drawing under such Letter of Credit; or
(viii) any consequences arising from causes beyond the control
of any Agent or any Bank.
Borrowers shall be jointly and severally obligated to
reimburse each Letter of Credit Issuer upon demand for all amounts paid under
Letters of Credit as set forth in the immediately preceding paragraph hereof;
provided, however, if Borrowers for any reason fail to reimburse such Letter of
Credit Issuer in full upon demand, Banks shall reimburse such Letter of Credit
Issuer in accordance with each Banks' Commitment Percentage for amounts due and
unpaid from Borrowers as set forth hereinbelow; provided, further, however, that
no such reimbursement made by Banks shall discharge Borrowers' joint and several
obligations to reimburse Letter of Credit Issuer. All reimbursement amounts
payable by any Bank under this Section 3.1(b) shall include interest thereon at
the Federal Funds Rate, from the date of the payment of such amounts by any
Letter of Credit Issuer to the date of reimbursement by such Bank. No Bank shall
be liable for the performance or nonperformance of the obligations of any other
Bank under this paragraph. The reimbursement obligations of Banks under this
paragraph shall continue after the Termination Date and shall survive
termination of this Agreement and the other Loan Papers. For purposes of this
Section 3.1(b), the term Letter or Letters of Credit shall not include
Supplemental Letters of Credit.
(c) No Bank will be obligated to lend to any Borrower or incur
Letter of Credit Exposure under this Section 3.1, and no Borrower shall be
entitled to borrow hereunder or obtain Letters of Credit hereunder (i) during
the existence of any Borrowing Base Deficiency, or (ii) in an amount which would
cause a Borrowing Base Deficiency. Nothing in this Section 3.1(c) shall be
deemed to limit any Bank's obligation to (A) reimburse any Letter of Credit
Issuer with respect to such Bank's participation in Letters of Credit issued by
such Letter of Credit Issuer as provided in Section 3.1(b), or (B) fund any
Refunding Borrowing provided that Borrowers are in compliance with Section 5.4.
For purposes of this Section 3.1(c), the term Letter or Letters of Credit shall
not include Supplemental Letters of Credit.
(d) In addition to Letters of Credit issued pursuant to
Section 3.1(b), upon request from any Borrower from time to time, BankBoston
may, in its sole discretion and without any obligation to do so, issue letters
of credit for the account of Borrowers pursuant to this Section 3.1(d) which
shall, except as expressly provided to the contrary in this Section 3.1(d) or
otherwise herein, be considered "Letters of Credit" for all purposes of this
Agreement. Any Letter of Credit issued pursuant to this Section 3.1(d) is
referred to herein as a "Supplemental Letter of Credit". Notwithstanding
anything contained herein to the contrary, Supplemental Letters of Credit shall
be subject to the following terms and conditions:
(i) the aggregate Supplemental Letter of Credit Exposure
outstanding with respect to all Supplemental Letters of Credit shall
not exceed $5,000,000 at any time;
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(ii) Supplemental Letters of Credit shall be issued for the
sole account and risk of BankBoston, and no other Bank shall be deemed
to have any participation interest in such Supplemental Letters of
Credit or related Supplemental Letter of Credit Exposure or any
reimbursement obligation or other credit risk related thereto;
(iii) any Request for Letter of Credit issued by a Borrower
with respect to any Supplemental Letter of Credit shall clearly state
that the requested Letter of Credit is to be a Supplemental Letter of
Credit, and, simultaneously with the issuance of any Supplemental
Letter of Credit, BankBoston shall deliver written notice to each other
Bank of the issuance thereof and specifying the amount and terms of
such Supplemental Letter of Credit and that such Letter of Credit is a
Supplemental Letter of Credit for purposes of this Agreement;
(iv) BankBoston shall be entitled to receive and retain, for
its sole account, all Supplemental Letter of Credit Fees payable in
respect of any Supplemental Letter of Credit;
(v) Supplemental Letter of Credit Exposure with respect to
Supplemental Letters of Credit will not be deemed to be outstanding
solely for purposes of (A) determining the amounts available to be
borrowed pursuant to Section 3.1(a), (B) the limitations on the amounts
of Letters of Credit issuable to Borrowers pursuant to Section 3.1(b),
(C) the existence of any Borrowing Base Deficiency, or (D) determining
the Availability hereunder; and
(vi) Supplemental Letters of Credit shall only be Hedge
Transaction Letters of Credit.
In connection with the issuance of Supplemental Letters of Credit
hereunder, Borrowers shall pay to BankBoston for its own account and in respect
of such Supplemental Letters of Credit (a) the applicable Supplemental Letter of
Credit Fee in accordance with Section 3.14, and (b) at the time of issuance of
each Supplemental Letter of Credit, the applicable Letter of Credit Fronting
Fee. BankBoston shall be entitled to receive and retain all such fees for its
sole account. Any (y) material amendment or modification, or (z) renewal or
extension of any Supplemental Letter of Credit shall be deemed to be the
issuance of a new Supplemental Letter of Credit for purposes of this Section
3.1(d). Notwithstanding anything to the contrary contained herein, Borrowers
shall pay to BankBoston in connection with any amendment or modification of any
nature, BankBoston's usual and customary fees for amendments or modifications
to, and processing of, Letters of Credit.
SECTION 3.2. Method of Borrowing. (a) In order to request any Borrowing
hereunder, any Borrower shall hand deliver, telex or telecopy to Administrative
Agent a duly completed Request for Borrowing (herein so called) (i) prior to
11:00 a.m. (Boston, Massachusetts time) on the Borrowing Date specified for a
proposed Adjusted Base Rate Borrowing, and (ii) prior to 1:00 p.m. (Boston,
Massachusetts time) at least three (3) Eurodollar Business Days before the
Borrowing Date of a proposed Eurodollar Borrowing. Each such Request for
Borrowing shall be substantially in the form of Exhibit G hereto, shall be
binding upon each Borrower, and shall specify:
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(i) whether such Borrowing is to be an Adjusted Base Rate
Borrowing or a Eurodollar Borrowing;
(ii) the Borrowing Date of such Borrowing, which shall be a
Domestic Business Day in the case of an Adjusted Base Rate
Borrowing, or a Eurodollar Business Day in the case of a
Eurodollar Borrowing;
(iii) the aggregate amount of such Borrowing; and
(iv) in the case of a Eurodollar Borrowing, the duration of
the Interest Period applicable thereto, subject to the
provisions of the definition of Interest Period.
(b) Upon receipt of a Request for Borrowing, Administrative
Agent shall promptly notify each Bank of the contents thereof and the amount of
the Borrowing to be loaned by such Bank pursuant thereto, and such Request for
Borrowing shall not thereafter be revocable by Borrowers.
(c) Not later than 1:00 p.m. (Boston, Massachusetts time) on
the date of each Borrowing, each Bank shall make available its Commitment
Percentage of such Borrowing, in Federal or other funds immediately available in
Boston, Massachusetts, to Administrative Agent at its address set forth on
Schedule 1 hereto. Unless Administrative Agent determines that any applicable
condition specified in Section 7.2 has not been satisfied, Administrative Agent
will make the funds so received from Banks available to Borrowers at
Administrative Agent's aforesaid address by depositing such funds to the joint
account of Borrowers at Administrative Agent designated by Borrowers for such
purpose.
SECTION 3.3. Method of Requesting Letters of Credit. (a) In order to
request any Letter of Credit hereunder, any Borrower shall hand deliver, telex
or telecopy to Administrative Agent a duly completed Request for Letter of
Credit (herein so called) prior to 1:00 p.m. (Boston, Massachusetts time) at
least three (3) Domestic Business Days before the date specified for issuance of
such Letter of Credit. Each Request for a Letter of Credit shall be
substantially in the form of Exhibit H hereto, shall be accompanied by the
applicable Letter of Credit Issuer's duly completed and executed Letter of
Credit Application and agreement, shall be binding on each Borrower, and shall
specify:
(i) the requested date for issuance of such Letter of Credit;
(ii) the terms of such requested Letter of Credit, including
the name and address of the beneficiary, the stated amount,
the expiration date and the conditions under which drafts
under such Letter of Credit are to be available; and
(iii) the purpose of such Letter of Credit.
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(b) Upon receipt of a Request for Letter of Credit,
Administrative Agent shall promptly notify each Bank and the proposed Letter of
Credit Issuer of the contents thereof, including the amount of the requested
Letter of Credit, and such Request for Letter of Credit shall not thereafter be
revocable by Borrowers.
(c) No later than 1:00 p.m. (Boston, Massachusetts time) on
the date each Letter of Credit is requested, unless Administrative Agent or the
applicable Letter of Credit Issuer determines that any applicable condition
precedent set forth in Section 7.2 has not been satisfied, the applicable Letter
of Credit Issuer will issue and deliver such Letter of Credit pursuant to the
instructions of the requesting Borrower.
SECTION 3.4. Notes. Each Bank's Commitment Percentage of the Loan shall
be evidenced by a single Note payable to the order of such Bank in an amount
equal to such Bank's Commitment.
SECTION 3.5. Interest Rates; Payments. (a) The principal amount of the
Loan outstanding from day to day which is the subject of an Adjusted Base Rate
Tranche shall bear interest at a rate per annum equal to the Adjusted Base Rate;
provided that in no event shall the rate charged hereunder or under the Notes
exceed the Maximum Lawful Rate. Interest on any portion of the principal of the
Loan subject to an Adjusted Base Rate Tranche shall be payable as it accrues on
the last day of each Fiscal Quarter.
(b) The principal amount of the Loan outstanding from day to
day which is the subject of a Eurodollar Tranche shall bear interest for the
Interest Period applicable thereto at a rate per annum equal to the sum of (i)
the Adjusted LIBOR Rate, plus (ii) the Applicable Margin; provided that in no
event shall the rate charged hereunder or under the Notes exceed the Maximum
Lawful Rate. Interest on any portion of the principal of the Loan subject to a
Eurodollar Tranche having an Interest Period of one (1), two (2) or three (3)
months shall be payable on the last day of the Interest Period applicable
thereto. Interest on any portion of the principal of the Loan subject to a
Eurodollar Tranche having an Interest Period of more than three (3) months shall
be payable on the last day of the Interest Period applicable thereto and on the
last day of each three (3) month period during such Interest Period.
(c) So long as no Default or Event of Default shall be
continuing, subject to the provisions of this Section 3.5, Borrowers shall have
the option of having all or any portion of the principal outstanding under the
Loan borrowed by it be the subject of an Adjusted Base Rate Tranche or one (1)
or more Eurodollar Tranches, which shall bear interest at rates based upon the
Adjusted Base Rate and the Adjusted LIBOR Rate, respectively, and subject to the
provisions of Sections 3.5(a) and (b) (each such option is referred to herein as
an "Interest Option"); provided, that each Tranche shall be in a minimum amount
of $500,000 and shall be in an amount which is an integral multiple of $100,000.
Each change in an Interest Option made pursuant to this Section 3.5(c) shall be
deemed both a payment in full of the portion of the principal of the Loan which
was the subject of the Adjusted Base Rate Tranche or Eurodollar Tranche from
which such change was made
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and a Borrowing (notwithstanding that the unpaid principal amount of the Loan is
not changed thereby) of the portion of the principal of the Loan which is the
subject of the Adjusted Base Rate Tranche or Eurodollar Tranche into which such
change was made. Prior to the termination of each Interest Period with respect
to each Eurodollar Tranche, Borrowers shall give written notice (a "Rollover
Notice") in the form of Exhibit I attached hereto to Administrative Agent of the
Interest Option which shall be applicable to such portion of the principal of
the Loan upon the expiration of such Interest Period. Such Rollover Notice shall
be given to Administrative Agent at least one (1) Domestic Business Day, in the
case of an Adjusted Base Rate Tranche selection and at least three (3)
Eurodollar Business Days, in the case of a Eurodollar Tranche selection, prior
to the termination of the Interest Period then expiring. If Borrowers shall
specify a Eurodollar Tranche, such Rollover Notice shall also specify the length
of the succeeding Interest Period (subject to the provisions of the definitions
of such term) selected by Borrower. Each Rollover Notice shall be irrevocable
and effective upon notification thereof to Administrative Agent. If the required
Rollover Notice shall not have been timely received by Administrative Agent,
Borrowers shall be deemed to have elected that the principal of the Loan subject
to the Interest Period then expiring be the subject of an Adjusted Base Rate
Tranche upon the expiration of such Interest Period and Borrowers will be deemed
to have given Administrative Agent notice of such election. Subject to the
limitations set forth in this Section 3.5(c) on the minimum amount of Eurodollar
Tranches, Borrowers shall have the right to convert all or part of the Adjusted
Base Rate Tranche to a Eurodollar Tranche by giving Administrative Agent a
Rollover Notice of such election at least three (3) Eurodollar Business Days
prior to the date on which Borrowers elect to make such conversion (a
"Conversion Date"). The Conversion Date selected by Borrowers shall be a
Eurodollar Business Day. Notwithstanding anything in this Section 3.5 to the
contrary, no portion of the principal of the Loan which is the subject of an
Adjusted Base Rate Tranche may be converted to a Eurodollar Tranche and no
Eurodollar Tranche may be continued as such when any Default or Event of Default
has occurred and is continuing, but each such Tranche shall be automatically
converted to an Adjusted Base Rate Tranche on the last day of each applicable
Interest Period. In no event shall more than five (5) Interest Options be in
effect with respect to the Loan at any time.
(d) Notwithstanding anything to the contrary set forth in
Section 3.5(a) or (b), all overdue principal of and, to the extent permitted by
Law, overdue interest on the Loan and all other Obligations which are not paid
in full when due (whether at stated maturity, by acceleration or otherwise), for
the period from and including the due date thereof to but excluding the date the
same is paid in full, shall bear interest at a rate per annum equal to the
lesser of (a) the Default Rate, and (b) the Maximum Lawful Rate. Interest
payable as provided in this Section 3.5(d) shall be payable from time to time on
demand.
(e) Administrative Agent shall determine each interest rate
applicable to the Loan in accordance with the terms hereof. Administrative Agent
shall promptly notify Borrowers and Banks by telex, telecopy or cable of each
rate of interest so determined, and its determination thereof shall be
conclusive in the absence of manifest error.
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(f) Notwithstanding the foregoing, if at any time the rate of
interest calculated with reference to the Adjusted Base Rate or the LIBOR Rate
hereunder (the "contract rate") is limited to the Maximum Lawful Rate, any
subsequent reductions in the contract rate shall not reduce the rate of interest
on the Loan below the Maximum Lawful Rate until the total amount of interest
accrued equals the amount of interest which would have accrued if the contract
rate had at all times been in effect. In the event that at maturity (stated or
by acceleration), or at final payment of any Note, the total amount of interest
paid or accrued on such Note is less than the amount of interest which would
have accrued if the contract rate had at all times been in effect with respect
thereto, then at such time, to the extent permitted by Law, Borrowers shall pay
to the holder of such Note an amount equal to the difference between (i) the
lesser of the amount of interest which would have accrued if the contract rate
had at all times been in effect and the amount of interest which would have
accrued if the Maximum Lawful Rate had at all times been in effect, and (ii) the
amount of interest actually paid on such Note.
(g) Interest payable on the principal of any portion of the
Loan subject to a Eurodollar Tranche shall be computed based on the number of
actual days elapsed assuming that each calendar year consisted of 360 days.
Interest payable on the principal of any portion of the Loan subject to an
Adjusted Base Rate Tranche shall be computed based on the number of actual days
elapsed and based on the actual number of days in the calendar year for which
accrued interest is being computed.
SECTION 3.6. Mandatory Repayments. (a) On the last day of each Fiscal
Quarter after the Revolver Conversion Date (commencing with the last day of the
Fiscal Quarter immediately following the Revolver Conversion Date), Borrowers
shall make a mandatory prepayment of the principal of the Loan then outstanding
in an amount equal to one sixteenth (1/16th) of the aggregate principal balance
of the Loan outstanding on the Revolver Conversion Date.
(b) If, on any date, the aggregate outstanding principal
balance of the Loan on such date shall exceed the Total Commitment (after giving
effect to any mandatory or voluntary reduction of the Total Commitment on such
date pursuant to Section 3.9 or 3.11), then Borrowers shall immediately repay,
without premium or penalty, the principal of the Loan in an amount equal to such
excess, along with accrued unpaid interest on the amount so repaid to the date
of such repayment.
SECTION 3.7. Mandatory Prepayment Following Certain Events. Immediately
upon the consummation by any Credit Party of any Asset Disposition, Borrowers
shall (a) make a mandatory prepayment on the Loan in an amount required pursuant
to Section 5.5 to eliminate any Borrowing Base Deficiency, and (b) make a
mandatory prepayment on the Loan (in addition to the prepayment required by
clause (a) preceding), in an amount equal to the lesser of (i) the amount
necessary to cause the Availability to be $10,000,000, or (ii) the remainder of
(A) the Borrowing Base value of the properties which were the subject of such
Asset Disposition, minus (B) the mandatory prepayment required by clause (a)
preceding. Notwithstanding the foregoing, in the event a Default or Event of
Default is in existence on the date of the consummation of any Asset
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Disposition, all Net Cash Proceeds from any such Asset Disposition shall be
applied as a mandatory prepayment on the Loan. For purposes of this Section 3.7,
the Borrowing Base value of the Borrowing Base Property or Borrowing Base
Properties sold or otherwise disposed of pursuant to such Asset Disposition
shall be the Borrowing Base value of such Borrowing Base Property as proposed by
Administrative Agent and approved by Required Banks.
SECTION 3.8. Voluntary Prepayments. Borrower may, subject to Section
4.3 and the other provisions of this Agreement, upon (A) one (1) Domestic
Business Day advance notice to Administrative Agent with respect to Adjusted
Base Rate Borrowings, and (B) three (3) Domestic Business Days advance notice to
Administrative Agent with respect to Eurodollar Borrowings, prepay the principal
of the Loan in whole or in part. Any partial prepayment shall be in a minimum
amount of $500,000 and shall be in an integral multiple of $100,000 and (i) to
the extent made after the Revolver Conversion Date (a) may not be reborrowed
hereunder, and (b) shall be applied to the mandatory prepayments required by
Section 3.6(a) in the inverse order of maturity, and (ii) to the extent made
with respect to any Eurodollar Tranche, may be made only on the last day of the
Interest Period applicable thereto.
SECTION 3.9. Mandatory Reduction of Commitments. The Total Commitment
shall reduce (and the Commitments of each Bank shall reduce ratably) on the
Revolver Conversion Date to an amount equal to the principal balance of the Loan
outstanding on the Revolver Conversion Date. The Total Commitment shall reduce
after the Revolver Conversion Date (and the Commitments of each Bank shall
reduce ratably) (a) on the last day of each Fiscal Quarter in an amount equal to
the mandatory prepayment required to be made on such date pursuant to Section
3.6(a), (b) on each date on which a mandatory prepayment is required to be made
on such date pursuant to Section 3.7, by the amount of such mandatory
prepayment, (c) on each date on which a mandatory prepayment is required to be
made pursuant to Section 5.4, by the amount of such required mandatory
prepayment, (d) on the date of each voluntary prepayment made pursuant to
Section 3.8, by the amount of such voluntary prepayment, and (e) on the date of
each voluntary prepayment made pursuant to Section 3.11, by the amount of such
voluntary prepayment.
SECTION 3.10. Mandatory Termination of Commitments; Termination Date
and Maturity. The Total Commitment (and the Commitment of each Bank) shall
terminate on the Termination Date. The outstanding principal balance of the
Loan, all accrued but unpaid interest thereon and all other Obligations shall be
due and payable in full on the Termination Date.
SECTION 3.11. Voluntary Reduction of Total Commitment. Borrowers may,
by notice to Administrative Agent ten (10) Domestic Business Days prior to the
effective date of any such reduction, permanently reduce or terminate the Total
Commitment (and thereby permanently reduce the Commitment of each Bank ratably
in accordance with such Bank's Commitment Percentage); provided, that any
reduction shall be in amounts not less than $500,000 or any larger multiple of
$100,000. On the effective date of any such reduction in the Total Commitment,
Borrowers shall, to the extent required as a result of such reduction, make a
principal payment on the Loan (together with accrued interest thereon) in an
amount sufficient to cause the Outstanding Credit to be equal
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to or less than the Total Commitment as thereby reduced (and Administrative
Agent shall distribute to each Bank in like funds that portion of any such
payment as is required to cause the principal balance of the Loan held by such
Bank to be not greater than its Commitment as thereby reduced). Notwithstanding
the foregoing, Borrowers shall not be permitted to voluntarily reduce the Total
Commitment (a) if, as a result of such reduction, Borrowers would be required to
prepay all or any portion of the principal amount of any Eurodollar Tranche
prior to the last day of the Interest Period applicable thereto, or (b) to an
amount less than the aggregate Letter of Credit Exposure of all Banks.
SECTION 3.12. Application of Payments. Each repayment pursuant to
Sections 3.6, 3.7, 3.8, 3.9, 3.11 and 5.4 shall be made together with accrued
interest to the date of payment, and shall be applied to payment of the Loan in
accordance with Section 4.2 and the other provisions of this Agreement.
SECTION 3.13. Commitment Fee. On the Revolver Conversion Date and on
the last day of each Fiscal Quarter prior to the Revolver Conversion Date,
commencing on March 31, 2000, and, in the event the Commitments are terminated
in their entirety prior to the Revolver Conversion Date, on the date of such
termination, Borrowers shall pay to Administrative Agent, for the ratable
benefit of each Bank based on each Bank's Commitment Percentage, a commitment
fee equal to the Commitment Fee Percentage for the applicable period (computed
on the basis of actual days elapsed and as if each calendar year consisted of
360 days) of the average daily Availability for the Fiscal Quarter (or portion
thereof) ending on such date.
SECTION 3.14. Letter of Credit Fees. On the Revolver Conversion Date,
and on the last day of each Fiscal Quarter prior to the Revolver Conversion
Date, commencing on March 31, 2000, and, in the event the Commitments are
terminated in their entirety prior to the Revolver Conversion Date, on the date
of such termination, Borrowers shall pay to Administrative Agent or BankBoston
(as applicable) (to be distributed by Administrative Agent (or retained by
BankBoston, as applicable) in accordance with Sections 3.1(b) and 3.1(d)) the
Letter of Credit Fee and Supplemental Letter of Credit Fee which accrued during
such Fiscal Quarter (or portion thereof), computed on the basis of actual days
elapsed and as if each calendar year consisted of 360 days.
SECTION 3.15. Administrative Agency and Other Fees. Borrowers shall pay
to Administrative Agent and its Affiliates such fees and other amounts as
Borrowers shall be required to pay to Administrative Agent and its Affiliates
from time to time pursuant to any separate agreement between any Borrower,
Administrative Agent, Book Manager, Sole Lead Arranger or any of their
Affiliates setting forth the compensation to be paid to Administrative Agent,
Book Manager, Sole Lead Arranger and their Affiliates in consideration for
acting as Administrative Agent, Book Manager and Sole Lead Arranger hereunder
and for providing other services in connection with the credit facilities
provided pursuant hereto. Such fees and other amounts shall be retained by the
Administrative Agent and its Affiliates, and no Bank (other than Administrative
Agent) shall have any interest therein. Administrative Agent may disburse any
fees paid to Administrative Agent and its Affiliates pursuant to this Section
3.15 in any manner Administrative Agent desires in its sole discretion.
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ARTICLE IV
GENERAL PROVISIONS
SECTION 4.1. Delivery and Endorsement of Notes. Simultaneously with the
execution of this Agreement, Administrative Agent shall deliver to each Bank the
Note payable to such Bank. Each Bank may endorse (and prior to any transfer of
its Note shall endorse) on the schedule attached to its Note appropriate
notations to evidence the date and amount of each advance of funds made by it in
respect of any Borrowing, the Interest Period applicable thereto, and the date
and amount of each payment of principal received by such Bank with respect to
the Loan; provided that the failure by any Bank to so endorse its Note shall not
affect the joint and several liability of Borrowers for the repayment of all
amounts outstanding under such Notes together with interest thereon. Each Bank
is hereby irrevocably authorized by each Borrower to endorse its Note and to
attach to and make a part of any Note a continuation of any such schedule as
required.
SECTION 4.2. General Provisions as to Payments. (a) Borrowers shall
make each payment of principal of, and interest on, the Loan and all fees
payable by Borrowers hereunder not later than 1:00 p.m. (Boston, Massachusetts
time) on the date when due, in Federal or other funds immediately available in
Boston, Massachusetts, to Administrative Agent at its address set forth on
Schedule 1 hereto. Administrative Agent will promptly (and if such payment is
received by Administrative Agent by 11:00 a.m. (Boston, Massachusetts time), and
otherwise if reasonably possible, on the same Domestic Business Day) distribute
to each Bank its Commitment Percentage of each such payment received by
Administrative Agent for the account of Banks. Whenever any payment of principal
of, or interest on, that portion of the Loan subject to an Adjusted Base Rate
Tranche or of fees shall be due on a day which is not a Domestic Business Day,
the date for payment thereof shall be extended to the next succeeding Domestic
Business Day (subject to the definition of Interest Period). Whenever any
payment of principal of, or interest on, that portion of the Loan subject to a
Eurodollar Tranche shall be due on a day which is not a Eurodollar Business Day,
the date for payment thereof shall be extended to the next succeeding Eurodollar
Business Day (subject to the definition of Interest Period). If the date for any
payment of principal is extended by operation of Law or otherwise, interest
thereon shall be payable for such extended time. Each Borrower hereby authorizes
Administrative Agent to charge from time to time against such Borrower's account
or accounts with Administrative Agent any amount then due by Borrowers.
(b) Prior to the occurrence of an Event of Default, all
principal payments received by Banks with respect to the Loan shall be applied
first to Eurodollar Tranches outstanding under the Loan with Interest Periods
ending on the date of such payment, then to the Adjusted Base Rate Tranches
outstanding under the Loan, and then to Eurodollar Tranches outstanding under
the Loan next maturing until such principal payment is fully applied, with such
adjustments in such order of payment as Administrative Agent shall specify in
order that each Bank receives its ratable share of each such payment.
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(c) After the occurrence of an Event of Default, all amounts
collected or received by Administrative Agent or any Bank from any Credit Party
or in respect of any of the assets of any Credit Party shall be applied first to
the payment of all proper costs incurred by Administrative Agent in connection
with the collection thereof (including reasonable expenses and disbursements of
counsel to Administrative Agent), second to the payment of all proper costs
incurred by Banks in connection with the collection thereof (including
reasonable expenses and disbursements of counsel to Banks), third to the
reimbursement of any advances made by Banks to effect performance of any
unperformed covenants of any Credit Party under any of the Loan Papers, fourth
to the payment of any unpaid fees required pursuant to Section 3.15, fifth to
the payment of any unpaid fees required pursuant to Sections 3.1(b), 3.13 and
3.14, sixth to each Bank in accordance with its Commitment Percentage for
application to the portion of the outstanding balance of the Loan held by such
Bank (with any such payment being applied first to accrued but unpaid interest
and then to principal). Notwithstanding the foregoing, BankBoston may apply any
payment received by it pursuant to the "sixth" clause of this Section 4.2(c) to
satisfy any unsatisfied reimbursement obligation of Borrowers with respect to
Supplemental Letters of Credit or to establish reserves required by Section
3.1(b) with respect to Supplemental Letters of Credit (and any reserves so
established shall be held for the sole and exclusive benefit of BankBoston for
satisfaction of Supplemental Letter of Credit Exposure until all Supplemental
Letters of Credit have been canceled or expired in accordance with their terms
and all Supplemental Letter of Credit Exposure has been satisfied).
SECTION 4.3. Funding Losses. If Borrowers make any payment of principal
subject to a Eurodollar Tranche (whether pursuant to Section 3.6, 3.7, 3.8, 3.9,
3.10, 3.11 or 5.4 or Article XII or XIV and whether as a voluntary or mandatory
prepayment or otherwise) on any day other than the last day of an Interest
Period applicable thereto, or if Borrowers fail to borrow any Eurodollar
Borrowing, after notice has been given to any Bank in accordance with Section
3.2, Borrower shall reimburse each Bank on demand for any resulting loss or
expense incurred by it, including (without limitation) any loss incurred in
obtaining, liquidating or employing deposits from third parties, or any loss
arising from the re-employment of funds at rates lower than the cost to such
Bank of such funds and related costs, which in the case of the payment or
prepayment prior to the end of the Interest Period for any Eurodollar Tranche,
shall include the amount, if any, by which (a) the interest which such Bank
would have received absent such payment or prepayment for the applicable
Interest Period exceeds (b) the interest which such Bank would receive if its
Commitment Percentage of the amount of such Eurodollar Borrowing were deposited,
loaned, or placed by such Bank in the interbank Eurodollar market on the date of
such payment or prepayment for the remainder of the applicable Interest Period.
Such Bank shall promptly deliver to Borrowers and Administrative Agent a
certificate as to the amount of such loss or expense, which certificate shall be
conclusive in the absence of manifest error.
SECTION 4.4. Foreign Lenders, Participants, and Assignees. Each Bank,
Participant (by accepting a participation interest under this Agreement), and
Assignee (by executing an Assignment and Assumption Agreement) that is not
organized under the Laws of the United States of America or one of its states
(a) represents to Administrative Agent and Borrowers that (i) no
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Taxes are required to be withheld by Administrative Agent or Borrowers with
respect to any payments to be made to it in respect of the Obligations, and (ii)
it has furnished to Administrative Agent and Borrowers two (2) duly completed
copies of either U.S. Internal Revenue Service Form 4224, Form 1001, Form W-8,
or other form acceptable to Administrative Agent that entitles it to exemption
from U.S. federal withholding Tax on all interest payments under the Loan
Papers, and (b) covenants to (i) provide Administrative Agent and Borrowers a
new Form 4224, Form 1001, Form W-8, or other form acceptable to Administrative
Agent upon the expiration or obsolescence of any previously delivered form
according to applicable Laws and regulations, duly executed and completed by it,
and (ii) comply from time to time with all applicable Laws and regulations with
regard to the withholding Tax exemption. If any of the foregoing is not true or
the applicable forms are not provided, then Borrowers and Administrative Agent
(but without duplication) may deduct and withhold from interest payments under
the Loan Papers any United States federal income Tax at the maximum rate under
the Code.
SECTION 4.5. Non-Receipt of Funds by Administrative Agent. Unless
Administrative Agent shall have been notified by a Bank or Borrowers ("Payor")
prior to the date on which such Bank is to make payment to Administrative Agent
hereunder or Borrowers are to make a payment to Administrative Agent for the
account of one or more Banks, as the case may be (such payment being herein
called the "Required Payment"), which notice shall be effective upon receipt,
that Payor does not intend to make the Required Payment to Administrative Agent,
Administrative Agent may assume that the Required Payment has been made and may,
in reliance upon such assumption (but shall not be required to), make the amount
thereof available to the intended recipient on such date and, if Payor has not
in fact made the Required Payment to Administrative Agent: (a) the recipient of
such payment shall, on demand, pay to Administrative Agent the amount made
available to it together with interest thereon in respect of the period
commencing on the date such amount was so made available by Administrative Agent
until the date Administrative Agent recovers such amount at a rate per annum
equal to the Adjusted Base Rate then in effect for such period, and (b)
Administrative Agent shall be entitled to offset against any and all sums to be
paid to such recipient, the amount calculated in accordance with the foregoing
clause (a).
SECTION 4.6. Joint and Several Liability; Rights of Contribution. (a)
Each Borrower states and acknowledges that: (i) pursuant to this Agreement,
Borrowers desire to utilize their borrowing potential on a consolidated basis to
the same extent possible if they were merged into a single corporate entity;
(ii) each Borrower has determined that it will benefit specifically and
materially from the advances of credit contemplated by this Agreement; (iii) it
is both a condition precedent to the obligations of Agents and Banks hereunder
and a desire of each Borrower that each Borrower execute and deliver this
Agreement; and (iv) each Borrower has requested and bargained for the structure
and terms of and security for the advances contemplated by this Agreement.
(b) Each Borrower hereby irrevocably and unconditionally: (i)
agrees that it is jointly and severally liable to Agents and Banks for the full
and prompt payment and performance of the obligations of each Borrower under
this Agreement and each other Loan Paper that may
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specify that particular Borrower is responsible for a given payment or
performance; (ii) agrees to fully and promptly perform all of its obligations
hereunder with respect to each advance of credit hereunder as if such advance
had been made directly to it; and (iii) agrees as a primary obligation to
indemnify each Agent and each Bank, on demand, for and against any loss incurred
by any Agent or any Bank as a result of any of the obligations of any Borrower
(the "subject Borrower") being or becoming void, voidable, unenforceable or
ineffective for any reason whatsoever, whether or not known to the subject
Borrower or any Person, the amount of such loss being the amount which such
Agent or Bank would otherwise have been entitled to recover from Borrowers.
(c) It is the intent of each Borrower that the indebtedness,
obligations and liabilities hereunder of no one of them be subject to challenge
on any basis related to any federal or state Law dealing with fraudulent
conveyances or any other Law related to transfers for less than fair or
reasonably equivalent value. Accordingly, as of the date hereof, the liability
of each Borrower under this Section 4.6 together with all of its other
liabilities to all Persons as of the date hereof and as of any other date on
which a transfer is deemed to occur by virtue of this Agreement, calculated in
amount sufficient to pay its probable net liabilities on its existing
indebtedness as the same become absolute and matured ("Dated Liabilities"), is
and is to be, less than the amount of the aggregate of a fair valuation of its
property as of such corresponding date ("Dated Assets"). To this end, each
Borrower under this Section 4.6: (i) grants to and recognizes in each other
Borrower ratably, rights of subrogation and contribution in the amount, if any,
by which the Dated Assets of such Borrower, but for the aggregate of subrogation
and contribution in its favor recognized herein, would exceed the Dated
Liabilities of such Borrower or, as the case may be, (ii) acknowledges receipt
of and recognizes its right to subrogation and contribution ratably from the
other Borrowers in the amount, if any, by which the Dated Liabilities of such
Borrower, but for the aggregate of subrogation and contribution in its favor
recognized herein, would exceed the Dated Assets of such Borrower under this
Section 4.6. In recognizing the value of the Dated Assets and the Dated
Liabilities, it is understood that each Borrower will recognize, to at least the
same extent of their aggregate recognition of liabilities hereunder, their
rights to subrogation and contribution hereunder. It is a material objective of
this Section 4.6 that each Borrower recognizes rights to subrogation and
contribution rather than be deemed to be insolvent (or in contemplation thereof)
by reason of an arbitrary interpretation of its joint and several obligations
hereunder.
(d) Each Borrower agrees and acknowledges that the present
structure of the credit facilities detailed in this Agreement is based in part
upon the financial and other information presently known to Agents and Banks
regarding each Borrower, the corporate and other organizational structure of
Borrowers, and the present financial condition of each Borrower. Upon or after
the occurrence of an Event of Default and so long as it is continuing, each
Borrower hereby agrees that Required Banks shall have the right, in their sole
credit judgment, to require that any or all of the following changes be made to
these credit facilities: (i) restrict loans and advances between Borrowers, (ii)
separate the Loans into separate loans to each Borrower as shall be determined
by Required Banks, and (iii) establish such other procedures as shall be
reasonably deemed by Required Banks to be useful in tracking where Loans are
made under this Agreement and the source of payments received by Banks on such
Loans.
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ARTICLE V
BORROWING BASE
SECTION 5.1. Reserve Reports; Proposed Borrowing Base. As soon as
available and in any event by February 28 and August 31 of each year commencing
February 28, 2000, Borrowers shall deliver to each Bank a Reserve Report
prepared as of the immediately preceding December 31 and June 30, respectively.
Simultaneously with the delivery to Administrative Agent and each Bank of each
Reserve Report, Borrowers shall notify each Bank of the Borrowing Base which
Borrowers request become effective for the period commencing on the next
Determination Date.
SECTION 5.2. Periodic Determinations of the Borrowing Base; Procedures
and Standards. Based in part on the Reserve Reports made available to Banks
pursuant to Section 5.1, Banks shall redetermine the Borrowing Base on or prior
to the next Determination Date (or such date promptly thereafter as reasonably
possible based on the engineering and other information available to Banks). Any
Borrowing Base which becomes effective as a result of any Determination of the
Borrowing Base shall be subject to the following restrictions: (a) such
Borrowing Base shall not exceed the Borrowing Base requested by Borrowers
pursuant to Section 5.1 or 5.3 (as applicable), (b) such Borrowing Base shall
not exceed the Total Commitment then in effect, (c) to the extent such Borrowing
Base represents an increase from the Borrowing Base in effect prior to such
Determination, such Borrowing Base shall be approved by all Banks, and (d) any
Borrowing Base which represents a decrease in the Borrowing Base in effect prior
to such Determination, or a reaffirmation of such prior Borrowing Base, shall be
proposed by Administrative Agent and require approval of Required Banks. Each
Determination shall be made by Banks in accordance with its normal and customary
procedures for evaluating oil and gas reserves and other related assets as such
exist at that particular time and will otherwise be in their sole discretion.
Administrative Agent shall propose such redetermined Borrowing Base to Banks
within thirty (30) days following receipt by Administrative Agent and Banks of a
Reserve Report. After having received notice of such proposal by Administrative
Agent, Required Banks (or all Banks in the event of a proposed increase) shall
have fifteen (15) days to agree or disagree with such proposal. If at the end of
such fifteen (15) day period, Required Banks (or all Banks in the event of a
proposed increase) have not communicated their approval or disapproval, such
silence shall be deemed an approval and Administrative Agent's proposal shall be
the new Borrowing Base. If, however, Required Banks (or any Bank in the event of
a proposed increase) notify Administrative Agent within such fifteen (15) day
period of their disapproval, Required Banks (or all Banks in the event of a
proposed increase) shall, within a reasonable period of time, agree on a new
Borrowing Base. In taking the above actions, Administrative Agent and Banks
shall act in accordance with their normal and customary procedures for
evaluating oil and gas reserves and other related assets as such exist at that
particular time and will otherwise act in their sole discretion. It is further
acknowledged and agreed that each Bank may consider such other credit factors as
it deems appropriate which are consistent with its normal and customary
procedures for evaluating oil and gas reserves and shall have no obligation in
connection with any Determination to approve any increase from the Borrowing
Base in effect prior to such
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Determination. Promptly following any Determination of the Borrowing Base,
Administrative Agent shall notify Borrower of the amount of the Borrowing Base
as redetermined, which Borrowing Base shall be effective as of the date
specified in such notice, and shall remain in effect for all purposes of this
Agreement until the next Determination.
SECTION 5.3. Special Determinations of the Borrowing Base. In addition
to the redeterminations of the Borrowing Base pursuant to Section 5.2 and 5.4,
Borrowers and Required Banks may each request Special Determinations of the
Borrowing Base from time to time; provided, that (a) Borrowers may not request
more than two (2) Special Determinations in any Fiscal Year during the Revolving
Credit Period, and (b) Required Banks may not request more than one (1) Special
Determination in any Fiscal Year (including, without limitation, the Fiscal Year
ending December 31, 2000). In the event Required Banks request a Special
Determination, Administrative Agent shall promptly deliver notice of such
request to Borrowers and Borrowers shall, within twenty (20) days following the
date of such request, deliver to Banks a Reserve Report prepared as of the last
day of the calendar month preceding the date of such request. In the event
Borrowers request a Special Determination, Borrowers shall deliver written
notice of such request to Banks which shall include (i) a Reserve Report
prepared as of a date not more than thirty (30) days prior to the date of such
request, and (ii) the amount of the Borrowing Base requested by Borrowers and to
become effective on the Determination Date applicable to such Special
Determination. Upon receipt of such Reserve Report, Administrative Agent shall,
subject to approval of Required Banks, or all Banks in the event of a proposed
increase in the Borrowing Base, redetermine the Borrowing Base in accordance
with the procedure set forth in Section 5.2 which Borrowing Base shall become
effective on the Determination Date applicable to such Special Determination (or
as soon thereafter as Administrative Agent and Required Banks, or all Banks in
the event of a proposed increase in the Borrowing Base, approve such Borrowing
Base and provide notice thereof to Borrowers).
SECTION 5.4 Asset Disposition Adjustment. In addition to the
redeterminations of the Borrowing Base pursuant to Section 5.2 and 5.3, the
Borrowing Base shall reduce simultaneously with the completion by any Borrower
of any Asset Disposition by the Borrowing Base value of the Borrowing Base
Properties which are the subject of such Asset Disposition (which shall be the
Borrowing Base value assigned thereto by Administrative Agent and approved by
Required Banks).
SECTION 5.5. Borrowing Base Deficiency. If a Borrowing Base Deficiency
exists at any time (other than as a result of any adjustment to the Borrowing
Base pursuant to Section 5.4), Borrowers shall, within ten (10) days following
notice thereof from Administrative Agent provide written notice (the "Election
Notice") to Administrative Agent stating the action which Borrowers propose to
take to remedy such Borrowing Base Deficiency, and Borrowers shall, thereafter,
at their option, either (a) within ten (10) days following the delivery of such
Election Notice, make a prepayment of principal on the Loan in an amount
sufficient to eliminate such Borrowing Base Deficiency, and if such Borrowing
Base Deficiency cannot be eliminated by prepaying the Loan in full (as a result
of outstanding Letter of Credit Exposure), Borrowers shall also deposit with
Administrative Agent sufficient funds to be held by Administrative Agent as
security for outstanding Letter of Credit Exposure in the manner contemplated by
Section 3.1(b) as necessary to eliminate
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such Borrowing Base Deficiency; (b) within thirty (30) days following the
delivery of such Election Notice, submit additional oil and gas properties owned
by a Borrower and any of their Subsidiaries for consideration in connection with
the determination of the Borrowing Base which Administrative Agent deems
sufficient in its sole discretion to eliminate such Borrowing Base Deficiency;
or (c) eliminate such Borrowing Base Deficiency by making monthly mandatory
prepayments of principal on the Loan, each of which shall be in an amount, and
for a term (which shall not, in any event, exceed six (6) months) as determined
by Administrative Agent in its sole discretion to eliminate such Borrowing Base
Deficiency, and in connection therewith, Borrowers shall (i) dedicate a
sufficient amount (as determined by Administrative Agent in its sole discretion)
of the monthly cash flow from Borrowers' oil and gas properties to satisfy such
payments, and (ii) execute and deliver such collateral assignments and/or
security agreements in form and substance satisfactory to Administrative Agent
which it may, in its discretion, require with respect thereto. Notwithstanding
the foregoing, upon any redetermination of the Borrowing Base pursuant to
Section 5.4, which results in a Borrowing Base Deficiency (or increase in any
existing Borrowing Base Deficiency), Borrowers shall promptly, but in all events
within two (2) Domestic Business Days after such Borrowing Base Deficiency first
occurs, make a mandatory prepayment of principal on the Loan in an amount
sufficient to eliminate such Borrowing Base Deficiency (or increase in any
previously existing Borrowing Base Deficiency).
SECTION 5.6. Initial Borrowing Base. Notwithstanding anything contained
herein to the contrary, the Borrowing Base in effect during the period from the
Closing Date until the date of the first Determination after the Closing Date
shall be the Initial Borrowing Base.
ARTICLE VI
COLLATERAL
SECTION 6.1. Security. (a) The Obligations shall be secured by first
and prior Liens (subject only to Permitted Encumbrances) covering and
encumbering (i) the Mineral Interests owned by Borrowers specified by
Administrative Agent or Required Banks which shall in all events include not
less than the Mortgage Required Reserve Value of all Proved Mineral Interests
owned by Borrowers on and after the Closing Date, and (ii) one hundred percent
(100%) of the issued and outstanding Equity of each existing and future
Subsidiary of Parent. On the Closing Date, Borrowers shall deliver to
Administrative Agent, for the ratable benefit of each Bank (A) the Assignments
and Amendments to Mortgages, and the Mortgages in form and substance acceptable
to Administrative Agent and duly executed by Borrowers together with such other
assignments, conveyances, amendments, agreements and other writings, including,
without limitation, UCC-1 financing statements (each duly authorized and
executed) as Administrative Agent shall deem necessary or appropriate to grant,
evidence and perfect first and prior Liens in all Borrowing Base Properties and
other interests of Borrowers required by this Section 6.1(a), (B) the Parent
Pledge Agreement duly executed by Parent and each Subsidiary Pledge Agreement
duly executed by each applicable Subsidiary of Parent, (C) such UCC-1 financing
statements as Administrative Agent shall request to fully evidence and perfect
the Liens created by each such Parent Pledge Agreement and
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Subsidiary Pledge Agreement, and (D) the certificates (or other evidence
satisfactory to Administrative Agent) evidencing the issued and outstanding
Equity of each Subsidiary of Parent, duly endorsed or accompanied by appropriate
blank stock powers (as applicable).
(b) On the Closing Date and on or before each Determination
Date after the Closing Date and at such other times as Administrative Agent or
Required Banks shall request, Borrowers shall deliver to Administrative Agent,
for the ratable benefit of each Bank, Mortgages in form and substance acceptable
to Administrative Agent and duly executed by the appropriate Borrower, together
with such other assignments, conveyances, amendments, agreements and other
writings, including, without limitation, UCC-1 financing statements (each duly
authorized and executed) as Administrative Agent shall deem necessary or
appropriate to grant, evidence and perfect the Liens required by Section 6.1(a)
with respect to Mineral Interests then held by Borrowers which are not the
subject of existing first and prior, perfected Liens securing the Obligations as
required by Section 6.1(a).
(c) On the date of the creation or acquisition by Parent of
any Subsidiary, or on the date of creation or acquisition by any Subsidiary of
Parent of any Indirect Subsidiary, Parent or such Subsidiary of Parent (as
applicable) shall execute and deliver to Administrative Agent a Parent Pledge
Agreement or Subsidiary Pledge Agreement (as applicable) together with (i) all
certificates (or other evidence acceptable to Administrative Agent) evidencing
the issued and outstanding Equity of any such Subsidiary of every class which
shall be duly endorsed or accompanied by stock powers executed in blank (as
applicable), and (ii) such UCC-1 financing statements as Administrative Agent
shall deem necessary or appropriate to grant, evidence and perfect the Liens
required by Section 6.1(a)(ii) in the issued and outstanding Equity of each such
Subsidiary.
SECTION 6.2. Title Opinions. At any time any Borrower or any of their
Subsidiaries is required to execute and deliver Mortgages to Administrative
Agent pursuant to Section 6.1, such Borrower shall also deliver to
Administrative Agent such opinions of counsel (including, if so requested, title
opinions, and in each case addressed to Administrative Agent) or other evidence
of title as Administrative Agent shall deem necessary or appropriate to verify
(i) such Borrower's title to the Title Required Reserve Value of the Proved
Mineral Interests which are subject to such Mortgages, and (ii) the validity,
perfection and priority of the Liens created by such Mortgages.
SECTION 6.3. Guarantees. Payment and performance of the Obligations
shall be fully guaranteed by each existing or hereafter created or acquired
Subsidiary of Parent (other than Borrowers, Vista LLC and PEC) pursuant to a
Facility Guaranty. On the date of creation or acquisition by Parent of any
Subsidiary, or on the date of creation or acquisition by any Subsidiary of
Parent of any Indirect Subsidiary, Parent shall cause such Subsidiary to execute
and deliver to Administrative Agent a Facility Guaranty.
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ARTICLE VII
CONDITIONS TO BORROWINGS
SECTION 7.1. Conditions to Amendment and Restatement, Initial Borrowing
and Participation in Letter of Credit Exposure. The obligation of each Bank to
amend and restate the Existing Prize Credit Agreement in the form of this
Agreement and the obligation of each Bank to loan its Commitment Percentage of
the initial Borrowing hereunder, and the obligation of Administrative Agent to
issue (or cause another Bank to issue), the initial Letter of Credit issued
hereunder is subject to the satisfaction of each of the following conditions:
(a) Closing Deliveries. Administrative Agent shall have
received each of the following documents, instruments and agreements, each of
which shall be in form and substance and executed in such counterparts as shall
be acceptable to Administrative Agent and Required Banks and each of which
shall, unless otherwise indicated, be dated the Closing Date:
(i) a Note payable to the order of each Bank in the amount of
such Bank's Commitment, duly executed and delivered by each
Borrower;
(ii) the Parent Pledge Agreement duly executed and delivered
by Parent together with (A) certificates (or other evidence
acceptable to Administrative Agent) evidencing one hundred
percent (100%) of the issued and outstanding Equity of each
direct Subsidiary of Parent of every class, which certificates
shall be duly endorsed or accompanied by stock powers executed
in blank (as applicable), and (B) such financing statements
executed by Parent as Administrative Agent shall request to
evidence and perfect the Liens granted pursuant to such Parent
Pledge Agreement;
(iii) the Subsidiary Pledge Agreements duly executed and
delivered by each Subsidiary of Parent (including PEC but
excluding Borrowers and OGP), together with (A) certificates
(or other evidence acceptable to Administrative Agent)
evidencing one hundred percent (100%) of the issued and
outstanding Equity of each Indirect Subsidiary of Parent of
every class, which certificates shall be duly endorsed or
accompanied by stock powers executed in blank (as applicable),
and (B) such financing statements executed by each Subsidiary
of Parent (other than Borrowers and OGP) as Administrative
Agent shall request to evidence and perfect the Liens granted
pursuant to each such Subsidiary Pledge Agreement;
(iv) the Facility Guaranties duly executed and delivered by
Parent and each Subsidiary of Parent other than Borrowers, PEC
and Vista LLC;
(v) the Mortgages to be executed on the Closing Date pursuant
to Section 6.1(a), duly executed and delivered by Borrowers,
together with such other assignments, conveyances, amendments,
agreements and other writings, including, without
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limitation, UCC-1 financing statements, in form and substance
satisfactory to Administrative Agent;
(vi) the Assignments and Amendments to Mortgages to be
executed on the Closing Date pursuant to Section 6.1(a), duly
executed and delivered by Borrowers, together with such other
assignments, conveyances, amendments, agreements and other
writings, including, without limitation, UCC-1 financing
statements, in form and substance satisfactory to
Administrative Agent;
(vii) a Certificate of Ownership Interests substantially in
the form of Exhibit B, duly executed and delivered by an
Authorized Officer of each Borrower;
(viii) an opinion of Conner & Winters, A Professional
Corporation, special counsel to Parent and Borrowers,
favorably opining as to such matters as Administrative Agent
or Required Banks may request;
(ix) an opinion of Vinson & Elkins L.L.P., special counsel to
Administrative Agent, in form and substance satisfactory to
Administrative Agent;
(x) a certificate executed by an Authorized Officer of each
Borrower stating that (A) the representations and warranties
contained in this Agreement and the other Loan Papers are true
and correct in all respects, (B) no Default or Event of
Default has occurred which is continuing, and (C) all
conditions set forth in this Section 7.1 and Section 7.2 have
been satisfied;
(xi) such UCC-11 search reports as Administrative Agent shall
require, prepared as of a date not more than twenty (20) days
prior to the Closing Date, conducted in such jurisdictions and
reflecting such names as Administrative Agent shall request;
(xii) a copy of the articles or certificate of incorporation,
certificate of limited partnership, or comparable charter
documents, and all amendments thereto, of each Credit Party
accompanied by a certificate that such copy is true, correct
and complete, and dated within ten (10) days of the Closing
Date, issued by the appropriate Governmental Authority of the
jurisdiction of incorporation or organization of each such
Credit Party, and accompanied by a certificate of the
Secretary or comparable Authorized Officer of each such Credit
Party, that such copy is true, correct and complete on the
Closing Date;
(xiii) a copy of the bylaws, partnership agreement or
comparable documents, and all amendments thereto, of each
Credit Party accompanied by a certificate of the Secretary or
comparable Authorized Officer of each such Credit Party that
such copy is true, correct and complete as of the date hereof;
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(xiv) certain certificates and other documents issued by the
appropriate Governmental Authorities of such jurisdictions as
Administrative Agent has requested relating to the existence
of each Credit Party and to the effect that each Credit Party
is in good standing with respect to the payment of franchise
and similar Taxes and is duly qualified to transact business
in such jurisdictions;
(xv) a certificate of incumbency of all officers of each
Credit Party (to the extent a party to any Loan Paper) who
will be authorized to execute or attest to any Loan Paper,
dated the date hereof, executed by the Secretary or comparable
Authorized Officer of each such Credit Party (as applicable);
(xvi) copies of resolutions or comparable authorizations
approving the Loan Papers and authorizing the transactions
contemplated by this Agreement and the other Loan Papers, duly
adopted by the Board of Directors, partners or comparable
authority of each Credit Party a party to any Loan Paper,
accompanied by certificates of the Secretary or comparable
officer or partner of each such Credit Party (as applicable)
that such copies are true and correct copies of resolutions
duly adopted at a meeting of or (if permitted by applicable
Law and, if required by such Law, by the Bylaws, or other
charter documents of each such Credit Party, as applicable) by
the unanimous written consent of the Board of Directors of
each such Credit Party, as applicable, and that such
resolutions constitute all the resolutions adopted with
respect to such transactions, have not been amended, modified,
or revoked in any respect, and are in full force and effect as
of the date hereof;
(xvii) copies of consents of partners of each Credit Party
which is a partnership (to the extent required) to the
transactions contemplated by this Agreement and the other Loan
Papers, duly executed by each partner of such Credit Party
required to consent to such transactions, accompanied by
certificates of the Secretary or comparable Authorized
Officers or partner of each applicable Credit Party that such
copies are true and correct copies of all consents of the
partners of the Credit Parties required to be executed and
granted pursuant to such Credit Party's partnership agreement
and all other comparable charter documents of such Credit
Party;
(xviii) certificates from Borrowers' insurance broker setting
forth the insurance maintained by Borrowers, stating that such
insurance is in full force and effect, that all premiums due
have been paid and stating that such insurance is adequate and
complies with the requirements of Section 9.5;
(xix) a copy of each Closing Document and all other material
documents, instruments and agreements executed and/or
delivered by any Credit Party in connection with the Closing
Transactions, together with a certificate from an Authorized
Officer of each Borrower certifying that such copies are
accurate and
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complete and represent the complete understanding and
agreement of the parties with respect to the subject matter
thereof;
(xx) an opinion of Conner & Winters, A Professional
Corporation, special Oklahoma counsel to Borrowers, favorably
opining as to such matters as Administrative Agent or Required
Banks may request;
(xxi) an opinion of Cotton, Bledsoe, Tighe & Dawson, special
Texas counsel to Borrowers, favorably opining as to such
matters as Administrative Agent or Required Banks may request;
(xxii) an opinion of Gordon, Arata, McCollam & Duplantis,
L.L.P., special Louisiana counsel to Administrative Agent,
favorably opining as to such matters as Administrative Agent
or Required Banks may request;
(xxiii) an opinion of Hinkle, Cox, Eaton, Coffield & Hensley,
P.L.L.C., special New Mexico counsel to Administrative Agent,
favorably opining as to such matters as Administrative Agent
or Required Banks may request; and
(xxiv) a report or reports in form, scope and detail
acceptable to Administrative Agent and Banks setting forth the
results of a review of Borrowers' Mineral Interests and other
operations, which report(s) shall not reflect the existence of
facts or circumstances which would constitute a material
violation of any Applicable Environmental Law or which are
likely to result in a material liability to any Credit Party,
and/or otherwise reveal any condition or circumstance which
would reflect that the representations and warranties
contained in Section 8.16 hereof are inaccurate in any
respect.
(b) Closing Transactions. Subject only to disbursement and
application of the initial Borrowing, the Closing Transactions shall have
occurred (or Administrative Agent shall be satisfied that such transactions will
occur simultaneously therewith). Without limiting the foregoing, each of the
following shall have occurred (or Administrative Agent shall be satisfied that
each of the following shall occur simultaneously therewith):
(i) Borrowers shall have assumed and refinanced in full the
Debt of Prize LP, Vista LP and Midland under the Existing
Credit Agreements;
(ii) the Existing Vista Credit Agreement shall have been
terminated, all obligations thereunder shall have been
refinanced with the proceeds of the initial Borrowing
hereunder, and all Liens securing payment and performance of
such obligations shall have been assigned to Administrative
Agent pursuant to the Assignment and Amendment to Mortgages;
and
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(iii) the Merger shall have been completed pursuant to the
terms of the Merger Agreement, and pursuant thereto the Merger
Certificate shall have been duly filed with the Secretary of
State of Delaware.
(c) Fees and Expenses. All fees and expenses of Administrative
Agent, Book Manager and Sole Lead Arranger and their Affiliates in connection
with the credit facilities provided herein shall have been paid.
(d) Title Review. Administrative Agent or its title counsel
shall have completed a review of title (including limited opinions of title)
with respect to the Title Required Reserve Value of all Borrowing Base
Properties, and such review shall not have revealed any condition or
circumstance which would reflect that the representations and warranties
contained in Section 8.9 hereof are inaccurate in any respect.
(e) No Material Adverse Change. In the sole discretion of each
Bank, no Material Adverse Change shall have occurred in the assets, liabilities,
financial condition or prospects of any Credit Party.
(f) No Legal Prohibition. The transactions contemplated by
this Agreement and the other Loan Papers shall be permitted by applicable Law
and regulation and shall not subject any Agent, any Bank, or any Credit Party to
any material adverse change in their assets, liabilities, financial condition or
prospects.
(g) No Litigation. No litigation, arbitration or similar
proceeding shall be pending which calls into question the validity or
enforceability of this Agreement and/or the other Loan Papers.
(h) Closing Fees. Borrowers shall have paid to Administrative
Agent any fees payable to Administrative Agent or any Affiliate of
Administrative Agent pursuant to Section 3.15.
(i) Other Matters. All matters related to this Agreement, the
other Loan Papers, the Closing Transactions, the Closing Documents, or any
Credit Party shall be acceptable to Administrative Agent and each Bank in their
sole discretion, and Borrowers shall have delivered to Administrative Agent and
each Bank such evidence as they shall request to substantiate any matters
related to this Agreement, the other Loan Papers, the Closing Transactions, the
Closing Documents, or any Credit Party as Administrative Agent or any Bank shall
request.
SECTION 7.2. Conditions to each Borrowing and each Letter of Credit.
The obligation of each Bank to loan its Commitment Percentage of each Borrowing
and the obligation of any Letter of Credit Issuer to issue Letters of Credit on
the date any Letter of Credit is to be issued are subject to the satisfaction of
each of the conditions set forth in Section 7.1, together with the further
satisfaction of the following conditions:
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(a) timely receipt by Administrative Agent of a Request for
Borrowing or Request for Letter(s) of Credit (as applicable);
(b) immediately before and after giving effect to such
Borrowing or issuance of such Letter(s) of Credit, no Default or Event of
Default shall have occurred and be continuing and neither such Borrowing nor the
issuance of such Letter(s) of Credit (as applicable) shall cause a Default or
Event of Default;
(c) the representations and warranties of each Credit Party
contained in this Agreement and the other Loan Papers shall be true and correct
in all material respects on and as of the date of such Borrowing or the issuance
of such Letter(s) of Credit (as applicable), except to the extent such
representations and warranties are expressly stated as of a certain date, in
which case such representations and warranties shall be true and correct in all
material respects as of such date;
(d) the funding of such Borrowing or the issuance of such
Letter(s) of Credit (as applicable) and all other Borrowings to be made and/or
Letter(s) of Credit to be issued (as applicable) on the same day under this
Agreement, shall not cause a Borrowing Base Deficiency; and
(e) following the issuance of any Letter(s) of Credit, the
aggregate Letter of Credit Exposure of all Banks (with respect to Letters of
Credit which are not Supplemental Letters of Credit) shall not exceed
$10,000,000, and the aggregate Supplemental Letter of Credit Exposure of
BankBoston with respect to all Supplemental Letters of Credit shall not exceed
$5,000,000.
Each Borrowing and the issuance of each Letter of Credit hereunder
shall constitute a representation and warranty by each Borrower that on the date
of such Borrowing or issuance of such Letter of Credit (as applicable) the
statements contained in subclauses (b), (c), (d) and (e) above are true.
SECTION 7.3. Agreements Regarding Initial Borrowing. Each Borrower,
each Agent and each Bank acknowledge and agree that Borrowers have requested a
Borrowing to be made on the Closing Date in the aggregate amount of
$190,167,569.72 (all of which will constitute an Adjusted Base Rate Borrowing),
all the proceeds of which are to be applied to pay certain fees and expenses of
Agents and Banks and to refinance in full all Obligations outstanding under and
as defined in the Existing Credit Agreements (the "Refinancing Borrowing"). Each
Agent and each Bank hereby waive the requirements of Sections 3.2(a) and 7.2(a)
with respect to the Refinancing Borrowing to the extent, but only to the extent,
such Sections require the delivery of a Request for Borrowing as a condition
precedent to the obligation of each Bank to loan its Commitment Percentage of
each Borrowing. Each Bank, each Agent and each Borrower further acknowledge and
agree that, notwithstanding the contrary provisions of Section 3.2(c), each Bank
shall only be required to fund as part of such Refinancing Borrowing the
remainder, if any (and as applicable), of (a) its Commitment Percentage of such
Refinancing Borrowing, minus (b) the amount it is to
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receive as a result of the application of the proceeds of the Refinancing
Borrowing to refinance all Obligations outstanding under and as defined in the
Existing Credit Agreements.
SECTION 7.4. Materiality of Conditions. Each condition precedent herein
is material to the transactions contemplated herein, and time is of the essence
in respect of each thereof.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
Parent and each Borrower jointly and severally represent and warrant
that each of the following statements is true and correct on the date hereof and
will be true and correct on the occasion of each Borrowing and the issuance of
each Letter of Credit, except to the extent such representations and warranties
are expressly stated as of a certain date, in which case such representations
and warranties shall be true and correct as of such date:
SECTION 8.1. Existence and Power. Each of the Credit Parties (a) is a
corporation, limited liability company or partnership duly incorporated or
organized (as applicable), and is validly existing and in good standing under
the Laws of its jurisdiction of incorporation or organization (as applicable),
(b) has all corporate, limited liability company or partnership power (as
applicable) and all material governmental licenses, authorizations, consents and
approvals required to carry on its businesses as now conducted and as proposed
to be conducted, and (c) is duly qualified to transact business as a foreign
corporation, foreign limited liability company or foreign partnership (as
applicable) in each jurisdiction where a failure to be so qualified could have a
Material Adverse Effect.
SECTION 8.2. Corporate, Limited Liability Company, Partnership and
Governmental Authorization; Contravention. The execution, delivery and
performance of this Agreement and the other Loan Papers by each Credit Party (as
applicable) (a) are within such Credit Party's corporate, partnership, or
limited liability company powers (as applicable), (b) have been duly authorized
by all necessary corporate, partnership, or limited liability company action (as
applicable), (c) require no action by or in respect of, or filing with, any
Governmental Authority or official, and (d) do not contravene, or constitute a
default under, any provision of applicable Law or regulations (including,
without limitation, the Margin Regulations) or of the articles of association,
partnership agreement, certificate of limited partnership, articles of
incorporation, certificate of incorporation, bylaws, regulations or other
organizational documents (as applicable) of any such Credit Party or of any
agreement, judgment, injunction, order, decree or other instrument binding upon
any such Credit Party or result in the creation or imposition of any Lien on any
asset of any such Credit Party except Liens securing the Obligations.
SECTION 8.3. Binding Effect. This Agreement constitutes a valid and
binding agreement of Parent and each Borrower; the other Loan Papers when
executed and delivered in accordance with this Agreement, will then constitute
valid and binding obligations of each Credit
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Party (to the extent a party thereto); and each Loan Paper is enforceable
against each such Credit Party (to the extent a party thereto) in accordance
with its terms except as (a) the enforceability thereof may be limited by
bankruptcy, insolvency or similar Laws affecting creditors rights generally, and
(b) the availability of equitable remedies may be limited by equitable
principles of general applicability.
SECTION 8.4. Financial Information. (a) The Current Financials fairly
present, in conformity with GAAP, the consolidated financial position of Parent
and its consolidated results of operations and cash flows as of the date and for
the periods covered thereby.
(b) There has been no Material Adverse Change in the business,
financial position, results of operations or prospects of any Credit Party since
the date of the most recent balance sheet included in the Current Financials.
SECTION 8.5. Litigation. Except for matters disclosed on Schedule 3
attached hereto, there is no action, suit or proceeding pending against, or to
the knowledge of any Credit Party, threatened against or affecting any Credit
Party before any court, arbitrator, Governmental Authority or official in which
there is a reasonable possibility of an adverse decision which could have a
Material Adverse Effect or which could in any manner draw into question the
validity of the Loan Papers.
SECTION 8.6. ERISA. No Credit Party nor any ERISA Affiliate maintains
or has ever maintained or been obligated to contribute to any Plan covered by
Title IV of ERISA or subject to the funding requirements of section 412 of the
Code or section 302 of ERISA. Each Plan maintained by any Credit Party or any
ERISA Affiliate is in compliance in all material respects with all applicable
Laws. Except in such instances where an omission or failure would not have a
Material Adverse Effect, (a) all returns, reports and notices required to be
filed with any regulatory agency with respect to any Plan have been filed
timely, and (b) no Credit Party nor any ERISA Affiliate has failed to make any
contribution or pay any amount due or owing as required by the terms of any
Plan. There are no pending or, to Parent's or any Borrower's knowledge,
threatened claims, lawsuits, investigations or actions (other than routine
claims for benefits in the ordinary course) asserted or instituted against, and
no Credit Party nor any ERISA Affiliate has knowledge of any threatened
litigation or claims against, the assets of any Plan or its related trust or
against any fiduciary of a Plan with respect to the operation of such Plan that
are likely to result in liability of any Credit Party having a Material Adverse
Effect. Except in such instances where an omission or failure would not have a
Material Adverse Effect, each Plan that is intended to be "qualified" within the
meaning of section 401(a) of the Code is, and has been during the period from
its adoption to date, so qualified, both as to form and operation and all
necessary governmental approvals, including a favorable determination as to the
qualification under the Code of such Plan and each amendment thereto, have been
or will be timely obtained. No Credit Party nor any ERISA Affiliate has engaged
in any prohibited transactions, within the meaning of section 406 of ERISA or
section 4975 of the Code, in connection with any Plan which would result in
liability of any Credit Party having a Material Adverse Effect. No Credit Party
nor any ERISA Affiliate maintains or contributes to any
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Plan that provides a post-employment health benefit, other than a benefit
required under section 601 of ERISA, or maintains or contributes to a Plan that
provides health benefits that is not fully funded except where the failure to
fully fund such Plan would not have a Material Adverse Effect. No Credit Party
nor any ERISA Affiliate maintains, has established or has ever participated in a
multiple employer welfare benefit arrangement within the meaning of section
3(40)(A) of ERISA.
SECTION 8.7. Taxes and Filing of Tax Returns. Each Credit Party has
filed all material tax returns required to have been filed and has paid all
Taxes shown to be due and payable on such returns, including interest and
penalties, and all other Taxes which are payable by such party, to the extent
the same have become due and payable, other than Taxes with respect to which a
failure to pay would not have a Material Adverse Effect. Neither Parent nor any
Borrower knows of any proposed material Tax assessment against any Credit Party,
and all Tax liabilities of each Credit Party and their predecessors are
adequately provided for. Except as disclosed in writing to Banks, no income tax
liability of any Credit Party, or any of their predecessors has been asserted by
the Internal Revenue Service for Taxes in excess of those already paid.
SECTION 8.8. Title to Properties; Liens. Each Credit Party has good and
valid title to all material assets purported to be owned by them, including,
without limitation, all material assets reflected in the Current Financials and
any subsequent financial statements delivered to Banks pursuant to Sections
9.1(a) and (b), and none of such assets are subject to any Lien other than
Permitted Encumbrances.
SECTION 8.9. Mineral Interests. (a) Upon consummation of the Closing
Transactions, Borrowers will have good and defensible title to all Borrowing
Base Properties (except for Borrowing Base Properties disposed of in compliance
with, and to the extent permitted by, Section 10.5 to the extent this
representation and warranty is made or deemed made after the Closing Date), free
and clear of all Liens, except Permitted Encumbrances and Immaterial Title
Deficiencies, and will have full authority to create Liens thereon in favor of
Administrative Agent for the ratable benefit of Banks, (b) with the exception of
Immaterial Title Deficiencies, all Borrowing Base Properties are valid,
subsisting, and in full force and effect, and all rentals, royalties and other
amounts due and payable in respect thereof have been duly paid, (c) without
regard to any consent or non-consent provisions of any joint operating agreement
covering any of such Mineral Interests and with the exception of Immaterial
Title Deficiencies, upon consummation of the Closing Transactions, Borrowers'
share of (i) the costs for each Borrowing Base Property is not greater than the
decimal fraction set forth in the Reserve Reports, before and after payout, as
the case may be, and described by the respective designations "working
interests," "WI," "gross working interest," "GWI," or similar terms, and (ii)
production from, allocated to, or attributed to each such Borrowing Base
Property is not less than the decimal fraction set forth in such Reserve Report,
before and after payout, as the case may be, and described therein by the
designations "net revenue interest," "NRI" or similar terms, and (d) except in
the case of wells which, in the aggregate, represent less than four percent (4%)
of the production of the Proved Producing Mineral Interests described in the
Reserve Reports, each well drilled in respect of each Proved Producing Mineral
Interest described in the Reserve Report (A) is capable of, and is presently,
producing Hydrocarbons in commercially
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profitable quantities, and upon consummation of the Closing Transactions,
Borrowers will receive payments for their share of production, and no funds in
respect of any thereof will be held in suspense other than any such funds being
held in suspense pending delivery of appropriate division orders, and (B) to
Parent's and each Borrower's knowledge, has been drilled, bottomed, completed
and operated in compliance with all Laws and no such well which is currently
producing Hydrocarbons is subject to any penalty in production by reason of such
well having produced in excess of its allowable production.
SECTION 8.10. Business; Compliance. Each Credit Party has performed and
abided by all obligations required to be performed under each license, permit,
order, authorization, grant, contract, agreement, or regulation to which such
Credit Party is a party or by which such Credit Party or any of the assets of
such Credit Party are bound to the extent a failure to perform and abide by such
obligations could have a Material Adverse Effect; provided that, to the extent
Mineral Interests owned by any such Credit Party are operated by operators other
than such Credit Party or an Affiliate of such Credit Party, neither Parent nor
any Borrower has any knowledge that any such obligation remains unperformed in
any material respect, and the appropriate Person has enforced the contractual
obligations of such operators in accordance with reasonable commercial practices
in the industry.
SECTION 8.11. Licenses, Permits, Etc. Each Credit Party possesses such
valid franchises, certificates of convenience and necessity, operating rights,
licenses, permits, consents, authorizations, exemptions and orders of tribunals,
as are necessary to carry on their businesses as now being conducted except to
the extent a failure to obtain any such item would not have a Material Adverse
Effect; provided that, to the extent Mineral Interests owned by any Credit Party
are operated by operators other than such Credit Party or an Affiliate of such
Credit Party, neither Parent nor any Borrower has any knowledge that possession
of such items has not been obtained, and the appropriate Person has enforced the
contractual obligations of such operators in accordance with reasonable
commercial practices in the industry.
SECTION 8.12. Compliance with Law. The business and operations of each
Credit Party have been and are being conducted in accordance with all applicable
Laws, rules and regulations of all tribunals and Governmental Authorities, other
than Laws, rules and regulations the violation of which could not (either
individually or collectively) have a Material Adverse Effect; provided that, to
the extent Mineral Interests owned by any Credit Party are operated by operators
other than such Credit Party or an Affiliate of such Credit Party, neither
Parent nor any Borrower has any knowledge of non-compliance and the appropriate
Person has enforced the contractual obligations of such operators in accordance
with reasonable commercial practices in the industry.
SECTION 8.13. Ownership Interests. The Reserve Reports most recently
provided to Banks accurately reflect, and all Reserve Reports hereafter
delivered pursuant to this Agreement will accurately reflect, in all material
respects, the ownership interests in the Mineral Interests referred to therein
(including all before and after payout calculations).
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SECTION 8.14. Full Disclosure. All information heretofore furnished by
any Credit Party (or any other party on any Credit Party's behalf) to any Agent
or any Bank for purposes of or in connection with this Agreement or any
transaction contemplated hereby is, and all such information hereafter furnished
by any Credit Party or on behalf of any Credit Party to any Agent or any Bank
will be, true, complete and accurate in every material respect or based on
reasonable estimates on the date as of which such information is stated or
certified. Parent and Borrowers have disclosed to Banks in writing any and all
facts (other than facts of general public knowledge) which might reasonably be
expected to have a Material Adverse Effect, or might affect (to the extent
Parent or any Borrower can now reasonably foresee), the business, operations,
prospects or condition, financial or otherwise, of each Credit Party or the
ability of each Credit Party to perform its obligations under this Agreement and
the other Loan Papers.
SECTION 8.15. Organizational Structure; Nature of Business. PEC exists
for the sole purpose of owning a limited partner interest in Prize LP. Vista LLC
exists for the sole purpose of owning a limited partnership interest in Vista
LP. Each Credit Party (other than PEC and Vista LLC) is engaged only in the
business of acquiring, exploring, developing and operating Mineral Interests and
the production, marketing, processing and transporting of Hydrocarbons
therefrom. Schedule 4 attached hereto accurately reflects, as of the date
hereof, and after giving effect to the Closing Transactions: (i) the
jurisdiction of incorporation or organization of each Credit Party, (ii) each
jurisdiction in which each Credit Party is qualified to transact business as a
foreign corporation, foreign partnership or foreign limited liability company,
(iii) the authorized, issued and outstanding stock, partnership or limited
liability interests of each Credit Party, including the names of (and number of
shares or other equity interests held by) the record and beneficial owners of
such interests, and (iv) all outstanding warrants, options, subscription rights,
convertible securities or other rights to purchase capital stock, partnership or
limited liability company interests of each Credit Party. Except as set forth in
this Section 8.15 and in Schedule 4 hereto, no Person holds record or beneficial
ownership of any capital stock or other equity interest in any Borrower or any
other Subsidiary of Parent or any other right or option to acquire any capital
stock or other equity interest in any Borrower or any other Subsidiary of Parent
and, without limiting the foregoing, there are not outstanding any warrants,
options, subscription rights or other rights to purchase stock or other equity
interests in any Borrower or any other Subsidiary of Parent. No Credit Party has
made or presently holds any Investments other than Permitted Investments. Except
as set forth in Schedule 4 hereto, Borrowers do not have any Subsidiaries, and
no Credit Party is a partner or joint venturer in any partnership or joint
venture or a member of any unincorporated association.
SECTION 8.16. Environmental Matters. Upon completion of, and after
giving effect to, the Closing Transactions, no real or personal property owned
or leased by any Credit Party (including without limitation, Borrowers' Mineral
Interests) and no operations conducted thereon, and to Parent's or any
Borrower's knowledge, no operations of any prior owner, lessee or operator of
any such properties, is or has been in violation of any Applicable Environmental
Law other than violations which neither individually nor in the aggregate will
have a Material Adverse Effect, nor is any such property or operation the
subject of any existing, pending or, to Parent's or any Borrower's knowledge,
threatened Environmental Complaint which could, individually or in the
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aggregate, have a Material Adverse Effect. All notices, permits, licenses, and
similar authorizations, if any, required to be obtained or filed in connection
with the ownership or operation of any and all real and personal property owned,
leased or operated by any Credit Party (after giving effect to the Closing
Transactions), including, without limitation, notices, licenses, permits and
authorizations required in connection with any past or present treatment,
storage, disposal, or release of Hazardous Substances into the environment, have
been duly obtained or filed except to the extent the failure to obtain or file
such notices, licenses, permits and authorizations would not have a Material
Adverse Effect. All Hazardous Substances, if any, generated at any and all real
and personal property owned, leased or operated by any Credit Party (after
giving effect to the Closing Transactions) have been transported, treated, and
disposed of only by carriers maintaining valid permits under RCRA and all other
Applicable Environmental Laws. There have been no Hazardous Discharges which
were not in compliance with Applicable Environmental Laws other than Hazardous
Discharges which would not, individually or in the aggregate, have a Material
Adverse Effect. No Credit Party has any contingent liability in connection with
any Hazardous Discharges which could have a Material Adverse Effect.
SECTION 8.17. Burdensome Obligations. No Credit Party nor any of the
properties of any Credit Party (after giving effect to the Closing Transactions)
is subject to any Law or regulation or subject to any restriction under the
articles or certificate of incorporation, certificate of limited partnership,
partnership agreement, bylaws, regulations or other organizational documents of
any Credit Party or under any agreement or instrument to which any Credit Party
is a party or by which any of their properties may be subject or bound, which is
so unusual or burdensome as to be likely in the foreseeable future to have a
Material Adverse Effect. Without limiting the foregoing, no Credit Party is a
party to or bound by an agreement or subject to any order of any Governmental
Authority which prohibits or restricts in any way the right of such party to
make Distributions other than restrictions binding on the Credit Parties set
forth in this Agreement.
SECTION 8.18. Government Regulations. No Credit Party is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act, the Investment Company Act of 1940 (as
any of the preceding acts have been amended) or any other Law or regulation
which regulates the incurring by it of Debt, including, but not limited to, Laws
relating to common carriers or the sale of electricity, gas, steam, water or
other public utility services.
SECTION 8.19. Fiscal Year. Each of Parent's and each Borrower's Fiscal
Year is January 1 through December 31.
SECTION 8.20. No Default. Neither a Default nor an Event of Default has
occurred or will exist after giving effect to the transactions contemplated by
this Agreement or the other Loan Papers.
SECTION 8.21. Insider. No Credit Party is, and no Person having
"control" (as that term is defined in 12 U.S.C. Section 375(b) or regulations
promulgated thereunder) of any Credit
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Party is an "executive officer," "director" or "shareholder" of any Bank or any
bank holding company of which any Bank is a Subsidiary or of any Subsidiary of
such bank holding company.
SECTION 8.22. Gas Balancing Agreements and Advance Payment Contracts.
On the date of this Agreement: (a) there is no Material Gas Imbalance, and (b)
the aggregate amount of all Advance Payments received by any Credit Party under
Advance Payment Contracts which have not been satisfied by delivery of
production does not exceed $2,000,000.
SECTION 8.23. Closing Documents; Material Agreements. Borrower has
provided each Bank with a true and correct copy of each of the Closing
Documents, including all amendments and modifications thereto. No material
rights or obligations of any party to any of the Closing Documents or Material
Agreements have been waived and neither Borrower nor any other Credit Party, nor
to the best knowledge of Parent or any Borrower, any other party to any of the
Closing Documents or Material Agreements, is in default of its obligations
thereunder. Each of the Closing Documents is a valid, binding and enforceable
obligation of the parties thereto in accordance with its terms and is in full
force and effect. Each representation and warranty made by Prize LP and Former
Prize, and to the best knowledge of Prize LP and Former Prize, by Parent, Vista
LP, PECAC and each other Person a party to any of the Closing Documents (a) was
true and correct when made, and (b) will be true and correct on the Closing
Date, except to the extent such representation and warranty is expressly stated
as of a certain date.
SECTION 8.24. Year 2000 Matters. Any reprogramming required to permit
the proper functioning (but only to the extent that such proper functioning
would otherwise be impaired by the occurrence of the year 2000) in and following
the year 2000 of computer systems and other equipment containing imbedded
microchips, in either case owned or operated by any Credit Party or used or
relied upon in the conduct of their business (including, to Parent's and any
Borrower's knowledge, any such systems and other equipment supplied by others or
with which the computer systems of any Credit Party interface), and the testing
of all such systems and other equipment as so reprogrammed, was timely
completed. The costs to Borrowers and any other Credit Party that have not been
incurred as of the date hereof for such reprogramming and testing and for other
reasonably foreseeable consequences to them of any improper functioning of other
computer systems and equipment containing embedded microchips due to the
occurrence of the year 2000 could not reasonably be expected to result in a
Default or Event of Default or to have a Material Adverse Effect. Except for any
reprogramming referred to above, the computer systems of each Credit Party are
and, with ordinary course upgrading and maintenance, will continue for the term
of this Agreement to be sufficient for the conduct of their business as
currently conducted.
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ARTICLE IX
AFFIRMATIVE COVENANTS
Parent and each Borrower jointly and severally covenant and agree that,
so long as any Bank has any commitment to lend or participate in Letter of
Credit Exposure hereunder or any amount payable under any Note remains unpaid or
any Letter of Credit remains outstanding:
SECTION 9.1. Information. Parent and Borrowers will deliver, or cause
to be delivered, to each Bank:
(a) as soon as available and in any event within ninety (90)
days after the end of each Fiscal Year of Parent, consolidated balance sheets of
Parent as of the end of such Fiscal Year and the related consolidated statements
of income and cash flow for such Fiscal Year, setting forth in each case in
comparative form the figures for the previous Fiscal Year, all reported by
Parent in accordance with GAAP and audited by a firm of independent public
accountants of nationally recognized standing acceptable to Administrative
Agent;
(b) as soon as available and in any event within sixty (60)
days after the end of each of the first three (3) Fiscal Quarters of each Fiscal
Year of Parent, consolidated balance sheets of Parent as of the end of such
Fiscal Quarter and the related consolidated statements of income and cash flow
for such Fiscal Quarter and for the portion of Parent's Fiscal Year ended at the
end of such Fiscal Quarter, setting forth in each case in comparative form the
figures for the corresponding Fiscal Quarter and the corresponding portion of
Parent's previous Fiscal Year; all financial statements delivered pursuant to
this Section 9.1(b) shall be certified as to fairness of presentation, GAAP and
consistency by the chief financial officer or the chief accounting officer of
Parent;
(c) simultaneously with the delivery of each set of financial
statements referred to in Sections 9.1(a) and (b), a certificate of the chief
financial officer or the chief accounting officer of Parent in the form of
Exhibit J attached hereto: (i) setting forth in reasonable detail the
calculations required to establish whether Parent was in compliance with the
requirements of Article XI on the date of such financial statements, (ii)
stating whether there exists on the date of such certificate any Default and, if
any Default then exists, setting forth the details thereof and the action which
Parent is taking or proposes to take with respect thereto, (iii) stating whether
or not any Material Adverse Change has occurred during the period covered by
such financial statements, and if any Material Adverse Change has occurred,
setting forth the details thereof, (iv) stating whether or not such financial
statements fairly present in all material respects the results of operations and
financial condition of Parent as of the date of the delivery of such financial
statements and for the period covered thereby, (v) setting forth (A) whether as
of such date there is a Material Gas Imbalance and, if so, setting forth the
amount of net gas imbalances under Gas Balancing Agreements to which any Credit
Party is a party or by which any Mineral Interests owned by any Credit Party are
bound, and (B) the aggregate amount of all Advance Payments received under
Advance Payment Contracts to which any Credit Party is a party or by which any
Mineral Interests
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owned by any Credit Party are bound which have not been satisfied by delivery of
production, if any, and (vi) a summary of the Hedge Transactions to which any
Credit Party is a party on such date;
(d) as soon as available and in any event within ten (10) days
after any Credit Party enters into any new Hedge Transaction permitted
hereunder, a certificate of the chief financial officer or chief accounting
officer of Parent containing a detailed description of such new Hedge
Transaction;
(e) immediately upon any Authorized Officer of any Credit
Party becoming aware of the occurrence of any Default, including, without
limitation, a Default under Article XI, a certificate of an Authorized Officer
of Parent setting forth the details thereof and the action which Parent is
taking or proposes to take with respect thereto;
(f) prompt notice (i) of any Material Adverse Change in the
financial condition of any Credit Party, or (ii) of the occurrence of any
acceleration of the maturity of any Debt owing by any Credit Party or any
default under any indenture, mortgage, agreement, contract or other instrument
to which it is a party or by which it or any of its properties is bound, if such
default or acceleration might have a Material Adverse Effect;
(g) promptly upon the mailing thereof to the stockholders of
Parent generally, copies of all financial statements, material reports and proxy
statements so mailed;
(h) promptly upon filing thereof, copies of all final
registration statements, post effective amendments thereto and annual, quarterly
or special reports which Parent shall have filed with the Securities and
Exchange Commission; provided, that Parent must deliver, or cause to be
delivered, any annual reports which Parent shall have filed with the Securities
and Exchange Commission within ninety (90) days after the end of each Fiscal
Year of Parent and any quarterly reports which Parent shall have filed with the
Securities and Exchange Commission within forty-five (45) days after the end of
each of the first three (3) Fiscal Quarters of each Fiscal Year of Parent;
(i) promptly upon receipt of same, any notice or other
information received by any Credit Party indicating any potential, actual or
alleged (i) non-compliance with or violation of the requirements of any
Applicable Environmental Law which could result in liability to any Credit Party
for fines, clean up or any other remediation obligations or any other liability
in excess of $100,000 in the aggregate; (ii) release or threatened release of
any Hazardous Discharge which release would impose on any Credit Party a duty to
report to a Governmental Authority or to pay cleanup costs or to take remedial
action under any Applicable Environmental Law which could result in liability to
any such Credit Party for fines, clean up and other remediation obligations or
any other liability in excess of $100,000 in the aggregate; or (iii) the
existence of any Lien arising under any Applicable Environmental Law securing
any obligation to pay fines, clean up or other remediation costs or any other
liability in excess of $100,000 in the aggregate; without limiting the
foregoing, Parent and/or a Borrower shall provide to Banks promptly upon receipt
of same copies of all
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environmental consultants or engineers reports received by any Credit Party
which would render the representations and warranties contained in Section 8.16
untrue or inaccurate in any material respect;
(j) in the event any notification is provided by any Credit
Party to any Bank or any Agent pursuant to Section 9.1(i) hereof or any Agent or
any Bank otherwise learns of any event or condition under which any such notice
would be required, then, upon request of Required Banks, Parent and/or a
Borrower shall, within ninety (90) days of such request, cause to be furnished
to each Bank a report by an environmental consulting firm acceptable to
Administrative Agent and Required Banks, stating that a review of such event,
condition or circumstance has been undertaken (the scope of which shall be
acceptable to Administrative Agent and Required Banks) and detailing the
findings, conclusions, and recommendations of such consultant; Borrowers shall
bear all expenses and costs associated with such review and updates thereof, as
well as all remediation or curative action recommended by any such environmental
consultant;
(k) no later than February 28 and August 31 of each year,
reports of production, volumes, revenue, expenses and product prices for all oil
and gas properties owned by Borrowers with a Recognized Value of $100,000 or
more for the periods of six (6) months ending the preceding December 31 and June
30, respectively; such reports shall be prepared on an accrual basis, shall be
reported on a field by field basis and shall otherwise be in form and substance
acceptable to each Bank; and
(l) from time to time such additional information regarding
the financial position or business of each Credit Party as Administrative Agent,
at the request of any Bank, may reasonably request.
SECTION 9.2. Business of Credit Parties. The primary business of the
Credit Parties (other than PEC and Vista LLC) will continue to be the
acquisition, exploration, development and operation of Mineral Interests, and
the production and marketing of Hydrocarbons and accompanying elements
therefrom.
SECTION 9.3. Maintenance of Existence. Each of Parent and each Borrower
shall, and shall cause each of the other Credit Parties to, at all times (a)
maintain its corporate, partnership or limited liability company existence (as
applicable) in its state of organization, and (b) maintain its good standing and
qualification to transact business in all jurisdictions where the failure to
maintain good standing or qualification to transact business could have a
Material Adverse Effect.
SECTION 9.4. Right of Inspection. Parent and each Borrower will permit,
and will cause each other Credit Party to permit, any officer, employee or agent
of any Agent or any Bank to visit and inspect any of the assets of any Credit
Party, examine each Credit Party's books of record and accounts, take copies and
extracts therefrom, and discuss the affairs, finances and accounts of each
Credit Party with any of such Credit Party's officers, accountants and auditors,
all upon reasonable advance notice and at such reasonable times and as often as
any Agent or any Bank may desire, all at the expense of Borrowers; provided,
that, prior to the occurrence of an Event of Default,
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no Agent nor any Bank will require any Credit Party to incur any unreasonable
expense as a result of the exercise by any Agent or any Bank of its rights
pursuant to this Section 9.4.
SECTION 9.5. Maintenance of Insurance. Parent and each Borrower will,
and will cause each other Credit Party to, at all times maintain or cause to be
maintained insurance covering such risks as are customarily carried by
businesses similarly situated including, without limitation, the following: (a)
workers' compensation insurance; (b) employer's liability insurance; (c) general
public liability and property damage insurance in respect of all activities in
which any Credit Party might incur personal liability for the death or injury of
an employee or third person, or damage to or destruction of another's property;
and (d) comprehensive automobile liability insurance. All loss payable clauses
or provisions in all policies of insurance maintained by the Credit Parties
pursuant to this Section 9.5 shall be endorsed in favor of and made payable to
Administrative Agent for the ratable benefit of Banks, as their interests may
appear. Administrative Agent for the ratable benefit of Banks shall have the
right to collect, and Parent and each Borrower hereby assign to Administrative
Agent for the ratable benefit of Banks, any and all monies that may become
payable under any such policies of insurance by reason of damage, loss or
destruction of any property which stands as security for the Obligations or any
part thereof, and Administrative Agent may, at its election, either apply for
the ratable benefit of Banks all or any part of the sums so collected toward
payment of the Obligations (or the portion thereof with respect to which such
property stands as security), whether or not such Obligations are then due and
payable, in such manner as Administrative Agent may elect or release same to
Borrowers.
SECTION 9.6. Payment of Taxes and Claims. Parent and each Borrower
will, and will cause each other Credit Party to, pay (a) all Taxes imposed upon
it or any of its assets or with respect to any of its franchises, business,
income or profits before any material penalty or interest accrues thereon, and
(b) all material claims (including, without limitation, claims for labor,
services, materials and supplies) for sums which have become due and payable and
which by Law have or might become a Lien (other than a Permitted Encumbrance) on
any of its assets; provided, however, no payment of Taxes or claims shall be
required if (i) the amount, applicability or validity thereof is currently being
contested in good faith by appropriate action promptly initiated and diligently
conducted in accordance with good business practices and no material part of the
property or assets of any Credit Party is subject to levy or execution, (ii) the
Credit Parties, as and to the extent required in accordance with GAAP, shall
have set aside on their books, reserves (segregated to the extent required by
generally accepted accounting practices) deemed by it to be adequate with
respect thereto, and (iii) the Credit Parties have notified Administrative Agent
of such circumstances, in detail satisfactory to Administrative Agent.
SECTION 9.7. Compliance with Laws and Documents. Parent and each
Borrower will, and will cause each other Credit Party to, comply with all Laws,
their respective articles or certificate of incorporation, certificate of
limited partnership, partnership agreement, bylaws, regulations and similar
organizational documents and all Material Agreements to which any Credit Party
is a party, if a violation, alone or when combined with all other such
violations, could have a Material Adverse Effect.
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SECTION 9.8. Operation of Properties and Equipment. (a) Parent and each
Borrower will, and will cause each other Credit Party to, maintain, develop and
operate its Mineral Interests in a good and workmanlike manner, and observe and
comply with all of the terms and provisions, express or implied, of all oil and
gas leases relating to such properties so long as such oil and gas leases are
capable of producing Hydrocarbons and accompanying elements in paying
quantities, to the extent that the failure to so observe and comply could have a
Material Adverse Effect.
(b) Parent and each Borrower will, and will cause each other
Credit Party to, comply in all respects with all contracts and agreements
applicable to or relating to its Mineral Interests or the production and sale of
Hydrocarbons and accompanying elements therefrom, except to the extent a failure
to so comply could not have a Material Adverse Effect.
(c) Parent and each Borrower will, and will cause each other
Credit Party to, at all times maintain, preserve and keep all operating
equipment used with respect to its Mineral Interests in proper repair, working
order and condition, and make all necessary or appropriate repairs, renewals,
replacements, additions and improvements thereto so that the efficiency of such
operating equipment shall at all times be properly preserved and maintained;
provided that no item of operating equipment need be so repaired, renewed,
replaced, added to or improved, if a Borrower shall in good faith determine that
such action is not necessary or desirable for the continued efficient and
profitable operation of the business of such Credit Party.
(d) With respect to Mineral Interests of any Credit Party
which are operated by operators other than such Credit Party, no Credit Party
shall be obligated itself to perform any undertakings contemplated by the
covenants and agreements contained in this Section 9.8 which are performable
only by such operators and are beyond the control of such Credit Party, but
shall be obligated to seek to enforce such operators' contractual obligations to
maintain, develop and operate the Mineral Interests subject to such operating
agreements.
SECTION 9.9. Further Assurances. Parent and each Borrower will, and
will cause each other Credit Party to, execute and deliver or cause to be
executed and delivered such other and further instruments or documents and take
such further action as in the judgment of Administrative Agent may be required
to carry out the provisions and purposes of the Loan Papers including, without
limitation, to create, preserve, protect and perfect the Liens of Administrative
Agent for the ratable benefit of the Banks as required by Article VI.
SECTION 9.10. Environmental Law Compliance and Indemnity. Parent and
each Borrower will, and will cause each other Credit Party to, comply in all
material respects with all Applicable Environmental Laws, including, without
limitation, (a) all licensing, permitting, notification and similar requirements
of Applicable Environmental Laws, and (b) all provisions of Applicable
Environmental Law regarding storage, discharge, release, transportation,
treatment and disposal of Hazardous Substances. Borrower will, and will cause
each other Credit Party to, promptly pay and discharge when due all debts,
claims, liabilities and obligations with respect to any clean-up or remediation
measures necessary to comply with Applicable Environmental Laws. Parent
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and each Borrower hereby indemnify and agree to defend and hold Banks and their
successors and assigns harmless from and against any and all claims, demands,
causes of action, loss, damage, liabilities, costs and expenses (including
reasonable attorneys' fees and court costs) of any and every kind or character,
known or unknown, fixed or contingent, asserted against or incurred by any Bank
at any time and from time to time including, without limitation, those asserted
or arising subsequent to the payment or other satisfaction of the Loan, by
reason of or arising out of the ownership, construction, occupancy, operation,
use and maintenance of any of the collateral for the Loan, including matters
arising out of the negligence of Banks; provided, however, this indemnity shall
not apply with respect to matters caused by or arising out of (i) the gross
negligence or willful misconduct of Banks (IT BEING THE EXPRESS INTENTION HEREBY
THAT BANKS SHALL BE INDEMNIFIED FROM THE CONSEQUENCES OF THEIR NEGLIGENCE); and
(ii) the construction, occupancy, operation, use and maintenance of the
collateral for the Loan by any owner, lessee or party in possession of the
collateral for the Loan subsequent to the ownership of the collateral for the
Loan by any Credit Party, provided further, however, that this subclause (ii)
shall not exclude from the foregoing indemnity and agreement, liability, claims,
demands, causes of action, loss, damage, costs and expenses imposed by reason of
the ownership of the collateral for the Loan by Banks after purchase by Banks at
any foreclosure sale or transfer in lieu thereof from any Credit Party in
partial or entire satisfaction of the Loan (unless the same shall be solely
attributable to the subsequent use of the collateral by Banks during their
ownership thereof). The foregoing indemnity and agreement applies to the
violation of any Applicable Environmental Law prior to the payment or other
satisfaction of the Loan and any act, omission, event or circumstance existing
or occurring on or about the collateral for the Loan (including, without
limitation, the presence on the collateral for the Loan or release from the
collateral for the Loan of asbestos or other Hazardous Substances disposed of or
otherwise present in or released prior to the payment or other satisfaction of
the Loan). It shall not be a defense to the covenant of Parent and each Borrower
to indemnify that the act, omission, event or circumstance did not constitute a
violation of any Applicable Environmental Law at the time of its existence or
occurrence. The provisions of this Section 9.10 shall survive the repayment of
the Loan and shall continue thereafter in full force and effect. In the event of
the transfer of the Loan or any portion thereof, Banks or any prior holder of
the Loan and any participants shall continue to be benefitted by this indemnity
and agreement with respect to the period of such holding of the Loan.
SECTION 9.11. Title Data. In addition to the title information required
by Sections 6.2 and 7.1(d) hereof, Borrowers shall, upon the request of Required
Banks, cause to be delivered to Administrative Agent such limited title opinions
and other information regarding title to Mineral Interests owned by Borrowers or
any other Credit Party as are appropriate to determine the status thereof;
provided, however, that Banks may not require Borrower to furnish title opinions
(except pursuant to Sections 6.2 and 7.1(d)) unless (a) an Event of Default
shall have occurred and be continuing, or (b) Required Banks have reason to
believe that there is a defect in or encumbrance upon Borrowers' title to such
Mineral Interests that is not a Permitted Encumbrance.
SECTION 9.12. ERISA Reporting Requirements. Parent and each Borrower
shall furnish, or cause to be furnished, to Administrative Agent:
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(a) promptly and in any event (i) within thirty (30) days
after any Credit Party or any ERISA Affiliate knows or has reason to know that
any ERISA Event described in clause (a) of the definition of ERISA Event or any
event described in section 4063(a) of ERISA with respect to any Plan of any
Credit Party or any ERISA Affiliate has occurred, and (ii) within ten (10) days
after any Credit Party or any ERISA Affiliate knows or has reason to know that
any other ERISA Event with respect to any Plan of any Credit Party or any ERISA
Affiliate has occurred or a request for minimum funding waiver under section 412
of the Code with respect to any Plan of any Credit Party or any ERISA Affiliate
has been made, a written notice describing such event and describing what action
is being taken or is proposed to be taken with respect thereto, together with a
copy of any notice of event that is given to the PBGC;
(b) promptly and in any event within two (2) Domestic Business
Days after receipt thereof by any Credit Party or any ERISA Affiliate from the
PBGC, copies of each notice received by any Credit Party or any ERISA Affiliate
of the PBGC's intention to terminate any Plan or to have a trustee appointed to
administer any Plan;
(c) promptly and in any event within thirty (30) days after
the receipt by any Credit Party of a request therefor by a Bank, copies of any
annual and other report (including Schedule B thereto) with respect to a Plan
filed by any Credit Party or any ERISA Affiliate with the United States
Department of Labor, the Internal Revenue Service or the PBGC;
(d) promptly, and in any event within ten (10) Domestic
Business Days after receipt thereof, a copy of any correspondence any Credit
Party or any ERISA Affiliate receives from the Plan Sponsor (as defined by
section 4001(a)(10) of ERISA) of any Plan asserting withdrawal liability
pursuant to section 4219 or 4202 of ERISA upon any Credit Party or any ERISA
Affiliate, and a statement from the chief financial officer of such Credit Party
or such ERISA Affiliate setting forth details as to the events giving rise to
such withdrawal liability and the action which such Credit Party or such ERISA
Affiliate is taking or proposes to take with respect thereto;
(e) notification within thirty (30) days of the effective date
thereof of any material increases in the benefits of any existing Plan which is
not a multiemployer plan (as defined in section 4001(a)(3) of ERISA), or the
establishment of any new Plans, or the commencement of contributions to any Plan
to which any Credit Party or any ERISA Affiliate was not previously
contributing;
(f) notification within three (3) Domestic Business Days after
any Credit Party or any ERISA Affiliate knows or has reason to know that any
such Credit Party or any such ERISA Affiliate has or intends to file a notice of
intent to terminate any Plan under a distress termination within the meaning of
section 4041(c) of ERISA and a copy of such notice; and
(g) promptly after receipt of written notice of commencement
thereof, notice of all (i) claims made by participants or beneficiaries with
respect to any Plan and (ii) actions, suits and proceedings before any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, affecting any Credit Party or any ERISA Affiliate with
respect
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to any Plan, except those which, in the aggregate, if adversely determined would
not have a Material Adverse Effect.
SECTION 9.13. Year 2000 Compatibility. Parent and each Borrower shall,
and shall cause each other Credit Party to, continue to take all actions
reasonably necessary to assure that Parent's and each other Credit Party's
computer based systems are able to continue to operate and effectively process
data which includes dates on and after January 1, 2000. At the request of
Administrative Agent or any Bank, Parent and each Borrower shall, and shall
cause each other Credit Party to, provide reasonable assurances satisfactory to
Administrative Agent and any such Bank of Parent's and each other Credit Party's
year 2000 compatibility.
SECTION 9.14. Required Hedge Transactions. Not later than ninety (90)
days following the Closing Date, Borrowers shall enter into and maintain Hedge
Transactions which are appropriate for Borrowers as determined by Borrowers'
senior management in good faith (and approved by Administrative Agent, such
approval not to be unreasonably withheld or delayed), but which shall in all
events provide for hedging of not less than fifty percent (50%) of Borrowers'
and their Subsidiaries' anticipated production of Hydrocarbons for a period of
not less than two (2) years (such period to be measured from the effective date
of each separate Hedge Transaction).
ARTICLE X
NEGATIVE COVENANTS
Parent and each Borrower agree that, so long as any Bank has any
commitment to lend or participate in Letter of Credit Exposure hereunder or any
amount payable under any Note remains unpaid or any Letter of Credit remains
outstanding:
SECTION 10.1. Incurrence of Debt. Parent and each Borrower will not,
nor will Parent and/or any Borrower permit any other Credit Party to, incur,
become or remain liable for any Debt other than (a) the Obligations, (b) Debt of
Parent or any Borrower or any other Credit Party to Parent, any Borrower or any
Subsidiary of Parent that has provided a Facility Guaranty and the Equity of
which has been pledged to Administrative Agent pursuant to a Parent Pledge
Agreement or a Subsidiary Pledge Agreement, (c) Debt described on Schedule 6
attached hereto, and (d) other Debt in the aggregate amount outstanding at any
time not to exceed $5,000,000.
SECTION 10.2. Restricted Payments. Parent and each Borrower will not,
nor will Parent and/or any Borrower permit any other Credit Party to, declare,
pay or make, or incur any liability to declare, pay or make, any Restricted
Payment.
SECTION 10.3. Negative Pledge. Parent and each Borrower will not, nor
will Parent and/or any Borrower permit any other Credit Party to, create, assume
or suffer to exist any Lien on any asset owned by it (other than Permitted
Encumbrances). Parent and each Borrower will not, nor will Parent and/or any
Borrower permit any other Credit Party to, enter into or become subject to any
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agreement (other than this Agreement) that prohibits or otherwise restricts the
right of any Credit Party to create, assume or suffer to exist any Lien in favor
of Administrative Agent or any Bank on any Credit Party's assets.
SECTION 10.4. Consolidations and Mergers. Parent and each Borrower will
not, nor will Parent and/or any Borrower permit any other Credit Party to,
consolidate or merge with or into any other Person; provided, that, so long as
no Default or Event of Default exists or will result, Parent, any Borrower or
any wholly owned Subsidiary of Parent or any Borrower may merge or consolidate
with any other Person so long as Parent, any Borrower or any wholly owned
Subsidiary of Parent or any Borrower is the surviving corporation or entity.
SECTION 10.5. Asset Dispositions. Parent and each Borrower will not,
nor will Parent and/or any Borrower permit any other Credit Party to, sell,
lease, transfer, abandon or otherwise dispose of any asset other than (a) the
sale in the ordinary course of business of Hydrocarbons produced from Borrowers'
Mineral Interests; (b) the sale, lease, transfer, abandonment or other
disposition of machinery, equipment and other personal property and fixtures
which are (i) made in connection with a release, surrender or abandonment of a
well, (ii) obsolete for their intended purpose and disposed of in the ordinary
course of business, or (iii) replaced by articles of comparable suitability
owned by any Credit Party, free and clear of all Liens except Permitted
Encumbrances; (c) the sale, lease, transfer or other disposition of (i)
Borrowing Base Properties; provided, that (A) Borrowers shall provide
Administrative Agent with not less than ten (10) Domestic Business Days notice
of such sale, lease, transfer or other disposition pursuant to this clause (i),
and (B) the aggregate Recognized Value of Borrowing Base Properties disposed of
pursuant to this clause (i) in any period between Periodic Determinations (which
shall include, without limitation, the period between the Closing Date and the
first Periodic Determination after the Closing Date) shall not exceed five
percent (5%) of the Borrowing Base then in effect, and (ii) other assets that
have no Recognized Value; provided, further that no sale, lease assignment,
transfer or other disposition of any Borrowing Base Property shall be permitted
pursuant to this clause (c) unless each of the following conditions is
satisfied: (i) all mandatory prepayments required by Section 3.7 in connection
with such sale, lease, transfer or other disposition are made concurrently with
the closing thereof, (ii) no Borrowing Base Deficiency will exist after
consummation of such sale, lease, transfer or other disposition (and application
of the proceeds thereof to the mandatory prepayments required by Section 3.7),
and (iii) no Default has occurred which is continuing. Except as provided in
Schedule 4, in no event will any Borrower issue, sell, transfer or dispose of,
or permit any other Credit Party to issue, sell, transfer or dispose of, any
capital stock or other equity interest in any Subsidiary of such Credit Party
(other than to the Person which is the direct parent of such Credit Party on the
Closing Date), nor will Parent or any Borrower permit any other Credit Party to
issue or sell any capital stock or other equity interest or any option, warrant
or other right to acquire such capital stock or equity interest or security
convertible into such capital stock or equity interest to any Person other than
the Person which is the direct parent of such issuer on the Closing Date.
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SECTION 10.6. Amendments to Material Documents. Parent and each
Borrower will not, nor will Parent and/or any Borrower permit any other Credit
Party to, enter into or permit any modification or amendment of, grant any
material consent under, or waive any material right or obligation of any Credit
Party under (a) its certificate or articles of incorporation, bylaws,
regulations, certificate of limited partnership, limited partnership agreement,
or other organizational documents; or (b) any Closing Document.
SECTION 10.7. Use of Proceeds. The proceeds of Borrowings under the
Commitment will not be used for any purpose other than (a) to finance the
acquisition, exploration and development of Mineral Interests, (b) to finance
the Merger, (c) to refinance existing indebtedness under the Existing Credit
Agreements, and (d) for general corporate purposes. None of the proceeds of the
Loan nor any Letter of Credit issued hereunder will be used, directly or
indirectly, (i) for the purpose, whether immediate, incidental or ultimate, of
purchasing or carrying any Margin Stock, or (ii) in violation of applicable Law
or regulation (including, without limitation, the Margin Regulations). Letters
of Credit will be issued hereunder only for the purpose of securing bids,
tenders, bonds, contracts and other obligations entered into in the ordinary
course of business of any Borrower or any of their Subsidiaries and to secure
Borrowers' obligations under Oil and Gas Hedge Transactions required by Section
9.14; provided, that, the aggregate Letter of Credit Exposure of all Banks under
all Hedge Transaction Letters of Credit (excluding Supplemental Letters of
Credit) shall not exceed $10,000,000 at any time. Without limiting the
foregoing, with the exception of Hedge Transaction Letters of Credit permitted
pursuant to the preceding sentence, no Letters of Credit will be issued
hereunder for the purpose of or providing credit enhancement with respect to any
Debt or equity security of any Credit Party or to secure any Credit Party's
obligations with respect to Hedge Transactions other than Hedge Transactions
with a Bank or an Affiliate of a Bank.
SECTION 10.8. Investments. Parent and each Borrower will not, nor will
Parent and/or any Borrower permit any other Credit Party to, directly or
indirectly, make any Investment other than Permitted Investments.
SECTION 10.9. Transactions with Affiliates. Parent and each Borrower
will not, nor will Parent and/or any Borrower permit any other Credit Party to,
engage in any material transaction with any of their Affiliates (other than any
Credit Party) unless such transaction is generally as favorable to such Credit
Party as could be obtained in an arm's length transaction with an unaffiliated
Person in accordance with prevailing industry customs and practices.
Notwithstanding the foregoing, and so long as no Event of Default has occurred
which is continuing, the restrictions set forth in this Section 10.9 shall not
apply to the payment of (a) reasonable and customary fees to directors of Parent
who are not employees of Parent, any Borrower and/or any other Subsidiary of
Parent, (b) reasonable financial advisory and similar fees to equity investors
in Parent who are not employees of Parent, any Borrower and/or any other
Subsidiary of Parent (including, without limitation, the fees payable to NGP
under Parent's existing agreement with NGP), or (c) financing fees paid in
connection with equity investments in Parent; provided, that the aggregate
amount of all such fees permitted to be paid pursuant to clauses (a) and (b) of
this Section 10.9 shall not exceed $300,000 in any Fiscal Year.
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SECTION 10.10. ERISA. Except in such instances where an omission or
failure would not have a Material Adverse Effect, Parent and each Borrower will
not, nor will Parent and/or any Borrower permit any other Credit Party to (a)
take any action or fail to take any action which would result in a violation of
ERISA, the Code or other Laws applicable to the Plans maintained or contributed
to by it or any ERISA Affiliate, or (b) modify the term of, or the funding
obligations or contribution requirements under any existing Plan, establish a
new Plan, or become obligated or incur any liability under a Plan that is not
maintained or contributed to by any Credit Party or any ERISA Affiliate as of
the Closing Date, except that Parent, any Borrower and/or any other Subsidiary
of Parent may establish and maintain a 401(k) plan for its employees and
employees of its Subsidiaries.
SECTION 10.11. Hedge Transactions. Parent and each Borrower will not,
nor will Parent and/or any Borrower permit any other Credit Party to, enter into
any Oil and Gas Hedge Transactions which would cause the volume of Hydrocarbons
with respect to which a settlement payment is calculated to exceed seventy
percent (70%) of Borrowers' anticipated production from Proved Producing Mineral
Interests during the period from the immediately preceding settlement date (or
the commencement of such Hedge Transactions if there is no prior settlement
date) to such settlement date.
SECTION 10.12. Operating Leases. Parent and each Borrower will not, nor
will Parent and/or any Borrower permit any other Credit Party to, incur, become,
or remain liable under any Operating Lease which would cause the aggregate
amount of all Rentals payable by any Credit Party in any Fiscal Year to be
greater than $1,000,000.
SECTION 10.13. Speculative Hedge Transactions. Parent and each Borrower
will not, nor will Parent and/or any Borrower permit any other Credit Party to,
enter into any commodity, interest rate, currency or other swap, option, collar
or other derivative transaction pursuant to which any Credit Party speculates on
the movement of commodity prices, securities prices, interest rates, financial
markets, currency markets or other items; provided, that nothing contained in
this Section 10.13 shall prohibit any Credit Party from (a) entering into
interest rate swaps or other interest rate hedge transactions pursuant to which
Borrower hedges interest rate risk with respect to the interest reasonably
anticipated to be incurred pursuant to this Agreement, (b) entering into Oil and
Gas Hedge Transactions permitted by Sections 9.14 and 10.11, or (c) making
Permitted Investments.
SECTION 10.14. Fiscal Year. Neither Parent nor any Borrower shall
change its Fiscal Year.
SECTION 10.15. Change in Business. Parent and each Borrower will not,
nor will Parent and/or any Borrower permit any other Credit Party to, make a
material change in the character of the business or businesses engaged in by
such parties on the date hereof, taken as a whole.
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SECTION 10.16. Acquisition. Parent and each Borrower will not, nor will
Parent and/or any Borrower permit any other Credit Party to, acquire, in a
single transaction or a series of related transactions, all or substantially all
of the assets or capital stock (or other outstanding equity interests) of any
Person, or all or substantially all of the assets comprising a division of any
Person; provided, that, nothing contained in this Section 10.16 shall prohibit
Borrowers from making any acquisition of assets consisting of oil and gas
properties or any other acquisition which is permitted by the terms of this
Agreement, including any Permitted Investment.
SECTION 10.17. Gas Balancing Agreements. Parent and each Borrower will
not, nor will Parent and/or any Borrower permit any other Credit Party to,
incur, become or remain liable for any Material Gas Imbalance.
ARTICLE XI
FINANCIAL COVENANTS
Parent and each Borrower agree that, so long as any Bank has any
commitment to lend or participate in Letter of Credit Exposure hereunder or any
amount payable under any Note remains unpaid or any Letter of Credit remains
outstanding:
(a) Parent will not permit its ratio of Consolidated Current
Assets to Consolidated Current Liabilities as of the end of any Fiscal Quarter
to be less than 1.0 to 1.
(b) As of the end of any Fiscal Quarter, commencing with the
Fiscal Quarter ending March 31, 2000, Parent will not permit its ratio of (i)
Consolidated EBITDA (for the four (4) Fiscal Quarters ending on such date) to
(ii) the sum of (A) Consolidated Net Interest Expense (for the four (4) Fiscal
Quarters ending on such date) plus (B) Letter of Credit Fees of Borrowers
(accruing during the Fiscal Quarter ending on such date) to be less than 2.50 to
1.
ARTICLE XII
DEFAULTS
SECTION 12.1. Events of Default. If one or more of the following events
(collectively "Events of Default" and individually an "Event of Default") shall
have occurred and be continuing:
(a) Borrowers shall fail to pay when due any principal of any
Note or any reimbursement obligation with respect to any Letters of Credit when
due;
(b) Borrowers shall fail to pay any accrued interest due and
owing on any Note or any fees or any other amount payable hereunder when due and
such failure shall continue for a period of three (3) Domestic Business Days
following the due date;
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(c) any Credit Party shall fail to observe or perform any
covenant or agreement applicable thereto contained in Article X or XI;
(d) any Credit Party shall fail to observe or perform any
covenant or agreement applicable thereto contained in this Agreement or the
other Loan Papers (other than those covered by Sections 12.1(a), (b) and (c))
and such failure continues for a period of thirty (30) days after the earlier of
(i) the date any Authorized Officer of any Credit Party acquires knowledge of
such failure, or (ii) written notice thereof has been given to any such Credit
Party by Administrative Agent at the request of any Bank; provided, that, as to
Defaults under Section 9.1(e) and (f), such Credit Party shall not be entitled
to more than one (1) notice and period of cure during each calendar year, and as
to each other type of Default, such Credit Party shall not be entitled to more
than two (2) notices and periods of cure during any calendar year;
(e) any Credit Party shall fail to cause the financial
statements described in Section 9.1(a) to be accompanied by the opinion without
qualification (except for qualifications required by changes in accounting
methods with which such Credit Party's auditors concur) of the accountants
preparing such opinion, that such financial statements were prepared in
accordance with GAAP and fairly present the consolidated financial position and
results of operations of such Credit Party;
(f) any representation, warranty, certification or statement
made or deemed to have been made by any Credit Party in this Agreement or by any
Credit Party or any other Person on behalf of any Credit Party in any other Loan
Paper or any other certificate, financial statement or other document delivered
pursuant to this Agreement shall prove to have been incorrect in any material
respect when made;
(g) any Credit Party shall fail to make any payment when due
on any Debt in a principal amount equal to or greater than $1,000,000, or any
event or condition (i) shall occur which results in the acceleration of the
maturity of any Debt of any such Credit Party in a principal amount equal to or
greater than $1,000,000, or (ii) shall occur which entitles (or, with the giving
of notice or lapse of time or both, would unless cured or waived, entitle) the
holder of such Debt to accelerate the maturity thereof;
(h) any Credit Party shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar Law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, or shall consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment for the
benefit of creditors, or shall fail generally to pay its debts as they become
due, or shall take any corporate or partnership action to authorize any of the
foregoing;
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(i) an involuntary case or other proceeding shall be commenced
against any Credit Party seeking liquidation, reorganization or other relief
with respect to it or its debts under any bankruptcy, insolvency or other
similar Law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of sixty (60) days; or an
order for relief shall be entered against any Credit Party under the federal
bankruptcy Laws as now or hereafter in effect;
(j) one (1) or more judgments or orders for the payment of
money aggregating in excess of $1,500,000 shall be rendered against any Credit
Party and such judgment or order (i) shall continue unsatisfied and unstayed
(unless bonded with a supersedeas bond at least equal to such judgment or order)
for a period of sixty (60) days, or (ii) is not fully paid and satisfied at
least ten (10) days prior to the date on which any of its assets may be lawfully
sold to satisfy such judgment or order;
(k) any Credit Party shall incur Environmental Liabilities
which, individually or when considered in the aggregate, exceed $800,000;
(l) this Agreement or any other Loan Paper shall cease to be
in full force and effect or shall be declared null and void or the validity or
enforceability thereof shall be contested or challenged by any Credit Party, or
any Credit Party shall deny that it has any further liability or obligation
under any of the Loan Papers, or any Lien created by the Loan Papers shall for
any reason (other than the express release thereof by a written instrument
executed by Administrative Agent in accordance with the Loan Papers) cease to be
a valid, first priority, perfected Lien upon any of the property purported to be
covered thereby; or
(m) a Change of Control shall occur;
then, and in every such event, Administrative Agent shall without presentment,
notice or demand (unless expressly provided for herein) of any kind (including,
without limitation, notice of intention to accelerate and acceleration), all of
which are hereby waived, (a) if requested by Required Banks, terminate the
Commitment and it shall thereupon terminate, and (b) if requested by Required
Banks, take such other actions as may be permitted by the Loan Papers,
including, without limitation, declaring the Notes, or any of them (together
with accrued interest thereon) to be, and the Notes, or any of them, shall
thereupon become, immediately due and payable; provided that in the case of any
of the Events of Default specified in Section 12.1(h) or (i), without any notice
to any Borrower or any other Credit Party or any other act by Administrative
Agent or Banks, the Commitment shall thereupon terminate and the Notes (together
with accrued interest thereon) shall become immediately due and payable.
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ARTICLE XIII
AGENTS
SECTION 13.1. Appointment and Authorization. Each Bank irrevocably
appoints and authorizes each Agent to take such action as agent on its behalf
and to exercise such powers under this Agreement, the Notes, the Mortgages and
the other Loan Papers as are delegated to such Agent by the terms hereof or
thereof, together with all such powers as are reasonably incidental thereto;
provided that, as between and among Banks and Agents, no Agent will prosecute,
settle or compromise any claim against Borrowers or any other Credit Party, or
release or institute enforcement proceedings, except with the consent of
Required Banks. Each Bank, Parent and each Borrower agree that none of the
Agents is a fiduciary for Banks or for Parent or any Borrower but simply is
acting in the capacity described herein to alleviate administrative burdens for
Parent, each Borrower and Banks and that no Agent has any duties or
responsibilities to Banks, Parent or any Borrower except those expressly set
forth herein.
SECTION 13.2. Agents and Affiliates. Each Agent in its individual
capacity and not as Agent hereunder shall have the same rights and powers under
this Agreement as any other Bank and may exercise or refrain from exercising the
same as though it were not an Agent hereunder and each Agent in its individual
capacity and not as Agent hereunder may accept deposits from, lend money to, and
generally engage in any kind of business with any Credit Party and any of their
Affiliates as if it were not an Agent hereunder.
SECTION 13.3. Action by Agents. The obligations of Agents hereunder are
only those expressly set forth herein. Without limiting the generality of the
foregoing, no Agent shall be required to take any action with respect to any
Default or Event of Default, except as expressly provided in Article XII.
Notwithstanding the administrative authority delegated to Agents, no Agent
shall, without the prior written approval of all Banks, cause or permit any
modification of the Loan Papers which would (a) increase the Commitment of any
Bank or subject any Bank to any additional obligations, (b) forgive any of the
principal or reduce the rate of interest on the Loan or any fees hereunder, (c)
postpone the Revolver Conversion Date, the Termination Date or any other date
fixed for payment of principal of or interest on the Loan or any fees hereunder,
(d) change the percentage of the Total Commitment, or the number of Banks which
shall be required for Banks or any of them to take any action under Section 15.2
or any other provision of this Agreement, (e) permit any Credit Party to assign
any of its rights hereunder, (f) amend or waive any of the provisions of Article
V or of the definitions contained in Section 2.1 applicable thereto, or (g)
provide for the release or substitution of collateral for the Loan other than
releases required pursuant to sales of collateral which are expressly permitted
under Section 10.5. Subject to the foregoing, each Agent shall make such
requests or take such actions in respect of any Credit Party as Required Banks
shall direct. Further, subject to the foregoing, each Agent shall grant such
waivers, consents or approvals in favor of any Credit Party as Required Banks
shall direct.
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SECTION 13.4. Consultation with Experts. Each Agent may consult with
legal counsel (who may be counsel for any Credit Party), independent public
accountants, third party engineers and other experts selected by it and shall
not be liable for any action taken or omitted to be taken by it in good faith in
accordance with the advice of such counsel, accountants, engineers or experts.
SECTION 13.5. Liability of Agents. None of the Agents nor any of their
directors, officers, agents, or employees shall be liable for any action taken
or not taken by such Agent in connection herewith (a) with the consent or at the
request of Required Banks, or (b) in the absence of its own gross negligence or
willful misconduct, IT BEING THE INTENTION OF BANKS THAT SUCH PARTIES SHALL NOT
BE LIABLE FOR THE CONSEQUENCES OF THEIR ORDINARY NEGLIGENCE. None of the Agents
nor any of their respective officers, directors, agents or employees shall be
responsible for or have any duty to ascertain, inquire into or verify (i) any
statement, warranty or representation made in connection with this Agreement or
any borrowing hereunder, (ii) the performance or observance of any of the
covenants or agreements of any Credit Party, (iii) the satisfaction of any
condition specified in Article VII, except receipt of items required to be
delivered to Administrative Agent, or (iv) the validity, effectiveness or
genuineness of this Agreement, the Notes or any other instrument or writing
furnished in connection herewith. No Agent shall incur any liability by acting
in reliance upon any notice, consent, certificate, statement, or other writing
(which may be a bank wire, telex or similar writing) believed by it to be
genuine or to be signed by the proper party or parties or upon any oral notice
which such Agent believes will be confirmed in writing by the proper party or
parties. If any Agent fails to take any action required to be taken by it under
the Loan Papers after the occurrence of an Event of Default and within a
reasonable time after being requested to do so by any Bank (after such
requesting Bank has obtained the approval of such other Banks as required), such
Agent shall not suffer or incur any liability as a result thereof, but such
requesting Bank may request such Agent to resign, whereupon such Agent shall so
resign pursuant to Section 13.9.
SECTION 13.6. Delegation of Duties. Each Agent may execute any of its
duties hereunder by or through officers, directors, employees, attorneys, or
agents.
SECTION 13.7. Indemnification. Each Bank shall, ratably in accordance
with its Commitment Percentage, indemnify each Agent (to the extent not
reimbursed by Borrowers) against any cost, expense (including counsel fees and
disbursements), claim, demand, action, loss or liability (except such as result
from such Agent's gross negligence or willful misconduct) that such Agent may
suffer or incur in connection with this Agreement or any action taken or omitted
by such Agent hereunder, including without limitation, matters arising out of
such Agent's own negligence, IT BEING THE INTENTION OF EACH BANK THAT EACH AGENT
SHALL BE INDEMNIFIED FOR THE CONSEQUENCES OF ITS ORDINARY NEGLIGENCE.
SECTION 13.8. Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon any Agent or any other Bank, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it will, independently and without reliance upon any
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Agent or any other Bank, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking any action under this Agreement.
SECTION 13.9. Successor Agents. Any Agent may resign at any time by
giving written notice thereof to Banks and Borrower. In addition, Borrowers may,
prior to a Default, request the designation by Banks of a successor Agent. Upon
any such request by Borrowers or resignation by such Agent, Required Banks shall
have the right to appoint a successor Agent, which shall be one of the Banks. If
no successor Agent shall have been so appointed by Required Banks and accepted
such appointment within thirty (30) days after the retiring Agent's giving of
notice of resignation or Borrowers' request for a successor Agent, then the
retiring Agent may, on behalf of Banks, appoint a successor Agent, which shall
(a) be a commercial bank organized under the Laws of the United States of
America or of any State thereof and having a combined capital and surplus of at
least $500,000,000 and (b) unless the successor Agent is a Bank, be reasonably
acceptable to Borrowers. Upon the acceptance of its appointment as a successor
Agent hereunder, such successor Agent shall thereupon succeed to and become
vested with all the rights and duties of the retiring Agent, and the retiring
Agent's resignation hereunder, the provisions of this Section 13.9 shall
continue to inure to its benefit as to any actions taken or omitted to be taken
by it while it was Agent hereunder. Borrowers shall be entitled to recommend a
successor Agent at the time of designation of any successor Agent pursuant to
this Section 13.9. Banks shall give due consideration to the successor nominated
by Borrowers, but shall have no obligation to approve such nominee.
ARTICLE XIV
PROTECTION OF YIELD; CHANGE IN LAWS
SECTION 14.1. Basis for Determining Interest Rate Applicable to
Eurodollar Tranches Inadequate. If on or prior to the first day of any Interest
Period with respect to a Borrowing:
(a) Administrative Agent is advised by any Bank that deposits
in dollars (in the applicable amounts) are not being offered to such Bank(s) in
the relevant market for such Interest Period, or
(b) Banks having fifty percent (50%) or more of the aggregate
amount of the Total Commitment advise Administrative Agent that the Adjusted
LIBOR Rate as determined by Administrative Agent will not adequately and fairly
reflect the cost to such Banks of funding their respective shares of the
requested Borrowing which will be subject to a Eurodollar Tranche for such
Interest Period,
then, in such event, Administrative Agent shall give notice thereof to Borrowers
and Banks, whereupon the obligations of Banks to allow interest to be computed
by reference to the Adjusted LIBOR Rate shall be suspended until Administrative
Agent notifies Borrowers that the circumstances giving rise to such suspension
no longer exist. Unless Borrowers notify
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Administrative Agent at least two (2) Domestic Business Days before the date of
any Borrowing for which a Request for Borrowing has previously been given that
it elects not to borrow on such date, such Borrowing shall instead be made as an
Adjusted Base Rate Borrowing.
SECTION 14.2. Illegality of Eurodollar Tranches. (a) If, after the date
of this Agreement, the adoption of any applicable Law, rule or regulation, or
any change therein, or any change in the interpretation or administration
thereof by any Governmental Authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Bank (or
its Eurodollar Lending Office) with any request or directive (whether or not
having the force of Law) of any such authority, central bank or comparable
agency shall make it unlawful or impossible for any Bank (or its Eurodollar
Lending Office) to make, maintain or fund any portion of the Loan subject to a
Eurodollar Tranche and such Bank shall so notify Administrative Agent,
Administrative Agent shall forthwith give notice thereof to the other Banks and
Borrowers. Until such Bank notifies Borrowers and Administrative Agent that the
circumstances giving rise to such suspension no longer exist, the obligation of
such Bank to maintain or fund any portion of the Loan subject to a Eurodollar
Tranche shall be suspended. Before giving any notice to Administrative Agent
pursuant to this Section 14.2, such Bank shall designate a different Eurodollar
Lending Office if such designation will avoid the need for giving such notice
and will not, in the judgment of such Bank, be otherwise disadvantageous to such
Bank. If such Bank shall determine that it may not lawfully continue to maintain
and fund any portion of the Loan outstanding subject to a Eurodollar Tranche to
maturity and shall so specify in such notice, Borrowers shall immediately
convert the principal amount of the Loan which is subject to a Eurodollar
Tranche to an Adjusted Base Rate Tranche of an equal principal amount from such
Bank (on which interest and principal shall be payable contemporaneously with
the unaffected Eurodollar Tranches of the other Banks).
(b) No Bank shall be required to make the Loan (or any portion
thereof) hereunder if the making of the Loan (or any portion thereof) would be
in violation of any Law applicable to such Bank.
SECTION 14.3. Increased Cost of Eurodollar Tranche. If after the date
hereof, the adoption of any applicable Law, rule or regulation, or any change
therein, or any change in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or its
Lending Office) with any request or directive (whether or not having the force
of Law) of any such authority, central bank or comparable agency:
(a) shall subject any Bank (or its Lending Office) to any tax,
duty or other charge with respect to maintaining or funding any portion of the
Loan subject to a Eurodollar Tranche, its Note or its obligation to allow
interest to be computed by reference to the Adjusted LIBOR Rate shall change the
basis of taxation of payments to any Bank (or its Lending Office) of the
principal of or interest on any portion of the Loan which is subject to any
Eurodollar Tranche or any other amounts due under this Agreement in respect of
any portion of the Loan which is subject to any Eurodollar Tranche or its
obligation to allow interest to be computed by reference to the Adjusted
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LIBOR Rate (except for changes in the rate of Tax on the overall net income of
such Bank or its Lending Office imposed by the jurisdiction in which such Bank's
principal executive office or Lending Office is located); or
(b) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve System, but
excluding with respect to any Eurodollar Tranche any such requirement included
in an applicable Eurodollar Reserve Percentage) against assets of, deposits with
or for the account of or credit extended by, any Bank's Lending Office or shall
impose on any Bank (or its Lending Office) or the applicable interbank
Eurodollar market or any other condition affecting Eurodollar Tranches, its Note
or its obligation to allow interest to be computed by reference to the Adjusted
LIBOR Rate;
and the result of any of the foregoing is to increase the cost to such Bank (or
its Lending Office) of funding or maintaining any portion of the Loan subject to
a Eurodollar Tranche, or to reduce the amount of any sum received or receivable
by such Bank (or its Lending Office) under this Agreement or under its Note with
respect thereto, by an amount deemed by such Bank to be material, then, within
five (5) days after demand by such Bank (with a copy to the Administrative
Agent), Borrowers shall pay to such Bank such additional amount or amounts as
will compensate such Bank for such increased cost or reduction. Each Bank will
promptly notify Borrowers and Administrative Agent of any event of which it has
knowledge, occurring after the date hereof, which will entitle such Bank to
compensation pursuant to this Section 14.3 and will designate a different
Lending Office if such designation will avoid the need for, or reduce the amount
of, such compensation and will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank. A certificate of any Bank claiming compensation
under this Section 14.3 and setting forth the additional amount or amounts to be
paid to it hereunder shall be conclusive in the absence of manifest error. In
determining such amount, such Bank may use any reasonable averaging and
attribution methods.
SECTION 14.4. Adjusted Base Rate Tranche Substituted for Affected
Eurodollar Tranche. If (a) the obligation of any Bank to fund or maintain any
portion of the Loan subject to a Eurodollar Tranche has been suspended pursuant
to Section 14.2, or (b) any Bank has demanded compensation under Section 14.3
and Borrowers shall, by at least five (5) Eurodollar Business Days prior notice
to such Bank through the Administrative Agent, have elected that the provisions
of this Section 14.4 shall apply to such Bank, then, unless and until such Bank
notifies Borrowers that the circumstances giving rise to such suspension or
demand for compensation no longer apply:
(a) any Tranche which would otherwise be characterized by such
Bank as a Eurodollar Tranche shall instead be deemed an Adjusted Base Rate
Tranche (on which interest and principal shall be payable contemporaneously with
the unaffected Eurodollar Tranches of the other Banks); and
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(b) after all of its Eurodollar Tranches have been repaid, all
payments of principal which would otherwise be applied to repay Eurodollar
Tranches shall be applied to repay its Adjusted Base Rate Tranches instead.
SECTION 14.5. Capital Adequacy. If after the date hereof, the adoption
of any applicable Law, rule or regulation, or any change therein, or any change
in the interpretation or administration thereof, by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its Lending Office) with
any request or directive (whether or not having the force of Law), shall:
(a) impose, modify or deem applicable any reserve, special
deposit, compensatory loan, deposit insurance, capital adequacy, minimum
capital, capital ratio or similar requirement against all or any assets held by,
deposits or accounts with, credit extended by or to, or commitments to extend
credit or any other acquisition of funds by any Bank (or its Lending Office), or
impose on any Bank (or its Lending Office) any other condition, with respect to
the maintenance by such Bank of all or any part of its Commitment; or
(b) subject any Bank (or its Lending Office) to, or cause the
termination or reduction of a previously granted exemption with respect to, any
Tax with respect to the maintenance by such Bank of all or any part of its
Commitment (other than Taxes assessed against such Bank's overall net income);
and the result of any of the foregoing is to increase the cost to such Bank (or
its Lending Office) of maintaining its Commitment or to reduce the amount of any
sums received or receivable by it (or its Lending Office) under this Agreement
or any other Loan Paper, or to reduce the rate of return on such Bank's equity
in connection with this Agreement, as the case may be, by an amount which such
Bank deems material;
then, in any such case, within five (5) days of demand by such Bank (or its
Lending Office) (with a copy to Administrative Agent), Borrowers shall pay to
such Bank (or its Lending Office) such additional amount or amounts as will
compensate such Bank for any additional cost, reduced benefit, reduced amount
received or reduced rate of return. Each Bank will promptly notify Borrowers and
Administrative Agent of any event of which it has knowledge, occurring after the
date hereof, which will entitle such Bank to compensation pursuant to this
Section 14.5. A certificate of any Bank claiming compensation under this Section
14.5 and setting forth the additional amount or amounts to be paid to it
hereunder shall be conclusive in the absence of manifest error. In determining
such amount, such Bank may use any reasonable averaging and attribution methods.
Without limiting the foregoing, in the event any event or condition
described in this Section 14.5 shall occur or arise which relates to the
maintenance by any Bank of that part of its Commitment which is in excess of its
Commitment Percentage of the Borrowing Base then in effect (such excess portion
of such Commitment of any Bank is hereinafter referred to as its "Surplus
Commitment"), such Bank shall notify Administrative Agent and Borrowers of the
occurrence of such event or the existence of such condition and of the amount of
a fee (to be computed on a per annum basis with respect to such Bank's Surplus
Commitment) which such Bank determines in good
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faith will compensate such Bank for such additional cost, reduced benefit,
reduced amount received or reduced rate of return. Within five (5) Domestic
Business Days following receipt of such notice, Borrowers shall notify such Bank
whether they accept or reject such fee (if Borrowers fail to timely respond to
such notice they will be deemed to have accepted such fee). If Borrowers reject
such fee, the applicable Commitment of each Bank will be automatically and
permanently reduced to the Borrowing Base applicable to such Commitment and then
in effect. If Borrowers accept such fee, such fee shall accrue from and after
the date of such Bank's notice and shall be payable in arrears (based on the
daily average balance of such Bank's Surplus Commitment) on the last day of each
Fiscal Quarter and on the Termination Date. Such fee shall be in lieu of any
amounts to which such Bank would otherwise be entitled in respect of its Surplus
Commitment pursuant to the other provisions of this Section 14.5 for the period
on and after the date of such notice unless such Bank determines that such fee
is not adequate to fully compensate such Bank for any additional cost, reduced
benefit, reduced amount received or reduced rate of return such Bank may
thereafter incur in respect of such Bank's Surplus Commitment. In that event
such Bank shall be entitled to such additional compensation to which such Bank
is otherwise entitled pursuant to this Section 14.5.
SECTION 14.6. Taxes. All amounts payable by Borrowers under the Loan
Papers (whether principal, interest, fees, expenses, or otherwise) to or for the
account of each Bank shall be paid in full, free of any deductions or
withholdings for or on account of any Taxes. If Borrowers are prohibited by Law
from paying any such amount free of any such deductions and withholdings, then
(at the same time and in the same manner that such original amount is otherwise
due under the Loan Papers) Borrowers shall pay to or for the account of such
Bank such additional amount as may be necessary in order that the actual amount
received by such Bank after deduction and/or withholding (and after payment of
any additional Taxes due as a consequence of the payment of such additional
amount, and so on) will equal the amount such Bank would have received if such
deduction or withholding were not made.
SECTION 14.7. Discretion of Banks as to Manner of Funding.
Notwithstanding any provisions of this Agreement to the contrary, each Bank
shall be entitled to fund and maintain its funding of all or any part of its
Commitment in any manner it sees fit, it being understood, however, that for the
purposes of this Agreement all determinations hereunder shall be made as if such
Bank had actually funded and maintained the Loan (or any portion thereof)
subject to a Eurodollar Tranche during the Interest Period for the Loan (or any
portion thereof) through the purchase of deposits having a maturity
corresponding to the last day of such Interest Period and bearing an interest
rate equal to the Adjusted LIBOR Rate for such Interest Period.
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ARTICLE XV
MISCELLANEOUS
SECTION 15.1. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including bank wire, telecopy or
similar writing) and shall be given (a) if to any Agent or any Bank, to such
party at its address or telecopy number set forth on Schedule 1 hereof, or (b)
if to Parent or any Borrower, to such party at its address or telecopy number
set forth on the signature pages hereto, or such other address or telecopy
number as such party may hereafter specify for the purpose by notice to
Administrative Agent, Parent and Borrowers, as the case may be. Each such
notice, request or other communication shall be effective (a) if given by
telecopy, when such telecopy is transmitted to the telecopy number specified in
this Section 15.1 and the appropriate answerback is received or receipt is
otherwise confirmed, (b) if given by mail, three (3) Domestic Business Days
after deposit in the mails with first class postage prepaid, addressed as
aforesaid, or (c) if given by overnight delivery, messenger or any other means,
when delivered at the address specified in this Section 15.1; provided that
notices to Administrative Agent under Article III or XIV shall not be effective
until received. Notwithstanding anything to the contrary contained herein, any
notice to be given to any Borrower or to all Borrowers pursuant to this
Agreement or any of the other Loan Papers may be given to any Borrower, and if
given to any Borrower in the manner set forth in this Section 15.1, such notice
shall be deemed to be effective notice to all Borrowers for purposes of this
Agreement.
SECTION 15.2. Waivers and Amendments; Acknowledgments. (a) No failure
or delay (whether by course of conduct or otherwise) by any Bank or any Agent in
exercising any right, power or remedy which it may have under any of the Loan
Papers shall operate as a waiver thereof or of any other right, power or remedy,
nor shall any single or partial exercise by any Bank or any Agent 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 Paper and
no consent to any departure therefrom shall ever be effective unless it is in
writing and signed by Required Banks and/or Administrative Agent in accordance
with Section 15.2(c) hereof, and then such waiver or consent shall be effective
only in the specific instances and for the purposes for which given and to the
extent specified in such writing. No notice to or demand on any Borrower shall
in any case of itself entitle any Borrower to any other or further notice or
demand in similar or other circumstances. This Agreement and the other Loan
Papers 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 modification or amendment of or supplement to
this Agreement or the other Loan Papers shall be valid or effective unless the
same is in compliance with subclause (c) to this Section 15.2.
(b) Each of Parent and each Borrower represent, warrant,
acknowledge and admit that (i) it has been advised by counsel in the
negotiation, execution and delivery of the Loan Papers to which it is a party,
(ii) it has made an independent decision to enter into this Agreement and the
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other Loan Papers to which it is a party, without reliance on any
representation, warranty, covenant or undertaking by Banks or Agents whether
written, oral or implicit, other than as expressly set out in this Agreement or
in another Loan Paper delivered on or after the date hereof, (iii) there are no
representations, warranties, covenants, undertakings or agreements by any Bank
or any Agent as to the Loan Papers except as expressly set out in this Agreement
or in another Loan Paper delivered on or after the date hereof, (iv) neither any
Bank nor any Agent owes any fiduciary duty to Parent, any Borrower or any other
Credit Party with respect to any Loan Paper or the transactions contemplated
thereby, (v) the relationship pursuant to the Loan Papers between Parent and
Borrowers, on one hand, and Banks and Agents, 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 Papers among Parent, any Borrower and
any Bank or any Agent, (vii) should an Event of Default or Default occur or
exist each Bank and each Agent will determine in its sole and absolute
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,
neither Parent nor any Borrower is relying upon any representation or covenant
by any Bank or any Agent or any representative thereof, and no such
representation or covenant has been made, that any Bank or any Agent will, at
the time of an Event of Default, or at any other time, waive, negotiate,
discuss, or take or refrain from taking any action permitted under the Loan
Papers with respect to any such Event of Default or Default or any other
provision of the Loan Papers, and (ix) each Bank has relied upon the
truthfulness of the acknowledgments in this Section 15.2(b) in deciding to
execute and deliver this Agreement and to make the Loan.
(c) Any provision of this Agreement, the Notes or the other
Loan Papers may be amended or waived if, but only if such amendment or waiver is
in writing and is signed by Parent, each Borrower and Required Banks (and, if
the rights or duties of any Agent are affected thereby, by any such Agent);
provided that no such amendment or waiver shall, unless signed by all Banks, (i)
increase the Commitment of any Bank or subject any Bank to any additional
obligation, (ii) forgive any of the principal of or reduce the rate of interest
on the Loan or any fees hereunder, (iii) postpone the Revolver Conversion Date,
the Termination Date or any date fixed for any payment of principal of or
interest on the Loan or any fees hereunder, (iv) change the percentages of the
Total Commitment, or the number of Banks which shall be required for the Banks
or any of them to take any action under this Section 15.2 or any other provision
of this Agreement, (v) permit Parent or any Borrower to assign any of its rights
hereunder, (vi) amend or waive any of the provisions of Article V or the
definitions contained in Section 2.1 applicable thereto, (vii) amend or waive
any of the conditions precedent contained in Section 7.1(a) hereof, or (viii)
provide for release or substitution of collateral for the Obligations or any
part thereof other than releases required pursuant to sales of collateral which
are expressly permitted by Section 10.5 hereof. Parent, each Borrower, each
Agent and each Bank further acknowledge that any decision by any Agent or any
Bank to enter into any amendment, waiver or consent pursuant hereto shall be
made by such Bank or such Agent in its sole discretion, and in making any such
decision each such Agent and each such Bank shall be permitted to give due
consideration to any credit or other relationship any such Agent or any such
Bank may have with Parent, any Borrower, any other Credit Party or any Affiliate
of any Credit Party.
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SECTION 15.3. Expenses; Documentary Taxes; Indemnification. (a) Parent
and each Borrower jointly and severally agree to pay (i) all out-of-pocket
expenses of Administrative Agent, including reasonable fees and disbursements of
special counsel for Administrative Agent, in connection with the preparation of
this Agreement and the other Loan Papers and, if appropriate, the recordation of
the Loan Papers, any waiver or consent hereunder or any amendment hereof or any
Default or alleged Default hereunder, and (ii) if an Event of Default occurs,
all out-of-pocket expenses incurred by each Agent and each Bank, including
reasonable fees and disbursements of counsel in connection with such Event of
Default and collection and other enforcement proceedings resulting therefrom,
fees of auditors and consultants incurred in connection therewith and
investigation expenses incurred by each Agent and each Bank in connection
therewith. Parent and each Borrower jointly and severally agree to indemnify
each Bank against any Taxes imposed by reason of the execution and delivery of
this Agreement or the Notes (other than Taxes in respect of the net income of
such Bank).
(b) Parent and each Borrower jointly and severally agree to
indemnify each Indemnified Entity (as defined below), upon demand, from and
against any and all liabilities, obligations, claims, losses, damages,
penalties, fines, actions, judgments, suits, settlements, costs, expenses or
disbursements (including reasonable fees of attorneys, accountants, experts and
advisors) of any kind or nature whatsoever (in this section collectively called
"liabilities and costs") which to any extent (in whole or in part) may be
imposed on, incurred by, or asserted against such Indemnified Entity growing out
of, resulting from or in any other way associated with any of the collateral for
the Loan, the Loan Papers, 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 Applicable
Environmental Laws by any Credit Party or any liabilities or duties of any
Credit Party or of any Indemnified Entity with respect to Hazardous Substances
found in or released into the environment).
THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND
COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM
OR THEORY OF STRICT LIABILITY OR ARE TO ANY EXTENT CAUSED, IN WHOLE OR IN PART,
BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY ANY INDEMNIFIED ENTITY;
provided only that no Indemnified Entity shall be entitled under this Section
15.3(b) 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, or by its own individual
actions with respect to the collateral for the Loan in its possession. As used
in this Section 15.3(b) the term "Indemnified Entity" refers to each Bank, each
Agent, and each director, officer, agent, trustee, manager, attorney, employee,
representative and Affiliate of any such Person.
SECTION 15.4. Right and Sharing of Set-Offs. (a) Upon the occurrence
and during the continuance of any Event of Default, each Bank is hereby
authorized at any time and from time
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to time, to the fullest extent permitted by Law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held and other indebtedness at any time owing by such Bank to or for the
credit or the account of any Credit Party against any and all of the
Obligations, irrespective of whether or not such Bank shall have made any demand
under this Agreement or any Note and although such obligations may be unmatured.
Each Bank agrees promptly to notify such Credit Party after any such setoff and
application made by such Bank, provided that the failure to give such notice
shall not affect the validity of such setoff and application. The rights of each
Bank under this Section 15.4(a) are in addition to other rights and remedies
(including, without limitation, other rights of setoff) which such Bank may
have.
(b) Each Bank agrees that if it shall, by exercising any right
of setoff or counterclaim or otherwise, receive payment after the occurrence and
during the continuance of an Event of Default of a proportion of the aggregate
amount of principal and interest due with respect to the Loan and Letter of
Credit Exposure which is greater than its Commitment Percentage, the Bank
receiving such proportionately greater payment shall purchase such
participations in the interests in the Loan and Letter of Credit Exposure held
by the other Banks, and such other adjustments shall be made, as may be required
so that all such payments of principal and interest and Letter of Credit
Exposure shall be shared by Banks ratably in accordance with their respective
Commitment Percentages; provided that nothing in this Section 15.4 shall impair
the right of any Bank to exercise any right of setoff or counterclaim it may
have and to apply the amount subject to such exercise to the payment of
indebtedness of any Credit Party other than the Obligations. Parent and each
Borrower agree, to the fullest extent they may effectively do so under
applicable Law, that Participants may exercise rights of setoff or counterclaim
and other rights with respect to such participation as fully as if such holder
of a participation were a direct creditor of Parent and/or any Borrower in the
amount of such participation.
SECTION 15.5. Survival. All of the various representations, warranties,
covenants, indemnitees and agreements in the Loan Papers shall survive the
execution and delivery of this Agreement and the other Loan Papers and the
performance hereof and thereof, including the making or granting of the Loan and
the delivery of the Notes and the other Loan Papers, and shall further survive
until all of the Obligations are paid in full to Banks and Agents and all of
Banks' obligations to Borrowers are terminated (provided, that, to the extent
expressly provided in any indemnification clause contained herein or in any
other Loan Paper, such indemnification obligation shall survive payment in full
of the Obligations and termination of the obligations of Banks to Borrowers
hereunder). All statements and agreements contained in any certificate or other
instrument delivered by Parent and/or any Borrower to any Bank or any Agent
under any Loan Paper shall be deemed representations and warranties by Parent
and/or Borrowers or agreements and covenants of Parent and/or Borrowers under
this Agreement. The representations, warranties and covenants made by any Credit
Party (as applicable) in the Loan Papers, and the rights, powers and privileges
granted to Banks and Agents in the Loan Papers, are cumulative, and, except for
expressly specified waivers and consents, no Loan Paper shall be construed in
the context of another to diminish, nullify, or otherwise reduce the benefit to
Banks and Agents of any such representation, warranty, covenant, right, power or
privilege. In particular and without limitation, no exception set out in this
Agreement
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to any representation, warranty or covenant herein contained shall apply to any
similar representation, warranty or covenant contained in any other Loan Paper,
and each such similar representation, warranty or covenant shall be subject only
to those exceptions which are expressly made applicable to it by the terms of
the various Loan Papers.
SECTION 15.6. Limitation on Interest. Each Bank, each Agent, Parent,
each Borrower, each other Credit Party and any other parties to the Loan Papers
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 Papers shall ever be
construed to create a contract to pay, for the use, forbearance or detention of
money, interest in excess of the Maximum Lawful Rate. None of Parent, any
Borrower, any other Credit Party 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 Lawful Rate and the
provisions of this Section 15.6 shall control over all other provisions of the
Loan Papers which may be in conflict or apparent conflict herewith. Each Bank
and each Agent expressly disavow any intention to charge or collect excessive
unearned interest or finance charges in the event the maturity of any Obligation
is accelerated. If (a) the maturity of any Obligation is accelerated for any
reason, (b) any Obligation is prepaid and as a result any amounts held to
constitute interest are determined to be in excess of the Maximum Lawful Rate,
or (c) any Bank 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 the Maximum Lawful Rate, then all such sums determined to constitute
interest in excess of the Maximum Lawful Rate shall, without penalty, be
promptly applied to reduce the then outstanding principal of the related
Obligations or, at any Bank's or such holder's option, promptly returned to
Borrowers or the other payor thereof upon such determination. In determining
whether or not the interest paid or payable, under any specific circumstance,
exceeds the Maximum Lawful Rate, Agents, Banks, Parent, each Borrower, and the
other Credit Parties (and any other payors or payees 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 instrument evidencing the Obligations in accordance
with the amounts outstanding from time to time thereunder and the Maximum Lawful
Rate in order to lawfully charge the Maximum Lawful Rate. To the extent that
Chapter 303 of the Texas Finance Code (or Article 5069-1D.003, VATS) is relevant
for the purpose of determining the Maximum Lawful Rate, each Bank elects to
determine the applicable rate ceiling under such Chapter 303 by the indicated
weekly rate ceiling from time to time in effect.
SECTION 15.7. Invalid Provisions. If any provision of the Loan Papers
is held to be illegal, invalid, or unenforceable under present or future Laws
effective during the term thereof, such provision shall be fully severable, the
Loan Papers shall be construed and enforced as if such illegal, invalid, or
unenforceable provision had never comprised a part thereof, and the remaining
provisions thereof shall remain in full force and effect and shall not be
affected by the illegal, invalid, or
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unenforceable provision or by its severance therefrom. Furthermore, in lieu of
such illegal, invalid, or unenforceable provision there shall be added
automatically as a part of the Loan Papers a provision as similar in terms to
such illegal, invalid, or unenforceable provision as may be possible and be
legal, valid and enforceable.
SECTION 15.8. Waiver of Consumer Credit Laws. Pursuant to Chapter 346
of the Texas Finance Code, as amended, Parent and each Borrower agree that such
Chapter shall not govern or in any manner apply to the Loan.
SECTION 15.9. Successors and Assigns. (a) Each Loan Paper binds and
inures to the parties to it, any intended beneficiary of it, and each of their
respective successors and permitted assigns. Neither Parent, any Borrower nor
any other Credit Party may assign or transfer any rights or obligations under
any Loan Paper without first obtaining all Banks' consent, and any purported
assignment or transfer without all Banks' consent is void. No Bank may transfer,
pledge, assign, sell any participation in, or otherwise encumber its portion of
the Obligations except as permitted by clause (b) or (c) below.
(b) Any Bank may (subject to the provisions of this section,
in accordance with applicable Law, in the ordinary course of its business, and
at any time) sell to one or more Persons (each a "Participant") participating
interests in its portion of the Obligations. The selling Bank remains a "Bank"
under the Loan Papers, the Participant does not become a "Bank" under the Loan
Papers, and the selling Bank's obligations under the Loan Papers remain
unchanged. The selling Bank remains solely responsible for the performance of
its obligations and remains the holder of its share of the outstanding Loan for
all purposes under the Loan Papers. Parent, each Borrower and each Agent shall
continue to deal solely and directly with the selling Bank in connection with
that Bank's rights and obligations under the Loan Papers, and each Bank must
retain the sole right and responsibility to enforce due obligations of any
Borrower and/or any other Credit Party. Participants have no rights under the
Loan Papers except certain voting rights as provided below. Subject to the
following, each Bank may obtain (on behalf of its Participants) the benefits of
Article XIV with respect to all participations in its part of the Obligations
outstanding from time to time so long as Borrowers are not obligated to pay any
amount in excess of the amount that would be due to that Bank under Article XIV
calculated as though no participations have been made. No Bank may sell any
participating interest under which the Participant has any rights to approve any
amendment, modification, or waiver of any Loan Paper except to the extent such
amendment, modification or waiver would (i) extend the Termination Date, (ii)
reduce the interest rate or fees applicable to the Commitments or any portion of
the Loan in which such Participant is participating, or postpone the payment of
any thereof, or (iii) release all or substantially all of the collateral or
guarantees securing any portion of the Total Commitment or the Loan in which
such Participant is participating. In addition, each agreement creating any
participation must include an agreement by the Participant to be bound by the
provisions of Section 15.15.
(c) Each Bank may make assignments to the Federal Reserve
Bank. Each Bank may also assign to one or more assignees (each an "Assignee")
all or any part of its rights and
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obligations under the Loan Papers so long as (i) the assignor Bank and Assignee
execute and deliver to Administrative Agent and Borrowers for their consent and
acceptance (which may not be unreasonably withheld and which, in the case of
Borrowers, will not be required during the existence of an Event of Default) an
assignment and assumption agreement in substantially the form of Exhibit K (an
"Assignment and Assumption Agreement") and Assignee pays to Administrative Agent
a processing fee of $3,000, (ii) Assignee acquires an identical percentage
interest in the Commitment of the assignor Bank and an identical percentage of
the interests in the outstanding Loan held by such assignor Bank, (iii) the
conditions (including, without limitation, minimum amounts of the Total
Commitment that may be assigned or that must be retained) for that assignment
set forth in the applicable Assignment and Assumption Agreement are satisfied,
and (iv) the portion of the Commitment assigned is at least $5,000,000. The
"Effective Date" in each Assignment and Assumption Agreement must (unless a
shorter period is agreeable to Borrowers and Administrative Agent) be at least
five (5) Domestic Business Days after it is executed and delivered by the
assignor Bank and Assignee to Administrative Agent and Borrowers (if Borrowers'
acceptance is required) for acceptance. Once that Assignment and Assumption
Agreement is accepted by Administrative Agent and Borrowers (if Borrowers'
acceptance is required), then, from and after the Effective Date stated in such
Assignment and Assumption Agreement (i) Assignee automatically becomes a party
to this Agreement and, to the extent provided in that Assignment and Assumption
Agreement, has the rights and obligations of a Bank under the Loan Papers, (ii)
the assignor Bank, to the extent provided in that Assignment and Assumption
Agreement, is released from its obligations to fund Borrowings under this
Agreement and its reimbursement obligations under this Agreement and, in the
case of an Assignment and Assumption Agreement covering all of the remaining
portion of the assignor Bank's rights and obligations under the Loan Papers,
that Bank ceases to be a party to the Loan Papers, (iii) Borrowers shall execute
and deliver to the assignor Bank and Assignee the appropriate Notes in
accordance with this Agreement following the transfer, (iv) upon delivery of the
Notes under clause (iii) preceding, the assignor Bank shall return to Borrowers
all Notes previously delivered to that Bank under this Agreement, and (v)
Schedule 1 is automatically deemed to be amended to reflect the name, address,
telecopy number, and Commitment of Assignee and the remaining Commitment (if
any) of the assignor Bank, and Administrative Agent shall prepare and circulate
to Borrowers and Banks an amended Schedule 1 reflecting those changes.
SECTION 15.10. Applicable Law and Jurisdiction. THIS AGREEMENT, EACH
NOTE AND THE OTHER LOAN PAPERS (INCLUDING, BUT NOT LIMITED TO, THE VALIDITY AND
ENFORCEABILITY HEREOF AND THEREOF) SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, OTHER THAN CONFLICT OF LAWS
RULES THEREOF, EXCEPT TO THE EXTENT THAT THE LAWS OF ANY STATE IN WHICH ANY
PROPERTY INTENDED AS SECURITY FOR THE OBLIGATIONS IS LOCATED NECESSARILY GOVERN
(A) THE PERFECTION AND PRIORITY OF THE LIENS IN FAVOR OF ADMINISTRATIVE AGENT
AND BANKS WITH RESPECT TO SUCH PROPERTY, AND (B) THE EXERCISE OF ANY REMEDIES
(INCLUDING FORECLOSURE) WITH RESPECT TO SUCH PROPERTY. Any legal action or
proceeding against Parent and/or any Borrower with respect to this Agreement or
any Loan Paper may be brought in the courts of the State of New York, the U.S.
Federal Courts in such state, sitting
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in the County of New York, or in the courts of any other jurisdiction where such
action or proceeding may be properly brought, and Parent and each Borrower
hereby irrevocably accept the jurisdiction of such courts for the purpose of any
action or proceeding. Parent and each Borrower hereby designate and irrevocably
appoint and empower C T Corporation System (the "Process Agent"), currently
located at 1633 Broadway, New York, New York 10019 as their authorized agent to
accept, receive and acknowledge, for and on behalf of Parent and each Borrower
and their property, service of any and all process which may be served but only
in any action, suit or proceeding of the nature referred to above in the State
of New York and further agree that failure of such firm to give Parent and each
Borrower any notice of any such service shall not impair or affect the validity
of such service or of any judgment rendered in any action or proceeding based
thereon. Parent and each Borrower hereby irrevocably authorize and direct the
Process Agent to accept such service on their behalf. Parent and each Borrower
further irrevocably consent to the service of process out of said courts by the
mailing thereof by Administrative Agent by U.S. registered or certified mail
postage prepaid to Parent and/or any Borrower at its address designated in
Section 15.1. Parent and each Borrower agree that a final judgment in any action
or proceeding shall be conclusive and may be enforced in any other jurisdiction
by suit on the judgment or in any other manner provided by Law. Nothing in this
Section 15.10 shall affect the rights of any Bank or any Agent to serve legal
process in any other manner permitted by Law or affect the right of any Bank or
any Agent to bring any action or proceeding against Parent and/or any Borrower
or their properties in the courts of any other jurisdiction. To the extent that
Parent or any Borrower has or hereafter may acquire any immunity from
jurisdiction of any court or from any legal process (whether through service of
notice, attachment prior to judgment, attachment in aid of execution, execution
or otherwise) with respect to either itself or its property, Parent and each
Borrower hereby irrevocably waive such immunity in respect of their obligations
under this Agreement and the other Loan Papers. Parent and each Borrower hereby
irrevocably waive any objection which they may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Agreement or any Loan Paper brought in the Supreme Court of the State of
New York, County of New York or the U.S. District Court for the Southern
District of New York, and hereby further irrevocably waive any claims that any
such suit, action or proceeding brought in any such court has been brought in an
inconvenient forum.
SECTION 15.11. Counterparts; Effectiveness. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when Administrative Agent
shall have received counterparts hereof signed by all of the parties hereto or,
in the case of any Bank as to which an executed counterpart shall not have been
received, Administrative Agent shall have received telegraphic or other written
confirmation from such Bank of execution of a counterpart hereof by such Bank.
SECTION 15.12. No Third Party Beneficiaries. It is expressly intended
that there shall be no third party beneficiaries of the covenants, agreements,
representations or warranties herein contained other than Book Manager and Sole
Lead Arranger and Participants and Assignees
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permitted pursuant to Section 15.9 and Affiliates of any Bank which hold any
part of the Obligations.
SECTION 15.13. COMPLETE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN
PAPERS COLLECTIVELY REPRESENT THE FINAL AGREEMENT BY AND AMONG BANKS, AGENTS,
PARENT AND BORROWERS AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF BANKS, AGENTS, PARENT AND
BORROWERS. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN OR AMONG BANKS,
AGENTS, PARENT AND BORROWERS.
SECTION 15.14. WAIVER OF JURY TRIAL, PUNITIVE DAMAGES, ETC. EACH OF
PARENT, EACH BORROWER, EACH AGENT, AND EACH BANK 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 PAPERS OR ANY TRANSACTION CONTEMPLATED
THEREBY OR ASSOCIATED THEREWITH, BEFORE OR 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 DAMAGES," AS DEFINED BELOW;
(c) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OR COUNSEL
FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT
SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVERS; AND (d) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT, THE OTHER LOAN PAPERS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND
THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED
IN THIS SECTION. AS USED IN THIS SECTION, "SPECIAL DAMAGES" INCLUDES ALL
SPECIAL, CONSEQUENTIAL, EXEMPLARY, OR PUNITIVE DAMAGES (REGARDLESS OF HOW
NAMED), BUT DOES NOT INCLUDE ANY PAYMENT OR FUNDS WHICH ANY PARTY HERETO HAS
EXPRESSLY PROMISED TO PAY OR DELIVER TO ANY OTHER PARTY HERETO.
SECTION 15.15. Confidential Information. Each Agent and each Bank agree
that all documentation and other information made available by any Credit Party
to such Agent or such Bank under the terms of this Agreement shall (except to
the extent such documentation or other information is publicly available or
hereafter becomes publicly available other than by action of any Agent or any
Bank, or was theretofore known or hereinafter becomes known to such Agent or
such Bank independent of any disclosure thereto by any Credit Party) be held in
the strictest confidence by such Agent or such Bank and used solely in the
administration and enforcement of the Loan from time to time outstanding from
such Bank to Borrowers and in the prosecution or defense of legal proceedings
arising in connection herewith; provided that (i) such Agent or such Bank may
disclose
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documentation and information to any Agent and/or any Bank which is a party to
this Agreement or any Affiliates thereof, and (ii) such Agent or such Bank may
disclose such documentation or other information to any other bank or other
Person to which such Bank sells or proposes to make an assignment or sell a
participation in the Loan hereunder if such other bank or Person, prior to such
disclosure, agrees in writing to be bound by the terms of this Section 15.15.
Notwithstanding the foregoing, nothing contained herein shall be construed to
prevent an Agent or a Bank from (a) making disclosure of any information (i) if
required to do so by applicable Law or regulation or accepted banking practices,
(ii) to any governmental agency or regulatory body having or claiming to have
authority to regulate or oversee any aspect of such Bank's business or that of
such Bank's corporate parent or Affiliates in connection with the exercise of
such authority or claimed authority, (iii) pursuant to any subpoena or if
otherwise compelled in connection with any litigation or administrative
proceeding, (iv) to correct any false or misleading information which may become
public concerning such Person's relationship to any Credit Party, or (v) to the
extent such Agent or such Bank or its counsel deems necessary or appropriate to
effect or preserve its security for the Obligations or any portion thereof or to
enforce any remedy provided in this Agreement, or any other Loan Paper, or
otherwise available by law; or (b) making, on a confidential basis, such
disclosures as such Bank reasonably deems necessary or appropriate to its legal
counsel or accountants (including outside auditors). If such Agent or such Bank
is compelled to disclose such confidential information in a proceeding
requesting such disclosure, such Agent or such Bank shall seek to obtain
assurance that such confidential treatment will be accorded such information;
provided, however, that no Agent nor any Bank shall have any liability for the
failure to obtain such treatment.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective Authorized Officers effective as of the day
and year first above written.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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SIGNATURE PAGE
TO
AMENDED AND RESTATED CREDIT AGREEMENT BY AND AMONG
PRIZE ENERGY RESOURCES, L.P.,
VISTA RESOURCES PARTNERS, L.P. AND
MIDLAND RESOURCES, INC., AS BORROWERS,
PRIZE ENERGY CORP., AS PARENT GUARANTOR,
THE FINANCIAL INSTITUTIONS LISTED ON SCHEDULE 1 THERETO, AS BANKS
BANKBOSTON, N.A., AS ADMINISTRATIVE AGENT,
FIRST UNION NATIONAL BANK, AS SYNDICATION AGENT,
CIBC INC., AS DOCUMENTATION AGENT,
AND
BANK ONE, TEXAS, N.A., AS LEAD MANAGER
BORROWERS:
PRIZE ENERGY RESOURCES, L.P., Address for Notice:
a Delaware limited partnership ------------------
By: Prize Operating Company, a Delaware 3500 William D. Tate
corporation, its sole general partner Suite 200
Grapevine, Texas 76051
Attn: Lon C. Kile
By: /s/ Lon C. Kile Telecopy No.: (817) 416-4206
------------------------------
Lon C. Kile, with a copy to:
President
Natural Gas Partners
777 Main Street, Suite 2250
Fort Worth, Texas 76102
Attn: Kenneth A. Hersh
Telecopy No.: (817) 820-6650
Signature Page
<PAGE> 98
SIGNATURE PAGE
TO
AMENDED AND RESTATED CREDIT AGREEMENT BY AND AMONG
PRIZE ENERGY RESOURCES, L.P.,
VISTA RESOURCES PARTNERS, L.P. AND
MIDLAND RESOURCES, INC., AS BORROWERS,
PRIZE ENERGY CORP., AS PARENT GUARANTOR,
THE FINANCIAL INSTITUTIONS LISTED ON SCHEDULE 1 THERETO, AS BANKS
BANKBOSTON, N.A., AS ADMINISTRATIVE AGENT,
FIRST UNION NATIONAL BANK, AS SYNDICATION AGENT,
CIBC INC., AS DOCUMENTATION AGENT,
AND
BANK ONE, TEXAS, N.A., AS LEAD MANAGER
VISTA RESOURCES PARTNERS, L.P., Address for Notice:
a Texas limited partnership -------------------
By: Vista Resources I, Inc., a Texas 3500 William D. Tate
corporation, its sole general partner Suite 200
Grapevine, Texas 76051
Attn: Lon C. Kile
By: /s/ Lon C. Kile Telecopy No.: (817) 416-4206
-----------------------------------
Lon C. Kile, with a copy to:
President
Natural Gas Partners
777 Main Street, Suite 2250
Fort Worth, Texas 76102
Attn: Kenneth A. Hersh
Telecopy No.: (817) 820-6650
Signature Page
<PAGE> 99
SIGNATURE PAGE
TO
AMENDED AND RESTATED CREDIT AGREEMENT BY AND AMONG
PRIZE ENERGY RESOURCES, L.P.,
VISTA RESOURCES PARTNERS, L.P. AND
MIDLAND RESOURCES, INC., AS BORROWERS,
PRIZE ENERGY CORP., AS PARENT GUARANTOR,
THE FINANCIAL INSTITUTIONS LISTED ON SCHEDULE 1 THERETO, AS BANKS
BANKBOSTON, N.A., AS ADMINISTRATIVE AGENT,
FIRST UNION NATIONAL BANK, AS SYNDICATION AGENT,
CIBC INC., AS DOCUMENTATION AGENT,
AND
BANK ONE, TEXAS, N.A., AS LEAD MANAGER
MIDLAND RESOURCES, INC., Address for Notice:
a Texas corporation -------------------
3500 William D. Tate
Suite 200
By: /s/ Lon C. Kile Grapevine, Texas 76051
------------------------ Attn: Lon C. Kile
Lon C. Kile, Telecopy No.: (817) 416-4206
President
with a copy to:
Natural Gas Partners
777 Main Street, Suite 2250
Fort Worth, Texas 76102
Attn: Kenneth A. Hersh
Telecopy No.: (817) 820-6650
Signature Page
<PAGE> 100
SIGNATURE PAGE
TO
AMENDED AND RESTATED CREDIT AGREEMENT BY AND AMONG
PRIZE ENERGY RESOURCES, L.P.,
VISTA RESOURCES PARTNERS, L.P. AND
MIDLAND RESOURCES, INC., AS BORROWERS,
PRIZE ENERGY CORP., AS PARENT GUARANTOR,
THE FINANCIAL INSTITUTIONS LISTED ON SCHEDULE 1 THERETO, AS BANKS
BANKBOSTON, N.A., AS ADMINISTRATIVE AGENT,
FIRST UNION NATIONAL BANK, AS SYNDICATION AGENT,
CIBC INC., AS DOCUMENTATION AGENT,
AND
BANK ONE, TEXAS, N.A., AS LEAD MANAGER
PARENT: Address for Notice:
- ------ ------------------
PRIZE ENERGY CORP., 3500 William D. Tate
a Delaware corporation Suite 200
Grapevine, Texas 76051
Attn: Lon C. Kile
Telecopy No.: (817) 416-4206
By: /s/ Lon C. Kile
----------------------------
Lon C. Kile, with a copy to:
President
Natural Gas Partners
777 Main Street, Suite 2250
Fort Worth, Texas 76102
Attn: Kenneth A. Hersh
Telecopy No.: (817) 820-6650
Signature Page
<PAGE> 101
SIGNATURE PAGE
TO
AMENDED AND RESTATED CREDIT AGREEMENT BY AND AMONG
PRIZE ENERGY RESOURCES, L.P.,
VISTA RESOURCES PARTNERS, L.P. AND
MIDLAND RESOURCES, INC., AS BORROWERS,
PRIZE ENERGY CORP., AS PARENT GUARANTOR,
THE FINANCIAL INSTITUTIONS LISTED ON SCHEDULE 1 THERETO, AS BANKS
BANKBOSTON, N.A., AS ADMINISTRATIVE AGENT,
FIRST UNION NATIONAL BANK, AS SYNDICATION AGENT,
CIBC INC., AS DOCUMENTATION AGENT,
AND
BANK ONE, TEXAS, N.A., AS LEAD MANAGER
ADMINISTRATIVE AGENT:
BANKBOSTON, N.A.
By: /s/ Kristine A. Kasselman
-------------------------------------
Kristine A. Kasselman
Managing Director
Signature Page
<PAGE> 102
SIGNATURE PAGE
TO
AMENDED AND RESTATED CREDIT AGREEMENT BY AND AMONG
PRIZE ENERGY RESOURCES, L.P.,
VISTA RESOURCES PARTNERS, L.P. AND
MIDLAND RESOURCES, INC., AS BORROWERS,
PRIZE ENERGY CORP., AS PARENT GUARANTOR,
THE FINANCIAL INSTITUTIONS LISTED ON SCHEDULE 1 THERETO, AS BANKS
BANKBOSTON, N.A., AS ADMINISTRATIVE AGENT,
FIRST UNION NATIONAL BANK, AS SYNDICATION AGENT,
CIBC INC., AS DOCUMENTATION AGENT,
AND
BANK ONE, TEXAS, N.A., AS LEAD MANAGER
SYNDICATION AGENT:
FIRST UNION NATIONAL BANK
By: /s/ Robert R. Wetteroff
--------------------------------
Robert R. Wetteroff
Senior Vice President
Signature Page
<PAGE> 103
SIGNATURE PAGE
TO
AMENDED AND RESTATED CREDIT AGREEMENT BY AND AMONG
PRIZE ENERGY RESOURCES, L.P.,
VISTA RESOURCES PARTNERS, L.P. AND
MIDLAND RESOURCES, INC., AS BORROWERS,
PRIZE ENERGY CORP., AS PARENT GUARANTOR,
THE FINANCIAL INSTITUTIONS LISTED ON SCHEDULE 1 THERETO, AS BANKS
BANKBOSTON, N.A., AS ADMINISTRATIVE AGENT,
FIRST UNION NATIONAL BANK, AS SYNDICATION AGENT,
CIBC INC., AS DOCUMENTATION AGENT,
AND
BANK ONE, TEXAS, N.A., AS LEAD MANAGER
DOCUMENTATION AGENT:
CIBC INC.
By: /s/ M. Beth Miller
--------------------------------
M. Beth Miller
Authorized Signatory
Signature Page
<PAGE> 104
SIGNATURE PAGE
TO
AMENDED AND RESTATED CREDIT AGREEMENT BY AND AMONG
PRIZE ENERGY RESOURCES, L.P.,
VISTA RESOURCES PARTNERS, L.P. AND
MIDLAND RESOURCES, INC., AS BORROWERS,
PRIZE ENERGY CORP., AS PARENT GUARANTOR,
THE FINANCIAL INSTITUTIONS LISTED ON SCHEDULE 1 THERETO, AS BANKS
BANKBOSTON, N.A., AS ADMINISTRATIVE AGENT,
FIRST UNION NATIONAL BANK, AS SYNDICATION AGENT,
CIBC INC., AS DOCUMENTATION AGENT,
AND
BANK ONE, TEXAS, N.A., AS LEAD MANAGER
LEAD MANAGER:
BANK ONE, TEXAS, N.A.
By: /s/ Myron C. Feldman
--------------------------------
Myron C. Feldman
First Vice President
Signature Page
<PAGE> 105
SIGNATURE PAGE
TO
AMENDED AND RESTATED CREDIT AGREEMENT BY AND AMONG
PRIZE ENERGY RESOURCES, L.P.,
VISTA RESOURCES PARTNERS, L.P. AND
MIDLAND RESOURCES, INC., AS BORROWERS,
PRIZE ENERGY CORP., AS PARENT GUARANTOR,
THE FINANCIAL INSTITUTIONS LISTED ON SCHEDULE 1 THERETO, AS BANKS
BANKBOSTON, N.A., AS ADMINISTRATIVE AGENT,
FIRST UNION NATIONAL BANK, AS SYNDICATION AGENT,
CIBC INC., AS DOCUMENTATION AGENT,
AND
BANK ONE, TEXAS, N.A., AS LEAD MANAGER
BANKBOSTON, N.A.
By: /s/ Kristine A. Kasselman
--------------------------------
Kristine A. Kasselman
Managing Director
Signature Page
<PAGE> 106
SIGNATURE PAGE
TO
AMENDED AND RESTATED CREDIT AGREEMENT BY AND AMONG
PRIZE ENERGY RESOURCES, L.P.,
VISTA RESOURCES PARTNERS, L.P. AND
MIDLAND RESOURCES, INC., AS BORROWERS,
PRIZE ENERGY CORP., AS PARENT GUARANTOR,
THE FINANCIAL INSTITUTIONS LISTED ON SCHEDULE 1 THERETO, AS BANKS
BANKBOSTON, N.A., AS ADMINISTRATIVE AGENT,
FIRST UNION NATIONAL BANK, AS SYNDICATION AGENT,
CIBC INC., AS DOCUMENTATION AGENT,
AND
BANK ONE, TEXAS, N.A., AS LEAD MANAGER
FIRST UNION NATIONAL BANK
By: /s/ Robert R. Wetteroff
--------------------------------
Robert R. Wetteroff
Senior Vice President
Signature Page
<PAGE> 107
SIGNATURE PAGE
TO
AMENDED AND RESTATED CREDIT AGREEMENT BY AND AMONG
PRIZE ENERGY RESOURCES, L.P.,
VISTA RESOURCES PARTNERS, L.P. AND
MIDLAND RESOURCES, INC., AS BORROWERS,
PRIZE ENERGY CORP., AS PARENT GUARANTOR,
THE FINANCIAL INSTITUTIONS LISTED ON SCHEDULE 1 THERETO, AS BANKS
BANKBOSTON, N.A., AS ADMINISTRATIVE AGENT,
FIRST UNION NATIONAL BANK, AS SYNDICATION AGENT,
CIBC INC., AS DOCUMENTATION AGENT,
AND
BANK ONE, TEXAS, N.A., AS LEAD MANAGER
CIBC INC.
By: /s/ M. Beth Miller
--------------------------------
M. Beth Miller
Authorized Signatory
Signature Page
<PAGE> 108
SIGNATURE PAGE
TO
AMENDED AND RESTATED CREDIT AGREEMENT BY AND AMONG
PRIZE ENERGY RESOURCES, L.P.,
VISTA RESOURCES PARTNERS, L.P. AND
MIDLAND RESOURCES, INC., AS BORROWERS,
PRIZE ENERGY CORP., AS PARENT GUARANTOR,
THE FINANCIAL INSTITUTIONS LISTED ON SCHEDULE 1 THERETO, AS BANKS
BANKBOSTON, N.A., AS ADMINISTRATIVE AGENT,
FIRST UNION NATIONAL BANK, AS SYNDICATION AGENT,
CIBC INC., AS DOCUMENTATION AGENT,
AND
BANK ONE, TEXAS, N.A., AS LEAD MANAGER
BANK ONE, TEXAS, N.A.
By: /s/ Myron C. Feldman
--------------------------------
Myron C. Feldman
First Vice President
Signature Page
<PAGE> 109
SIGNATURE PAGE
TO
AMENDED AND RESTATED CREDIT AGREEMENT BY AND AMONG
PRIZE ENERGY RESOURCES, L.P.,
VISTA RESOURCES PARTNERS, L.P. AND
MIDLAND RESOURCES, INC., AS BORROWERS,
PRIZE ENERGY CORP., AS PARENT GUARANTOR,
THE FINANCIAL INSTITUTIONS LISTED ON SCHEDULE 1 THERETO, AS BANKS
BANKBOSTON, N.A., AS ADMINISTRATIVE AGENT,
FIRST UNION NATIONAL BANK, AS SYNDICATION AGENT,
CIBC INC., AS DOCUMENTATION AGENT,
AND
BANK ONE, TEXAS, N.A., AS LEAD MANAGER
CHRISTIANIA BANK
By: /s/ William S. Phillips
--------------------------------
William S. Phillips
First Vice President
Signature Page
<PAGE> 110
SIGNATURE PAGE
TO
AMENDED AND RESTATED CREDIT AGREEMENT BY AND AMONG
PRIZE ENERGY RESOURCES, L.P.,
VISTA RESOURCES PARTNERS, L.P. AND
MIDLAND RESOURCES, INC., AS BORROWERS,
PRIZE ENERGY CORP., AS PARENT GUARANTOR,
THE FINANCIAL INSTITUTIONS LISTED ON SCHEDULE 1 THERETO, AS BANKS
BANKBOSTON, N.A., AS ADMINISTRATIVE AGENT,
FIRST UNION NATIONAL BANK, AS SYNDICATION AGENT,
CIBC INC., AS DOCUMENTATION AGENT,
AND
BANK ONE, TEXAS, N.A., AS LEAD MANAGER
BANK OF SCOTLAND
By: /s/ Annie Glynn
--------------------------------
Annie Glynn
Senior Vice President
Signature Page
<PAGE> 111
SIGNATURE PAGE
TO
AMENDED AND RESTATED CREDIT AGREEMENT BY AND AMONG
PRIZE ENERGY RESOURCES, L.P.,
VISTA RESOURCES PARTNERS, L.P. AND
MIDLAND RESOURCES, INC., AS BORROWERS,
PRIZE ENERGY CORP., AS PARENT GUARANTOR,
THE FINANCIAL INSTITUTIONS LISTED ON SCHEDULE 1 THERETO, AS BANKS
BANKBOSTON, N.A., AS ADMINISTRATIVE AGENT,
FIRST UNION NATIONAL BANK, AS SYNDICATION AGENT,
CIBC INC., AS DOCUMENTATION AGENT,
AND
BANK ONE, TEXAS, N.A., AS LEAD MANAGER
COMERICA BANK - TEXAS
By: /s/ Jeffrey H. Rathlamp
--------------------------------
Jeffrey H. Rathlamp
Assistant Vice President
Signature Page
<PAGE> 112
SIGNATURE PAGE
TO
AMENDED AND RESTATED CREDIT AGREEMENT BY AND AMONG
PRIZE ENERGY RESOURCES, L.P.,
VISTA RESOURCES PARTNERS, L.P. AND
MIDLAND RESOURCES, INC., AS BORROWERS,
PRIZE ENERGY CORP., AS PARENT GUARANTOR,
THE FINANCIAL INSTITUTIONS LISTED ON SCHEDULE 1 THERETO, AS BANKS
BANKBOSTON, N.A., AS ADMINISTRATIVE AGENT,
FIRST UNION NATIONAL BANK, AS SYNDICATION AGENT,
CIBC INC., AS DOCUMENTATION AGENT,
AND
BANK ONE, TEXAS, N.A., AS LEAD MANAGER
MEESPIERSON CAPITAL CORP.
By: /s/ Deirdre Sanborn
--------------------------------
Deirdre Sanborn
Vice President
Signature Page
<PAGE> 113
SIGNATURE PAGE
TO
AMENDED AND RESTATED CREDIT AGREEMENT BY AND AMONG
PRIZE ENERGY RESOURCES, L.P.,
VISTA RESOURCES PARTNERS, L.P. AND
MIDLAND RESOURCES, INC., AS BORROWERS,
PRIZE ENERGY CORP., AS PARENT GUARANTOR,
THE FINANCIAL INSTITUTIONS LISTED ON SCHEDULE 1 THERETO, AS BANKS
BANKBOSTON, N.A., AS ADMINISTRATIVE AGENT,
FIRST UNION NATIONAL BANK, AS SYNDICATION AGENT,
CIBC INC., AS DOCUMENTATION AGENT,
AND
BANK ONE, TEXAS, N.A., AS LEAD MANAGER
THE BANK OF NOVA SCOTIA
By: /s/ F. C. H. Ashby
--------------------------------
F. C. H. Ashby
Senior Manager Loan Operations
Signature Page
<PAGE> 114
SIGNATURE PAGE
TO
AMENDED AND RESTATED CREDIT AGREEMENT BY AND AMONG
PRIZE ENERGY RESOURCES, L.P.,
VISTA RESOURCES PARTNERS, L.P. AND
MIDLAND RESOURCES, INC., AS BORROWERS,
PRIZE ENERGY CORP., AS PARENT GUARANTOR,
THE FINANCIAL INSTITUTIONS LISTED ON SCHEDULE 1 THERETO, AS BANKS
BANKBOSTON, N.A., AS ADMINISTRATIVE AGENT,
FIRST UNION NATIONAL BANK, AS SYNDICATION AGENT,
CIBC INC., AS DOCUMENTATION AGENT,
AND
BANK ONE, TEXAS, N.A., AS LEAD MANAGER
THE FROST NATIONAL BANK
By: /s/ John S. Warren
--------------------------------
John S. Warren
Senior Vice President
Signature Page
<PAGE> 115
EXHIBIT A
This Instrument was prepared by,
and when recorded should be returned to:
Vinson & Elkins L.L.P.
2001 Ross Avenue
3700 Trammell Crow Center
Dallas, Texas 75201
Attn: Susan D. Hamilton
================================================================================
ASSIGNMENT OF LIENS AND AMENDMENT TO MORTGAGE
This Assignment of Liens and Amendment to Mortgage (this "Assignment")
is entered into as of the 8th day of February, 2000, among Prize Energy
Resources, L.P., a Delaware limited partnership ("Prize LP"), Vista Resources
Partners, L.P., a Texas limited partnership ("Vista LP"), Midland Resources,
Inc., a Texas corporation ("Midland" and, collectively with Prize LP and Vista
LP, "Borrowers" and each individually, a "Borrower"), BankBoston, N.A., a
national banking association, as Administrative Agent ("Administrative Agent")
for Banks under and as defined in the Credit Agreement (as hereinafter defined),
and BankBoston, N.A., a national banking association, as administrative agent
("Vista Administrative Agent") for Lenders under and as defined in the Existing
Vista Credit Agreement (as hereinafter defined). The Lenders under and as
defined in the Existing Vista Credit Agreement are collectively referred to
herein as "Existing Vista Lenders" and individually as an "Existing Vista
Lender").
W I T N E S S E T H:
WHEREAS, Vista LP, Midland (Vista LP and Midland being collectively
referred to herein as "Mortgagors"), Existing Vista Lenders and Vista
Administrative Agent are parties to that certain Credit Agreement, dated as of
December 18, 1998 (as amended through, but excluding, the date hereof, the
"Existing Vista Credit Agreement"), pursuant to which Existing Vista Lenders
have made a Loan (as defined in the Existing Vista Credit Agreement, which Loan
is referred to herein as the "Existing Vista Loan") to Mortgagors; and
WHEREAS, pursuant to that certain Merger Certificate (as defined in the
Credit Agreement), PEC Acquisition Corp., a Delaware corporation, which is a
wholly-owned subsidiary of Prize Energy Corp. (formerly known as Vista Energy
Resources, Inc.), a Delaware corporation ("Parent"), has merged with and into
Prize Natural Resources, Inc. (formerly Prize Energy Corp.), a Delaware
corporation ("Former Prize"), with Former Prize being the surviving corporation
as a wholly-owned subsidiary of Parent; and
A - 1
<PAGE> 116
WHEREAS, Borrowers, Parent, Administrative Agent, First Union National
Bank, as Syndication Agent, CIBC Inc., as Documentation Agent, Bank One, Texas,
N.A., as Lead Manager and Banks are parties to that certain Amended and Restated
Credit Agreement (the "Credit Agreement"), dated as of February 8, 2000,
pursuant to which Banks have agreed to make loans and other extensions of credit
to Borrowers, the proceeds of which loans and extensions of credit will, among
other things, be used by Borrowers to refinance the Obligations outstanding
under, and as defined in, the Existing Vista Credit Agreement (unless otherwise
defined herein, all terms used herein with their initial letter capitalized
shall have the meaning given such terms in the Credit Agreement); and
WHEREAS, the Existing Vista Loan is evidenced by, and Existing Vista
Lenders are (as applicable), the present owners and holders of, that certain (a)
Promissory Note (as amended, renewed, increased, extended, restated or otherwise
modified from time to time, the "Existing Vista BankBoston Note") dated June 30,
1999, executed by Mortgagors and payable to the order of BankBoston, N.A., in
the original principal amount of $30,000,000, (b) Promissory Note (as amended,
renewed, increased, extended, restated or otherwise modified from time to time,
the "Existing Vista MeesPierson Note") dated June 30, 1999, executed by
Mortgagors and payable to the order of MeesPierson Capital Corp., in the
original principal amount of $15,000,000, and (c) Promissory Note (as amended,
renewed, increased, extended, restated or otherwise modified from time to time,
the "Existing Vista BOS Note," and, collectively with the Existing Vista
BankBoston Note and the Existing Vista MeesPierson Note, referred to herein as
the "Existing Vista Notes" and each individually on "Existing Vista Note") dated
June 30, 1999, executed by Mortgagors and payable to the order of Bank of
Scotland, in the original principal amount of $10,000,000; and
WHEREAS, the Existing Vista Notes are secured in part by that certain
(a) Deed of Trust, Mortgage, Line of Credit Mortgage, Assignment, Security
Agreement, Fixture Filing and Financing Statement dated December 18, 1998, from
Vista LP to Vista Administrative Agent for the benefit of Existing Vista
Lenders, and (b) Deed of Trust, Mortgage, Line of Credit Mortgage, Assignment,
Security Agreement, Fixture Filing and Financing Statement dated December 18,
1998, from Midland to Vista Administrative Agent for the benefit of Existing
Vista Lenders (as such instruments have amended, supplemented, restated or
otherwise modified from time to time, the "Existing Vista Mortgages"), which
Existing Vista Mortgages have been recorded as set forth in Schedule I attached
hereto and incorporated herein; and
WHEREAS, as a condition to the making of the Loan under and as defined
in the Credit Agreement, Banks have required that (a) Existing Vista Lenders (i)
endorse their applicable Existing Vista Note to BankBoston, N.A., as
Administrative Agent for the ratable benefit of Banks, and (ii) deliver the
original of such Existing Vista Note so endorsed to Administrative Agent, (b)
Vista Administrative Agent assign to BankBoston, N.A., as Administrative Agent
for Banks under the Credit Agreement, all liens securing the payment of the
Existing Vista Notes, including, without limitation, the Existing Vista
Mortgages, and (b) the Existing Vista Mortgages be amended in certain respects;
and
WHEREAS, Vista Administrative Agent has agreed to assign all liens
securing the payment of the Existing Vista Notes, including, without limitation,
the Existing Vista Mortgages, to
A - 2
<PAGE> 117
Administrative Agent for the ratable benefit of each Bank (as provided in the
Credit Agreement); and
WHEREAS, the parties desire to enter into this Assignment to, among
other things, evidence the assignment of all liens securing payment of the
Existing Vista Notes, including, without limitation, the Existing Vista
Mortgages, from Vista Administrative Agent to Administrative Agent.
NOW, THEREFORE, in consideration of the promises contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties agree
as follows:
I.
TRANSFER OF EXISTING COLLATERAL
Borrowers hereby acknowledge and agree that the liens, security
interests and assignments securing the payment and performance of the
Obligations under and as defined in the Existing Vista Credit Agreement shall
not be released, but shall be carried forward, renewed and extended to secure
the Obligations under and as defined in the Credit Agreement, it being
understood and agreed that the Credit Agreement and this Assignment effect a
renewal, extension, amendment and restatement of the obligations, indebtedness,
and liabilities of Borrowers under the Existing Vista Notes and the Existing
Vista Mortgages. In connection therewith, Vista Administrative Agent shall
execute and deliver such assignments (including, without limitation, UCC-3
assignments), amendments, modifications and other documents, instruments and
agreements (collectively, the "Collateral Transfer Documents") as are necessary
to transfer of record to Administrative Agent the rights of Vista Administrative
Agent as mortgagee, secured party and/or assignee under all mortgages
(including, without limitation, the Existing Vista Mortgages), security
agreements, assignments of notes and liens, collateral assignments, chattel
mortgages, collateral chattel mortgages, financing statements, memorandums and
other documents, instruments and agreements encumbering the Mortgaged Properties
(as defined in the Existing Vista Mortgages). Vista Administrative Agent hereby
agrees to execute all such Collateral Transfer Documents, provided, that, Vista
Administrative Agent shall not be required to incur any expense in connection
with the execution and delivery of such Collateral Transfer Documents.
II.
ASSIGNMENT OF LIENS
Section 2.1. Vista Administrative Agent has GRANTED, BARGAINED, SOLD,
TRANSFERRED AND CONVEYED, and does hereby GRANT, BARGAIN, SELL, TRANSFER AND
CONVEY unto Administrative Agent for the ratable benefit of Banks (as provided
in the Credit Agreement), the Existing Vista Mortgages and all other mortgages,
deeds of trusts, security agreements, assignments of notes and liens,
assignments, chattel mortgages, security interests or other documents,
instruments and agreements of any nature securing the Existing Vista Notes in
any way (collectively, the "Assigned Rights"), without recourse to, or warranty
or representation, either express or implied by, Vista Administrative Agent
(except as expressly provided in Section 2.2 hereof) TO HAVE AND HOLD the same
unto BankBoston, N.A., as Administrative Agent for
A - 3
<PAGE> 118
Banks, and its successors and assigns forever. Concurrently with the complete
execution and delivery of this Assignment and completion of all other matters
contemplated herein, Vista Administrative Agent shall cause Existing Vista
Lenders to endorse their applicable Existing Vista Note, "Pay to the order of
BankBoston, N.A., as Administrative Agent for the ratable benefit of Banks (as
provided in the Credit Agreement), without recourse or warranty, express or
implied," and shall cause the delivery of the original of such Existing Vista
Note so endorsed to Administrative Agent hereunder.
Section 2.2. Vista Administrative Agent hereby represents and warrants
to Banks that (a) Vista Administrative Agent has full power and authority to
assign the Assigned Rights to Administrative Agent hereunder, (b) Vista
Administrative Agent has not executed any release, termination or cancellation
with respect to the Existing Mortgages or any of the Mortgaged Properties (as
therein defined), and (c) Vista Administrative Agent has not executed any prior
assignment or pledge of the Assigned Rights. Notwithstanding the foregoing,
neither Vista Administrative Agent nor any Existing Vista Lender (a) assumes any
responsibility with respect to any statements, warranties or representations
made in or in connection with the Existing Vista Mortgages or the Existing Vista
Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency, existence of, title to, or value of, the Existing
Vista Credit Agreement, the Existing Vista Mortgages or any collateral, or (b)
makes any representation or warranty or assumes any responsibility with respect
to the financial condition of Vista LP or Midland or any of their affiliates of
any of their obligations under the Existing Vista Credit Agreement or the
Existing Vista Mortgages, and (c) makes any other representation or warranty,
express or implied, except as expressly set forth in the foregoing sentence.
Section 2.3. Borrowers hereby expressly consent to the assignment of
the Assigned Rights to BankBoston, N.A., as Administrative Agent for Banks under
the Credit Agreement.
III.
AMENDMENTS TO EXISTING VISTA MORTGAGES
Section 3.1. The Existing Vista Mortgages shall be and hereby are
amended in the following respects:
(a) Sections 1.3, 1.4 and 1.5 of the Existing Vista Mortgages
shall be amended to read in full as follows:
"Section 1.3. Notes, Loan Papers, Other Obligations. This
Mortgage is made to secure and enforce the payment and performance of
the following promissory notes, obligations, indebtedness and
liabilities:
"(a) The "Obligations," as the same are described in
the Credit Agreement, including, without limitation, the
indebtedness evidenced by that certain (i) Amended and
Restated Note (as amended, renewed, increased, extended,
restated or otherwise modified from time to time, the
"BankBoston Note") dated February 8, 2000, incorporated by
this reference, executed by Prize Energy Resources, L.P., a
Delaware
A - 4
<PAGE> 119
limited partnership, Vista Resources Partners, L.P., a Texas
limited partnership, and Midland Resources, Inc., a Texas
corporation (collectively, "Borrowers") and payable to the
order of BankBoston, N.A., in the original principal amount of
$51,200,000, (ii) Amended and Restated Note (as amended,
renewed, increased, extended, restated or otherwise modified
from time to time, the "First Union Note") dated February 8,
2000, incorporated by this reference, executed by Borrowers
and payable to the order of First Union National Bank, in the
original principal amount of $51,200,000, (iii) Amended and
Restated Note (as amended, renewed, increased, extended,
restated or otherwise modified from time to time, the "CIBC
Note") dated February 8, 2000, incorporated by this reference,
executed by Borrowers and payable to the order of CIBC Inc.,
in the original principal amount of $46,400,000, (iv) Amended
and Restated Note (as amended, renewed, increased, extended,
restated or otherwise modified from time to time, the "Bank
One Note") dated February 8, 2000, incorporated by this
reference, executed by Borrowers and payable to the order of
Bank One, Texas, N.A., in the original principal amount of
$46,400,000, (v) Amended and Restated Note (as amended,
renewed, increased, extended, restated or otherwise modified
from time to time, the "Frost Note") dated February 8, 2000,
incorporated by this reference, executed by Borrowers and
payable to the order of The Frost National Bank, in the
original principal amount of $32,000,000, (vi) Amended and
Restated Note (as amended, renewed, increased, extended,
restated or otherwise modified from time to time, the "Bank of
Scotland Note") dated February 8, 2000, incorporated by this
reference, executed by Borrowers and payable to the order of
Bank of Scotland, in the original principal amount of
$38,400,000, (vii) Amended and Restated Note (as amended,
renewed, increased, extended, restated or otherwise modified
from time to time, the "Comerica Note") dated February 8,
2000, incorporated by this reference, executed by Borrowers
and payable to the order of Comerica Bank-Texas, in the
original principal amount of $35,200,000, (viii) Note (as
amended, renewed, increased, extended, restated or otherwise
modified from time to time, the "Scotia Note") dated February
8, 2000, incorporated by this reference, executed by Borrowers
and payable to the order of The Bank of Nova Scotia, in the
original principal amount of $35,200,000, (ix) Note (as
amended, renewed, increased, extended, restated or otherwise
modified from time to time, the "MeesPierson Note") dated
February 8, 2000, incorporated by this reference, executed by
Borrowers and payable to the order of MeesPierson Capital
Corp., in the original principal amount of $32,000,000, and
(x) Note (as amended, renewed, increased, extended, restated
or otherwise modified from time to time, the "Christiania
Note," and, collectively with the BankBoston Note, the First
Union Note, the CIBC Note, the Bank One Note, the Frost Note,
the Bank of Scotland Note, the Comerica Note, the Scotia Note,
and the MeesPierson Note, referred to herein as the "Notes"
and each individually a "Note"), dated February 8, 2000,
incorporated by this reference, executed by Borrowers and
payable to the order of Christiania Bank, in the original
principal amount of $32,000,000 each bearing interest as
therein provided, with interest and principal being payable as
therein provided, and with all remaining unpaid principal and
accrued interest being due and payable on or before
A - 5
<PAGE> 120
June 29, 2006, unless earlier due pursuant to the terms
thereof, and containing clauses for acceleration of maturity
and for attorneys' fees and costs;
(b) Any and all renewals, extensions or
rearrangements of all or any part of the loans, advances,
indebtedness, liabilities and obligations described or
referred to in clause (a) preceding and all notes executed in
replacement thereof, together with interest accruing thereon
and all court costs, attorneys' fees and other costs incurred
in the enforcement or collection of all or any part thereof;
(c) Payment and performance of any and all present
and future obligations of any Borrower according to the terms
of any present or future interest or currency swap rate, rate
cap, rate floor, rate collar, exchange transaction, forward
rate agreement, or other exchange or rate protection
agreements or any option with respect to any such transaction
now existing or hereafter entered into between any Borrower,
on the one hand, and Mortgagee, Banks or any Affiliate of any
of the foregoing (collectively, the "Bank Parties"), on the
other hand;
(d) Payment and performance of any and all present or
future obligations of any Borrower according to the terms of
any present or future Hedge Transaction (as defined in the
Credit Agreement), including, without limitation, any present
or future swap agreements, cap, floor, collar, exchange
transaction, forward agreement or other exchange or protection
agreements relating to any such transaction now existing or
hereafter entered into between any Borrower and any Bank
Party; and
(e) Without limiting the generality of the foregoing,
all post-petition interest, expenses and other duties and
liabilities with respect to indebtedness or other obligations
described above in this Section 1.3, which would be owed but
for the fact that they are unenforceable or not allowable due
to the existence of a bankruptcy, reorganization or similar
proceeding.
Section 1.4. Secured Indebtedness. The promissory notes
described in Section 1.3 above are the Notes (as defined in the Credit
Agreement) evidencing the Total Commitment (as defined in the Credit
Agreement), and the Banks will, subject to the terms and conditions of
the Credit Agreement, make advances and re-advances to Borrowers from
time to time (but not in excess of the Total Commitment or the
Borrowing Base [as each such term is defined in the Credit Agreement]),
and all such advances and re-advances shall be part of the Obligations
secured by this Mortgage. The indebtedness referred to in Section 1.3,
and all renewals, extensions and modifications thereof, and all
substitutions therefor, in whole or in part, are herein sometimes
referred to as the "Secured Indebtedness" or the "indebtedness secured
hereby".
Section 1.5. NEW MEXICO AGGREGATE UNPAID PRINCIPAL AMOUNT. AS
TO ONLY THE MORTGAGED PROPERTIES SITUATED IN THE STATE OF NEW MEXICO,
THE AGGREGATE UNPAID PRINCIPAL AMOUNT OF THE SECURED INDEBTEDNESS
OUTSTANDING AT ANY PARTICULAR TIME (AFTER HAVING
A - 6
<PAGE> 121
GIVEN EFFECT TO ALL ADVANCES AND ALL REPAYMENTS MADE PRIOR TO SUCH
TIME) WHICH IS SECURED BY PROPERTY LOCATED IN NEW MEXICO IS LIMITED TO
AN UNPAID PRINCIPAL AMOUNT NOT IN EXCESS OF SIX HUNDRED MILLION DOLLARS
($600,000,000)."
(c) All references in the Existing Vista Mortgages to the
"Administrative Agent" or "Agent" shall be deemed to be a reference to
BankBoston, N.A., as Administrative Agent for Banks, whose address is 100
Federal Street, Mail Stop 010804, Boston, Massachusetts 02110, together with any
successors and assigns thereto in such capacity.
(d) All references in the Existing Vista Mortgages to the
"Lenders" shall be deemed to be a reference to the "Banks" as defined herein.
(e) The term "default" as used in the Existing Vista Mortgages
shall include, without limitation, the occurrence of an "Event of Default" as
defined in the Credit Agreement.
(f) All references in the Existing Vista Mortgages to the
"Credit Agreement" shall be deemed to be a reference to the "Credit Agreement"
as defined herein.
(g) All references in the Existing Vista Mortgages to the
"Loan Documents" shall be deemed to be a reference to the "Loan Papers" as
defined in the Credit Agreement (as defined herein).
Section 3.2. All of the respective liens, privileges, priorities and
equities existing and to exist under and in accordance with the terms of the
Existing Vista Mortgages are hereby renewed, extended, carried forward and
conveyed as security for the Obligations contemplated by the Credit Agreement;
and, with respect to the Existing Vista Mortgages, (i) Vista LP and Midland (as
applicable) hereby GRANT, BARGAIN, SELL, WARRANT, MORTGAGE, ASSIGN, TRANSFER,
SET OVER and CONVEY, with warranties and covenants of title to the extent
provided in the Credit Agreement, to the Trustee and his permitted successors
and assigns for the benefit of BankBoston, N.A., as Administrative Agent for the
Banks (the "Mortgagee"), of all of the Mortgaged Property (as hereinafter
defined), to secure payment of the "Secured Indebtedness" (as described and
defined in the Existing Vista Mortgages, as amended hereby), TO HAVE and TO HOLD
the Mortgaged Property unto the Trustee and his permitted successors and assigns
forever, subject to all of the terms of such Existing Vista Mortgages, as
amended hereby, or (ii) alternatively, to the extent that any particular
jurisdiction wherein a portion of the Mortgaged Property is situated does not
recognize, permit or require Vista LP and Midland to mortgage or convey the
Mortgaged Property to the Trustee for the benefit of the Mortgagee, then, with
respect to the Mortgaged Property located in such particular jurisdiction, Vista
LP and Midland hereby GRANT, BARGAIN, SELL, WARRANT, MORTGAGE, ASSIGN, TRANSFER,
SET OVER and CONVEY, with warranties and covenants of title to the extent
provided in the Credit Agreement, unto the Mortgagee and its permitted
successors and assigns such Mortgaged Property, to secure repayment of the
"Secured Indebtedness" (as described and defined in the Existing Vista
Mortgages, as amended hereby), TO HAVE AND TO HOLD the Mortgaged Property unto
the Mortgagee and its permitted successors and assigns forever, subject to all
of the terms of the Existing Vista Mortgages, as
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<PAGE> 122
amended hereby. It is expressly understood, with respect to the Existing Vista
Mortgages, that the preceding grant and mortgage shall not cover or include, and
that there shall for all purposes be saved and excepted therefrom, any of the
Mortgaged Property or interests therein as to which the liens and security
interests of such Mortgages may have been previously released and discharged by
Vista Administrative Agent in its capacity as Mortgagee as, and only to the
extent that, such release and discharge is evidenced by any one or more
instruments duly executed by Vista Administrative Agent in its capacity as
Mortgagee and presently appearing of record. As used in this Assignment, the
term "Mortgaged Property" shall, with respect to the Existing Vista Mortgages,
have the identical meaning given to such term in the Existing Vista Mortgages.
Section 3.3. Except as amended hereby, the Existing Vista Mortgages
shall remain unchanged and in full force and effect, and Borrowers hereby
RATIFY, CONFIRM and ADOPT the Existing Vista Mortgages and all of their terms
and provisions, as amended hereby. The Existing Vista Mortgages, as amended
hereby, shall inure to the benefit of the Mortgagee and its permitted successors
and assigns and shall be binding upon Borrowers and their respective successors
and assigns whether or not the signature of the Mortgagee appears thereon or
hereon.
Section 3.4. This Assignment is being executed in multiple
counterparts, each of which shall for all purposes be deemed to be an original
and all of which are identical, except that to facilitate recordation in any
jurisdiction which (rather than permitting the Existing Vista Mortgages to be
identified by recordation reference only) may require this Assignment to contain
descriptions of that portion of the Mortgaged Property located in such
jurisdiction, such descriptions have been attached as one or more exhibits to
the counterparts of this Assignment to be recorded in such jurisdiction. Such
one or more exhibits (if applicable) have been designated as Exhibit A, as
appropriate, to correspond with the same lettering of the exhibit(s) originally
attached to the Existing Vista Mortgages and amendments and supplements thereto.
[Signature Pages to Follow]
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<PAGE> 123
IN WITNESS WHEREOF, this Assignment has been executed in multiple
counterparts as of the 8th day of February, 2000. Vista Administrative Agent has
executed this Assignment only to effectuate the assignment contained in Section
2.1 hereof and to make the representations and warranties contained in Section
2.2 hereof. Vista Administrative Agent is not a party to or bound by the
provisions of Article III hereof.
BANKBOSTON, N.A.,
a national banking association, as Administrative Agent for
Existing Vista Lenders
By:
---------------------------------------------------------
Name:
-------------------------------------------------------
Title:
------------------------------------------------------
BANKBOSTON, N.A.,
a national banking association, as Administrative Agent for
Banks
By:
---------------------------------------------------------
Name:
-------------------------------------------------------
Title:
------------------------------------------------------
PRIZE ENERGY RESOURCES, L.P., a Delaware limited
partnership
By: Prize Operating Company, a Delaware
corporation, its sole general partner
By:
-----------------------------------------------------
Lon C. Kile,
President
VISTA RESOURCES PARTNERS, L.P., a Texas limited
partnership
By: Vista Resources I, Inc., a Texas corporation, its
sole general partner
By:
-----------------------------------------------------
Lon C. Kile,
President
MIDLAND RESOURCES, INC., a Texas corporation
By:
---------------------------------------------------------
Lon C. Kile,
President
A - 9
<PAGE> 124
STATE OF MASSACHUSETTS )
)
COUNTY OF ______________ )
The foregoing instrument was acknowledged before me on this ____ day of
February, 2000, by ____________________, ___________________ of BankBoston,
N.A., a national banking association, as Administrative Agent for Existing Vista
Lenders and as Administrative Agent for Banks, on behalf of said banking
corporation.
---------------------------------------------------
Notary Public in and for the State of Massachusetts
My Commission Expires:
-----------------------------
A - 10
<PAGE> 125
STATE OF TEXAS )
)
COUNTY OF DALLAS )
The foregoing instrument was acknowledged before me on this ____ day of
February 2000, by Lon C. Kile, President of Prize Operating Company, a Delaware
corporation and sole general partner of Prize Energy Resources, L.P., a Delaware
limited partnership, on behalf of said corporation and limited partnership.
-------------------------------------------
Notary Public in and for the State of Texas
My Commission Expires:
---------------------
STATE OF TEXAS )
)
COUNTY OF DALLAS )
The foregoing instrument was acknowledged before me on this ____ day of
February 2000, by Lon C. Kile, President of Vista Resources I, Inc., a Texas
corporation and sole general partner of Vista Resources Partners, L.P., a
Delaware limited partnership, on behalf of said corporation and limited
partnership.
-------------------------------------------
Notary Public in and for the State of Texas
My Commission Expires:
---------------------
STATE OF TEXAS )
)
COUNTY OF DALLAS )
The foregoing instrument was acknowledged before me on this ____ day of
February 2000, by Lon C. Kile, President of Midland Resources, Inc., a Texas
corporation, on behalf of said corporation.
-------------------------------------------
Notary Public in and for the State of Texas
My Commission Expires:
---------------------
A - 11
<PAGE> 126
SCHEDULE I
RECORDING SCHEDULE FOR EXISTING VISTA MORTGAGES
A - 12
<PAGE> 127
EXHIBIT B
FORM OF CERTIFICATE OF OWNERSHIP INTERESTS
This Certificate of Ownership Interests (this "Certificate") is
executed and delivered pursuant to that certain Amended and Restated Credit
Agreement dated as of February 8, 2000 (as amended from time to time, the
"Agreement"), by and among Prize Energy Resources, L.P., a Delaware limited
partnership ("Prize LP"), Vista Resources Partners, L.P., a Texas limited
partnership ("Vista LP"), Midland Resources, Inc., a Texas corporation
("Midland" and, collectively with Prize LP and Vista LP, "Borrowers" and each
individually, a "Borrower"), Prize Energy Corp. (formerly known as Vista Energy
Resources, Inc.), a Delaware corporation, as Parent Guarantor, BankBoston, N.A.,
as Administrative Agent, First Union National Bank, as Syndication Agent, CIBC
Inc., as Documentation Agent, Bank One, Texas, N.A., as Lead Manager and certain
Banks as named and defined therein. Unless otherwise defined herein, all
capitalized terms used herein shall have the meanings given such terms in the
Agreement.
In order to induce Banks to extend credit to Borrowers under the
Agreement, Borrowers hereby jointly and severally represent and warrant to each
Bank that (a) Annex A attached hereto (the "Property Description") is a complete
and accurate description of all Borrowing Base Properties (collectively, the
"Initial Borrowing Base Properties") described in the Initial Reserve Reports;
(b) (i) Prize LP holds good and defensible title, subject only to Permitted
Encumbrances and Immaterial Title Deficiencies, to the Initial Borrowing Base
Properties described in Part I of Exhibit A, (ii) Vista LP holds good and
defensible title, subject only to Permitted Encumbrances and Immaterial Title
Deficiencies, to the Initial Borrowing Base Properties described in Part II of
Exhibit A, and (iii) Midland holds good and defensible title, subject only to
Permitted Encumbrances and Immaterial Title Deficiencies, to the Initial
Borrowing Base Properties described in Part III of Exhibit A; (c) without regard
to any consent or non-consent provisions of any joint operating agreement
covering any of the Initial Borrowing Base Properties and with the exception of
Immaterial Title Deficiencies, each Borrower's share of (i) the costs for each
of the Initial Borrowing Base Properties owned by such Borrower is not greater
than the decimal fraction set forth in the Initial Reserve Reports, before and
after payout, as the case may be, and described therein by the respective
designations "working interests," "WI," "gross working interest," "GWI," or
similar terms, and (ii) production from, allocated to, or attributed to each of
such Initial Borrowing Base Properties owned by such Borrower is not less than
the decimal fraction set forth in the Initial Reserve Reports, before and after
payout, as the case may be, and described therein by the designations "net
revenue interest," "NRI," or similar terms; and (d) except in the case of wells
which, in the aggregate, represent less than four percent (4%) of the production
of the Proved Producing Mineral Interests described in the Initial Reserve
Reports, each well drilled in respect of each of the Initial Borrowing Base
Properties (A) is capable of, and is presently, producing Hydrocarbons in
commercially profitable quantities, each Borrower is receiving its applicable
payments for its share of production, and no funds in respect of any thereof are
being presently held in suspense, other than any such funds being held in
suspense pending delivery of appropriate division orders, and (B) to Borrowers'
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<PAGE> 128
knowledge, has been drilled, bottomed, completed and operated in compliance with
all applicable Laws and no such well which is currently producing Hydrocarbons
is subject to any penalty in production by reason of such well having produced
in excess of its allowable production.
Each Borrower acknowledges and agrees that each Bank is relying on this
Certificate and the representations and warranties herein contained in extending
credit under the Agreement, and, but for each Borrower's execution and delivery
of this Certificate, Banks would not extend credit under the Agreement.
Executed as of the 8th day of February, 2000.
PRIZE ENERGY RESOURCES, L.P.,
a Delaware limited partnership
By: Prize Operating Company,
a Delaware corporation,
its sole general partner
By:
---------------------------------
Lon C. Kile,
President
VISTA RESOURCES PARTNERS, L.P.,
a Texas limited partnership
By: Vista Resources I, Inc.,
a Texas corporation,
its sole general partner
By:
---------------------------------
Lon C. Kile,
President
MIDLAND RESOURCES, INC.,
a Texas corporation
By:
---------------------------------
Lon C. Kile,
President
B - 2
<PAGE> 129
ANNEX A
Initial Borrowing Base Properties
Part I
Initial Borrowing Base Properties owned by Prize LP
(to be attached)
B - 3
<PAGE> 130
Part II
Initial Borrowing Base Properties owned by Vista LP
(to be attached)
B - 4
<PAGE> 131
Part III
Initial Borrowing Base Properties owned by Midland
(to be attached)
B - 5
<PAGE> 132
EXHIBIT C
FORM OF FACILITY GUARANTY
THIS GUARANTY (this "Guaranty") is executed and effective as of the
____ day of _______________, 200__, by ________________________, a
____________________ ("Guarantor"), in favor of BANKBOSTON, N.A., FIRST UNION
NATIONAL BANK, CIBC INC., BANK ONE, TEXAS, N.A., THE BANK OF NOVA SCOTIA, BANK
OF SCOTLAND, COMERICA BANK - TEXAS, THE FROST NATIONAL BANK, CHRISTIANIA BANK,
MEESPIERSON CAPITAL CORP. and the other financial institutions listed on
Schedule 1 of the Credit Agreement (as hereinafter defined) (BankBoston, N.A.,
First Union National Bank, CIBC Inc., Bank One, Texas, N.A., The Bank of Nova
Scotia, Bank of Scotland, Comerica Bank - Texas, The Frost National Bank,
Christiania Bank, MeesPierson Capital Corp. and such other financial
institutions are collectively referred to herein as "Noteholders").
W I T N E S S E T H:
WHEREAS, Prize Energy Resources, L.P., a Delaware limited partnership
("Prize LP"), Vista Resources Partners, L.P., a Texas limited partnership
("Vista LP"), Midland Resources, Inc., a Texas corporation ("Midland" and,
collectively with Prize LP and Vista LP, "Borrowers" and each individually, a
"Borrower"), [PRIZE ENERGY CORP. (FORMERLY KNOWN AS VISTA ENERGY RESOURCES,
INC.), A DELAWARE CORPORATION, AS PARENT GUARANTOR] [GUARANTOR], Noteholders,
BankBoston, N.A., as Administrative Agent ("Administrative Agent"), First Union
National Bank, as Syndication Agent ("Syndication Agent"), CIBC Inc., as
Documentation Agent ("Documentation Agent") and Bank One, Texas, N.A., as Lead
Manager ("Lead Manager"), are parties to that certain Amended and Restated
Credit Agreement (as may be amended from time to time, the "Credit Agreement")
dated as of February 8, 2000, pursuant to which Noteholders have agreed to make
a revolving/term credit loan to Borrowers and issue and participate in letters
of credit issued on behalf of Borrowers (unless otherwise defined herein, or
unless the context otherwise requires, each term used herein with its initial
letter capitalized shall have the meaning given such terms in the Credit
Agreement); and
WHEREAS, Noteholders have required, as a condition to making advances
of the proceeds of the Loan under the Credit Agreement, and issuing and
participating in letters of credit thereunder, that Guarantor execute and
deliver this Guaranty; and
WHEREAS, Guarantor has determined that valuable benefits will be
derived by it as a result of the Credit Agreement and Borrowings to be made by
Borrowers thereunder; and
WHEREAS, Guarantor has further determined that the benefits accruing to
it from the Credit Agreement exceed Guarantor's anticipated liability under this
Guaranty.
C - 1
<PAGE> 133
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged and confessed, Guarantor hereby covenants and
agrees as follows:
1. Guarantor hereby absolutely and unconditionally guarantees the
prompt, complete and full payment when due, no matter how such shall become due,
of the Obligations, and further guarantees that Borrowers will properly and
timely perform the Obligations.
2. If Guarantor is or becomes liable for any indebtedness owing by any
Borrower to Noteholders by endorsement or otherwise than under this Guaranty,
such liability shall not be in any manner impaired or affected hereby, and the
rights of Noteholders hereunder shall be cumulative of any and all other rights
that Noteholders may ever have against Guarantor. The exercise by Noteholders of
any right or remedy hereunder or under any other instrument, at law or in
equity, shall not preclude the concurrent or subsequent exercise of any other
right or remedy.
3. In the event of default by Borrowers in payment of the Obligations,
or any part thereof, when such Obligations, or any part thereof, become due,
either by their terms or as the result of the exercise of any power to
accelerate, Guarantor shall, on demand, and without further notice of dishonor
and without any notice having been given to Guarantor previous to such demand of
the acceptance by Noteholders of this Guaranty, and without any notice having
been given to Guarantor previous to such demand of the creating or incurring of
such Obligations, pay the amount due thereon to Noteholders at the
Administrative Agent's office as set forth in the Credit Agreement, and it shall
not be necessary for any Noteholder, in order to enforce such payment by
Guarantor, first, to institute suit or exhaust its remedies against any Borrower
or others liable on such Obligations, to have any Borrower joined with Guarantor
in any suit brought under this Guaranty or to enforce their rights against any
security which shall ever have been given to secure such indebtedness; provided,
however, that in the event Noteholders elect to enforce and/or exercise any
remedies they may possess with respect to any security for the Obligations prior
to demanding payment from Guarantor, Guarantor shall nevertheless be obligated
hereunder for any and all sums still owing Noteholders on the Obligations and
not repaid or recovered incident to the exercise of such remedies.
4. Notice to Guarantor of the acceptance of this Guaranty and of the
making, renewing or assignment of the Obligations and each item thereof, are
hereby expressly waived by Guarantor.
5. Each payment on the Obligations shall be deemed to have been made by
Borrowers unless express written notice is given to Administrative Agent at the
time of such payment that such payment is made by Guarantor as specified in such
notice.
6. If all or any part of the Obligations at any time be secured,
Guarantor agrees that Noteholders may at any time and from time to time, at
their discretion and with or without valuable consideration, allow substitution
or withdrawal of collateral or other security and release collateral or other
security or compromise or settle any amount due or owing under the Credit
Agreement or amend or modify in whole or in part the Credit Agreement or any
Loan Papers executed in
C - 2
<PAGE> 134
connection with same without impairing or diminishing the obligations of
Guarantor hereunder. Guarantor further agrees that if any Borrower executes in
favor of Noteholders any collateral agreement, mortgage or other security
instrument, the exercise by Noteholders of any right or remedy thereby conferred
on Noteholders shall be wholly discretionary with Noteholders, and that the
exercise or failure to exercise any such right or remedy shall in no way impair
or diminish the obligations of Guarantor hereunder. Guarantor further agrees
that Noteholders and Administrative Agent shall not be liable for their failure
to use diligence in the collection of the Obligations or in preserving the
liability of any Person liable for the Obligations, and Guarantor hereby waives
presentment for payment, notice of nonpayment, protest and notice thereof
(including, notice of acceleration), and diligence in bringing suits against any
Person liable on the Obligations, or any part thereof.
7. Guarantor agrees that Noteholders, in their discretion, may (i)
bring suit against all guarantors (including, without limitation, Guarantor
hereunder) of the Obligations jointly and severally or against any one or more
of them, (ii) compound or settle with any one or more of such guarantors for
such consideration as Noteholders may deem proper, and (iii) release one or more
of such guarantors from liability hereunder, and that no such action shall
impair the rights of Noteholders to collect the Obligations (or the unpaid
balance thereof) from other such guarantors of the Obligations, or any of them,
not so sued, settled with or released. Guarantor agrees, however, that nothing
contained in this Paragraph 7, and no action by Noteholders permitted under this
Paragraph 7, shall in any way affect or impair the rights or obligations of such
guarantors among themselves.
8. Guarantor represents and warrants to Noteholders that (i) Guarantor
is a corporation, limited partnership or limited liability company (as
applicable) duly incorporated or organized and validly existing under the laws
of the State of its incorporation or organization; (ii) Guarantor possesses all
requisite authority and power to authorize, execute, deliver and comply with the
terms of this Guaranty; this Guaranty has been duly authorized and approved by
all necessary action on the part of Guarantor and constitutes a valid and
binding obligation of Guarantor enforceable in accordance with its terms, except
as the enforcement thereof may be limited by applicable Debtor Relief Laws (as
hereinafter defined); and no approval or consent of any court or governmental
entity is required for the authorization, execution, delivery or compliance with
this Guaranty which has not been obtained (and copies thereof delivered to
Noteholders); and (iii) Guarantor is neither involved in, nor aware of the
threat of, any litigation which, in the event of an outcome unfavorable to
Guarantor, could have a material adverse effect on the financial position,
business operations, or prospects of Guarantor, nor are there any outstanding or
unpaid judgments against Guarantor. As used herein, the term "Debtor Relief
Laws" means the Bankruptcy Code of the United States of America and all other
applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement,
receivership, insolvency, reorganization, suspension of payments, or similar
debtor relief laws from time to time in effect affecting the rights of creditors
generally.
C - 3
<PAGE> 135
9. Guarantor covenants and agrees that until the Obligations are paid
and performed in full, except as otherwise provided in the Credit Agreement or
unless Noteholders give their prior written consent to any deviation therefrom,
it will (i) at all times maintain its existence and authority to transact
business in any State where Guarantor has assets and operations; and (ii)
promptly deliver to Noteholders and to Administrative Agent such information
respecting its business affairs, assets and liabilities as Noteholders may
reasonably request. The failure of Guarantor to comply with the terms of this
Paragraph 9 shall be an Event of Default under the Credit Agreement.
10. This Guaranty is for the benefit of Noteholders, their successors
and assigns, and in the event of an assignment by Noteholders (or their
successors or assigns) of the Obligations, or any part thereof, the rights and
benefits hereunder, to the extent applicable to the Obligations so assigned, may
be transferred with such Obligations. Subject to the preceding paragraph hereof,
this Guaranty is binding, not only on Guarantor, but on the legal
representatives, successors and assigns of Guarantor.
11. No modification, consent, amendment or waiver of any provision of
this Guaranty, nor consent to any departure by Guarantor therefrom, shall be
effective unless the same shall be in writing and signed by Required Banks, and
then shall be effective only in the specific instance and for the purpose for
which given. No notice to or demand on Guarantor in any case shall, of itself,
entitle Guarantor to any other or further notice or demand in similar or other
circumstances. No delay or omission by Noteholders in exercising any power or
right hereunder shall impair any such right or power or be construed as a waiver
thereof or any acquiescence therein, nor shall any single or partial exercise of
any such power preclude other or further exercise thereof, or the exercise of
any other right or power hereunder. All rights and remedies of Noteholders
hereunder are cumulative of each other and of every other right or remedy which
Noteholders may otherwise have at law or in equity or under any other contract
or document, and the exercise of one or more rights or remedies shall not
prejudice or impair the concurrent or subsequent exercise of other rights or
remedies.
12. No provision herein or in any promissory note, instrument or any
other Loan Paper executed by any Borrower or Guarantor evidencing the
Obligations shall require the payment or permit the collection of interest in
excess of the maximum permitted by law. If any excess of interest in such
respect is provided for herein or in any such promissory note, instrument, or
any other Loan Paper, the provisions of this Paragraph 12 shall govern, and
neither Guarantor nor any Borrower shall be obligated to pay the amount of such
interest to the extent that it is in excess of the amount permitted by law. The
intention of the parties being to conform strictly to any applicable federal or
state usury laws now in force, all promissory notes, instruments and other Loan
Papers executed by any Borrower or Guarantor evidencing the Obligations shall be
held subject to reduction to the amount allowed under said usury laws as now or
hereafter construed by the courts having jurisdiction.
C - 4
<PAGE> 136
13. If Guarantor should breach or fail to perform any provision of this
Guaranty, Guarantor agrees to pay Noteholders all costs and expenses (including
court costs and reasonable attorneys fees) incurred by Noteholders in the
enforcement hereof.
14. The liability of Guarantor under this Guaranty shall in no manner
be impaired, affected or released by the insolvency, bankruptcy, making of an
assignment for the benefit of creditors, arrangement, compensation, composition
or readjustment of any Borrower, or any proceedings affecting the status,
existence or assets of any Borrower or other similar proceedings instituted by
or against any Borrower and affecting the assets of any Borrower.
15. Guarantor understands and agrees that any amounts of Guarantor on
account with Noteholders may be offset to satisfy the obligations of Guarantor
hereunder.
16. Guarantor hereby subordinates and makes inferior any and all
indebtedness now or at any time hereafter owed by any Borrower to Guarantor to
the Obligations evidenced by the Credit Agreement and agrees after the
occurrence of a Default or Event of Default under the Credit Agreement, or any
event which with notice, lapse of time, or both, would constitute a Default or
Event of Default under the Credit Agreement, not to permit any Borrower to
repay, or to accept payment from any Borrower of, such indebtedness or any part
thereof without the prior written consent of Noteholders.
17. Guarantor hereby waives any and all rights of subrogation to which
Guarantor may otherwise be entitled against any Borrower as a result of any
payment made by Guarantor pursuant to this Guaranty.
18. As of the date hereof the fair saleable value of the property of
Guarantor is greater than the total amount of liabilities (including contingent
and unliquidated liabilities) of Guarantor, and Guarantor is able to pay all of
its liabilities as such liabilities mature and Guarantor does not have
unreasonably small capital within the meaning of Section 548, Title 11, United
States Code, as amended. In computing the amount of contingent or liquidated
liabilities, such liabilities have been computed at the amount which, in light
of all the facts and circumstances existing as of the date hereof, represents
the amount that can reasonably be expected to become an actual or matured
liability.
19. If any provision of this Guaranty is held to be illegal, invalid,
or unenforceable, such provision shall be fully severable; this Guaranty shall
be construed and enforced as if such illegal, invalid, or unenforceable
provision had never comprised a part hereof; and the remaining provisions hereof
shall remain in full force and effect and shall not be affected by the illegal,
invalid, or unenforceable provision or by its severance herefrom. Furthermore,
in lieu of such illegal, invalid, or unenforceable provision there shall be
added automatically as a part of this Guaranty a provision as similar in terms
to such illegal, invalid, or unenforceable provision as may be possible and be
legal, valid and enforceable.
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20. (a) Except to the extent required for the exercise of the remedies
provided in the other security instruments, Guarantor hereby irrevocably submits
to the nonexclusive jurisdiction of any New York state or federal court over any
action or proceeding arising out of or relating to this Guaranty or any other
Loan Paper, and Guarantor hereby irrevocably agrees that all claims in respect
of such action or proceeding may be heard and determined in such New York state
or federal court. Guarantor hereby irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of venue of any litigation arising out of or in connection with this Guaranty or
any of the Loan Papers brought in district courts of New York County, New York,
or in the United States District Court for the Southern District of New York.
Guarantor hereby irrevocably waives any claim that any litigation brought in any
such court has been brought in an inconvenient forum. Guarantor hereby agrees to
designate and maintain an agent for service of process in New York, New York in
connection with any such litigation and to deliver to Noteholders evidence
thereof. Guarantor hereby irrevocably consents to the service of process out of
any of the aforementioned courts in any such litigation by the mailing of copies
thereof by certified mail, return receipt requested, postage prepaid, to
Guarantor's office at 3500 William D. Tate, Suite 200, Grapevine, Texas 76051.
Guarantor irrevocably agrees that any legal proceeding against Noteholders shall
be brought in the district courts of New York County, New York, or in the United
States District Court for the Southern District of New York. Nothing herein
shall affect the right of Noteholders to commence legal proceedings or otherwise
proceed against Guarantor in any jurisdiction or to serve process in any manner
permitted by applicable law.
(b) Nothing in this Paragraph 20 shall affect any right of Noteholders
to serve legal process in any other manner permitted by law or affect the right
of any Noteholder to bring any action or proceeding against Guarantor either
jointly or severally in the courts of any other jurisdictions.
(c) To the extent that Guarantor has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service or notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property,
Guarantor hereby irrevocably waives such immunity in respect of its obligations
under this Guaranty and the other Loan Papers.
21. THIS GUARANTY AND THE OTHER LOAN PAPERS COLLECTIVELY REPRESENT THE
FINAL AGREEMENT BY AND AMONG NOTEHOLDERS, ADMINISTRATIVE AGENT, SYNDICATION
AGENT, DOCUMENTATION AGENT, LEAD MANAGER AND GUARANTOR AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF NOTEHOLDERS, ADMINISTRATIVE AGENT, SYNDICATION AGENT,
DOCUMENTATION AGENT, LEAD MANAGER AND GUARANTOR. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG NOTEHOLDERS, ADMINISTRATIVE AGENT, SYNDICATION AGENT,
DOCUMENTATION AGENT, LEAD MANAGER AND GUARANTOR.
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22. GUARANTOR, FOR ITSELF, ITS SUCCESSORS AND ASSIGNS, AND THE
NOTEHOLDERS HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW,
THEIR RIGHT TO A JURY TRIAL, IN ANY LITIGATION ARISING OUT OF OR IN CONNECTION
WITH THIS GUARANTY OR ANY OF THE OTHER LOAN PAPERS.
23. THIS GUARANTY AND THE OTHER LOAN PAPERS SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
[Signature Page to Follow]
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EXECUTED as of the date first above written.
GUARANTOR:
----------------------------------------,
a
----------------------------------------
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
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EXHIBIT D
FORM OF NOTE
$_______________ Boston, Massachusetts _________________
FOR VALUE RECEIVED, the undersigned, Prize Energy Resources, L.P., a
Delaware limited partnership ("Prize LP"), Vista Resources Partners, L.P., a
Texas limited partnership ("Vista LP"), and Midland Resources, Inc., a Texas
corporation ("Midland" and, collectively with Prize LP and Vista LP, "Makers"
and each individually, a "Maker"), jointly and severally promise to pay to the
order of [Name of Bank] ("Payee"), at the offices of BankBoston, N.A., as
Administrative Agent (herein so called), at 100 Federal Street, Mail Stop
010804, Boston, Massachusetts 02110, for Payee and the other Banks hereinafter
described, the principal sum of _______________________________ and ___/100
Dollars ($____________), or so much thereof as may be advanced and outstanding,
together with interest, as hereinafter described.
This Note has been executed and delivered pursuant to, and is subject
to and governed by, the terms of that certain Amended and Restated Credit
Agreement dated effective as of February 8, 2000 (as hereafter renewed,
extended, amended, or supplemented, the "Agreement"), among Makers, Prize Energy
Corp., a Delaware corporation, as Parent Guarantor, Payee, Administrative Agent,
Syndication Agent, Documentation Agent, Lead Manager and the other Banks named
therein and is one of the "Notes" referred to therein. Unless otherwise defined
herein or unless the context hereof otherwise requires, each term used herein
with its initial letter capitalized has the meaning given to such term in the
Agreement.
Makers also jointly and severally promise to pay interest on the unpaid
principal amount hereof in like money at the offices of Administrative Agent
above referenced from the date hereof at the rates applicable to amounts
outstanding under the Loan provided in the Agreement.
The principal balance of this Note and all interest which accrues
thereon shall be paid at the times and in the amounts required by the Agreement.
The entire outstanding principal balance hereof and all accrued but unpaid
interest thereon shall be due and payable in full on the Termination Date.
Upon and subject to the terms and conditions of the Agreement, Makers
shall be entitled to prepay the principal of or interest on this Note from time
to time and at any time, in whole or in part.
Upon the occurrence and continuance of an Event of Default, and upon
the conditions stated in the Agreement, Administrative Agent may, at its option,
and shall, to the extent required in accordance with the terms of the Agreement,
declare the entire unpaid principal of and accrued interest on this Note
immediately due and payable (provided that, upon the occurrence of certain
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<PAGE> 141
Events of Default, and upon the conditions stated in the Agreement, such
acceleration shall be automatic), without notice (except as otherwise required
by the Agreement), demand, or presentment, all of which are hereby waived, and
the holder hereof shall have the right to offset against this Note any sum or
sums owed by the holder hereof to any Maker. All past-due principal of and, to
the extent permitted by law, accrued interest on this Note shall, at the option
of the holder hereof, bear interest at the Default Rate until paid.
Notwithstanding the foregoing, if at any time, any rate of interest
calculated under Section 3.5 of the Agreement (the "Contract Rate") exceeds the
Maximum Lawful Rate, the rate of interest hereunder shall be limited to the
Maximum Lawful Rate, but any subsequent reductions in the Contract Rate shall
not reduce the rate of interest on this Note below the Maximum Lawful Rate until
the total amount of interest accrued equals the amount of interest which would
have accrued (including the amount of interest which would have accrued prior to
the payment or prepayment of any portion of this Note) if the Contract Rate had
at all times been in effect. In the event that at maturity (stated or by
acceleration), or at final payment of this Note, the total amount of interest
paid or accrued on this Note is less than the amount of interest which would
have accrued if the Contract Rate had at all times been in effect with respect
thereto, then at such time Makers shall pay to the holder of this Note an amount
equal to the difference between (a) the lesser of the amount of interest which
would have accrued if the Contract Rate had at all times been in effect and the
amount of interest which would have accrued if the Maximum Lawful Rate had at
all times been in effect, and (b) the amount of interest actually paid or
accrued on this Note.
PRIZE ENERGY RESOURCES, L.P.,
a Delaware limited partnership
By: Prize Operating Company,
a Delaware corporation,
its sole general partner
By:
----------------------------
Lon C. Kile,
President
VISTA RESOURCES PARTNERS, L.P.,
a Texas limited partnership
By: Vista Resources I, Inc.,
a Texas corporation,
its sole general partner
By:
----------------------------
Lon C. Kile,
President
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MIDLAND RESOURCES, INC.,
a Texas corporation
By:
----------------------------
Lon C. Kile,
President
LOANS, MATURITIES, AND
PAYMENTS OF PRINCIPAL AND INTEREST
<TABLE>
<CAPTION>
Payee's
Commitment Expiration of Rate of Interest Unpaid
Borrowing Percentage of Interest Applicable to Amount of Amount of Principal Notation Made
Date Borrowing Period Tranche Principal Paid Interest Paid Balance By
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
===================================================================================================================================
</TABLE>
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EXHIBIT E
FORM OF PARENT PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Agreement") is made as of ____________, 200___, by
Prize Energy Corp., a Delaware corporation (herein called "Pledgor"), in favor
of BankBoston, N.A., as Administrative Agent for the ratable benefit of Banks
(as defined below) (herein called "Pledgee").
W I T N E S S E T H:
WHEREAS, Prize Energy Resources, L.P., a Delaware limited partnership
("Prize LP"), Vista Resources Partners, L.P., a Texas limited partnership
("Vista LP"), Midland Resources, Inc., a Texas corporation ("Midland" and,
collectively with Prize LP and Vista LP, "Borrowers" and each individually, a
"Borrower"), Pledgor, as Parent Guarantor, BankBoston, N.A., as Administrative
Agent, First Union National Bank, as Syndication Agent, CIBC Inc., as
Documentation Agent, Bank One, Texas, N.A., as Lead Manager and Banks are
parties to that certain Amended and Restated Credit Agreement (as may be amended
from time to time, the "Credit Agreement") dated as of February 8, 2000,
pursuant to which Banks have agreed to make loans and other extensions of credit
to Borrowers for the purposes set forth therein; and
WHEREAS, it is a condition precedent to such extension of credit by
Banks pursuant to the Credit Agreement that, among other things, Pledgor shall
have executed and delivered to Pledgee a security agreement granting to Pledgee,
for the benefit of Banks, a security interest in the Collateral (as defined
herein); and
WHEREAS, the board of directors of Pledgor has determined that
Pledgor's execution, delivery and performance of this Agreement may reasonably
be expected to benefit Pledgor, directly or indirectly, and are in the best
interests of Pledgor.
NOW, THEREFORE, in consideration of the premises and in order to induce
Banks to extend credit under the Credit Agreement, Pledgor hereby agrees with
Pledgee as follows:
ARTICLE I
Definitions and References
Section 1.1. General Definitions. As used herein, the terms defined
above shall have the meanings indicated above, and the following terms shall
have the following meanings:
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"Bank" means any financial institution reflected on Schedule 1 to the
Credit Agreement and its successors and assigns, and "Banks" shall mean all
Banks.
"Code" means the Uniform Commercial Code in effect in the State of
Texas on the date hereof.
"Collateral" means all property of whatever type, in which Pledgee at
any time has a security interest pursuant to Section 2.1.
"Commitment" means the agreement or commitment by Banks to make loans
or otherwise extend credit to Borrowers under the Credit Agreement, and any
other agreement, commitment, statement of terms or other document contemplating
the making of loans or advances or other extension of credit by Banks to or for
the account of Borrowers which is now or at any time hereafter intended to be
secured by the Collateral under this Agreement.
"Equity" means shares of capital stock or a partnership, profits,
capital or member interest, or options, warrants or any other right to
substitute for or otherwise acquire the capital stock or a partnership, profits,
capital or member interest of any Subsidiary (as defined in Section 2.1(a)).
"Obligation Documents" means the Credit Agreement, the Notes, the Loan
Papers, and all other documents and instruments under, by reason of which, or
pursuant to which, any or all of the Obligations are evidenced, governed,
secured, or otherwise dealt with, and all other agreements, certificates, and
other documents, instruments and writings heretofore or hereafter delivered in
connection herewith or therewith.
"Obligations" means all present and future indebtedness, obligations
and liabilities of whatever type which are or shall be secured pursuant to
Section 2.2.
"Other Liable Party" means any Person, other than Pledgor, but
including Borrowers and each Subsidiary, who may now or may at any time
hereafter be primarily or secondarily liable for any of the Obligations or who
may now or may at any time hereafter have granted to Pledgee or Banks a Lien
upon any property as security for the Obligations.
"Pledged Equity" has the meaning given it in Section 2.1(a).
Section 1.2. Other Definitions. Reference is hereby made to the Credit
Agreement for a statement of the terms thereof. All capitalized terms used in
this Agreement which are defined in the Credit Agreement and not otherwise
defined herein shall have the same meanings herein as set forth therein. All
terms used in this Agreement which are defined in the Code and not otherwise
defined herein or in the Credit Agreement shall have the same meanings herein as
set forth in the Code, except where the context otherwise requires.
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Section 1.3. Exhibits. All exhibits attached to this Agreement are a
part hereof for all purposes.
Section 1.4. Amendment of Defined Instruments. Unless the context
otherwise requires or unless otherwise provided herein, references in this
Agreement to a particular agreement, instrument or document also refer to and
include all renewals, extensions, amendments, modifications, supplements or
restatements of any such agreement, instrument or document, provided that
nothing contained in this Section 1.4 shall be construed to authorize any Person
to execute or enter into any such renewal, extension, amendment, modification,
supplement or restatement.
Section 1.5. References and Titles. All references in this Agreement to
Exhibits, Articles, Sections, subsections, and other subdivisions refer to the
Exhibits, Articles, Sections, subsections and other subdivisions of this
Agreement unless expressly provided otherwise. Titles appearing at the beginning
of any subdivision are for convenience only and do not constitute any part of
any such subdivision and shall be disregarded in construing the language
contained in this Agreement. The words "this Agreement," "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 the phrase occurs. The word "or" is
not exclusive, and the word "including" (in all of its forms) means "including
without limitation". Pronouns in masculine, feminine and neuter gender 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.
ARTICLE II
Security Interest
Section 2.1. Grant of Security Interest. As collateral security for all
of the Obligations, Pledgor hereby pledges and assigns to Pledgee and grants to
Pledgee a continuing first priority security interest for the benefit of Banks
in and to all of the following rights, interests and property:
(a) all of the issued and outstanding Equity of _______________, a
_______________, and _______________, a _______________ (collectively referred
to herein as the "Subsidiaries" and individually as a "Subsidiary") now owned or
hereafter acquired by Pledgor including, without limitation, the Equity of each
Subsidiary owned by Pledgor on the date hereof (all of the foregoing being
herein sometimes called the "Pledged Equity");
(b) any and all proceeds or other sums arising from or by virtue of,
and all dividends and distributions (cash or otherwise) payable and/or
distributable with respect to, all or any of the Pledged Equity; and
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(c) all cash, securities, dividends and other property at any time and
from time to time receivable or otherwise distributed in respect of or in
exchange for any or all of the Pledged Equity and any other property substituted
or exchanged therefor.
Section 2.2. Obligations Secured. The security interest created hereby
in the Collateral constitutes continuing collateral security for all of the
following obligations, indebtedness and liabilities, whether now existing or
hereafter incurred:
(a) Credit Agreement Indebtedness. The payment by Borrowers, as and
when due and payable, of all amounts from time to time owing by Borrowers under
or in respect of the Credit Agreement, the Notes or any of the other Obligation
Documents.
(b) Renewals. All renewals, extensions, amendments, modifications,
supplements, or restatements of, or substitutions for, any of the foregoing.
(c) Performance. The due performance and observance by Borrowers of all
of their other obligations from time to time existing under or in respect of any
of the Obligation Documents.
(d) Hedge Transactions. The payment and performance of any and all
present or future obligations of any Credit Party according to the terms of any
present or future Hedge Transaction, including, without limitation, any present
or future swap agreements, cap, floor, collar, exchange, transaction, forward
agreement or other exchange or protection agreements relating to crude oil,
natural gas or other Hydrocarbons, or any option with respect to any such
transaction now existing or hereafter entered into between and/or among any
Credit Party, Pledgee, any Bank or any affiliate of any of the foregoing.
ARTICLE III
Representations, Warranties and Covenants
Section 3.1. Representations and Warranties. Pledgor represents and
warrants as follows:
(a) Ownership and Liens. Pledgor has good and marketable title to the
Collateral free and clear of all Liens, encumbrances or adverse claims, except
for the security interest created by this Agreement. No effective financing
statement or other instrument similar in effect covering all or any part of the
Collateral is on file in any recording office except such as have been filed in
favor of Pledgee relating to this Agreement.
(b) No Conflicts or Consents. Neither the ownership or the intended use
of the Collateral by Pledgor, nor the grant of the security interest by Pledgor
to Pledgee herein, nor the exercise by Pledgee of its rights or remedies
hereunder, will (i) conflict with any provision of (a) any domestic
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<PAGE> 147
or foreign law, statute, rule or regulation, (b) the certificate of
incorporation, articles of incorporation, charter or bylaws of any Subsidiary,
or (c) any agreement, judgment, license, order or permit applicable to or
binding upon Pledgor or any Subsidiary; or (ii) result in or require the
creation of any Lien, charge or encumbrance upon any assets or properties of
Pledgor except as expressly contemplated in the Obligation Documents. Except as
expressly contemplated in the Obligation Documents, no consent, approval,
authorization or order of, and no notice to or filing with, any court,
Governmental Authority, any Subsidiary, or third party is required in connection
with the grant by Pledgor of the security interest herein, or the exercise by
Pledgee of its rights and remedies hereunder.
(c) Security Interest. Pledgor has and will have at all times full
right, power and authority to grant a security interest in the Collateral to
Pledgee in the manner provided herein, free and clear of any Lien, adverse
claim, or encumbrance. This Agreement creates a valid and binding security
interest in favor of Pledgee in the Collateral securing the Obligations. The
taking possession by Pledgee (for the ratable benefit of Banks) of all
certificates, instruments and cash constituting Collateral from time to time and
the filing of the financing statements delivered concurrently herewith by
Pledgor to Pledgee will perfect, and establish the first priority of, Pledgee's
security interest hereunder in the Collateral securing the Obligations. No
further or subsequent filing, recording, registration, other public notice or
other action is necessary or desirable to perfect or otherwise continue,
preserve or protect such security interest except for continuation statements or
filings as contemplated in Section 3.3(b).
(d) Pledged Equity. (i) Pledgor is the legal and beneficial owner of
the Pledged Equity; (ii) the Pledged Equity is duly authorized and issued, fully
paid and non-assessable (as applicable), and all documentary, stamp or other
Taxes or fees owing in connection with the issuance, transfer and/or pledge
thereof hereunder have been paid; (iii) no dispute, right of setoff,
counterclaim or defense exists with respect to all or any part of the Pledged
Equity; (iv) the Pledged Equity is free and clear of all Liens, options,
warrants, puts, calls or other rights of third Persons, and restrictions, other
than (a) those Liens arising under this Agreement or any other of the Loan
Papers and Liens for Taxes not yet due and payable, and (b) restrictions on
transferability imposed by applicable state and federal securities Laws; (v)
Pledgor has full right and authority to pledge the Pledged Equity for the
purposes and upon the terms set out herein; (vi) certificates (as applicable)
representing the Pledged Equity have been delivered to Pledgee, together with a
duly executed blank stock power for each certificate; and (vii) no Subsidiary
has issued, and there are not outstanding, any options, warrants or other rights
to acquire Equity of any Subsidiary.
Section 3.2. Affirmative Covenants. Unless Pledgee shall otherwise
consent in writing, Pledgor will at all times comply with the covenants
contained in this Section 3.2 from the date hereof and so long as any part of
the Obligations or Commitments is outstanding.
(a) Ownership and Liens. Pledgor will maintain good and marketable
title to all Collateral free and clear of all Liens, encumbrances or adverse
claims, except for (i) the first priority
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security interest created by this Agreement, and (ii) the security interests and
other encumbrances expressly permitted by the Credit Agreement. Pledgor will
cause to be terminated any financing statement or other registration with
respect to the Collateral, except such as may exist or as may have been filed in
favor of Pledgee. Pledgor will defend Pledgee's right, title and special
property and security interest in and to the Collateral against the claims of
any Person.
(b) Further Assurances. Pledgor will at any time and from time to time
promptly execute and deliver all further instruments and documents and take all
further action that may be necessary or desirable or that Pledgee may request in
order (i) to perfect and protect the security interest created or purported to
be created hereby and the first priority of such security interest; (ii) to
enable Pledgee to exercise and enforce its rights and remedies hereunder in
respect of the Collateral; or (iii) to otherwise effect the purposes of this
Agreement, including: (A) executing and filing such financing or continuation
statements, or amendments thereto, as may be necessary or desirable or that
Pledgee may request in order to perfect and preserve the security interest
created or purported to be created hereby, and (B) furnishing to Pledgee from
time to time statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as Pledgee
may reasonably request, all in reasonable detail.
(c) Delivery of Pledged Equity. All certificates, instruments and
writings evidencing the Pledged Equity shall be delivered to Pledgee on or prior
to the execution and delivery of this Agreement. All other certificates,
instruments and writings hereafter evidencing or constituting Pledged Equity
shall be delivered to Pledgee promptly upon the receipt thereof by or on behalf
of Pledgor. All Pledged Equity shall be held by or on behalf of Pledgee pursuant
hereto and shall be delivered in the same manner and with the same effect as
described in Section 2.1 and Section 3.1. Upon delivery, such Equity shall
thereupon constitute "Pledged Equity" and shall be subject to the Liens herein
created, for the purposes and upon the terms and conditions set forth in this
Agreement and the other Loan Papers.
(d) Proceeds of Pledged Equity. If Pledgor shall receive, by virtue of
its being or having been an owner of any Pledged Equity, any (i) Equity
(including any certificate representing any Equity or distribution in connection
with any increase or reduction of capital, reorganization, reclassification,
merger, consolidation, sale of assets, or spinoff or split-off), promissory note
or other instrument or writing; (ii) option or right, whether as an addition to,
substitution for, or in exchange for, any Pledged Equity or otherwise; (iii)
dividends or other distributions payable in cash (except such dividends or other
distributions permitted to be retained by Pledgor pursuant to Section 4.7) or in
securities or other property; or (iv) dividends or other distributions in
connection with a partial or total liquidation or dissolution or in connection
with a reduction of capital, capital surplus or paid-in surplus, Pledgor shall
receive the same in trust for the benefit of Pledgee, shall segregate it from
Pledgor's other property, and shall promptly deliver it to Pledgee in the exact
form received, with any necessary endorsement or appropriate stock powers duly
executed in blank, to be held by Pledgee as Collateral.
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<PAGE> 149
(e) Status of Pledged Equity. The certificates evidencing the Pledged
Equity (as applicable) shall at all times be valid and genuine and shall not be
altered. The Pledged Equity at all times shall be duly authorized, validly
issued, fully paid, and non-assessable (as applicable), shall not be issued in
violation of the pre-emptive rights of any Person or of any agreement by which
Pledgor or any Subsidiary is bound, and, except for the bylaws or other
organizational documents of each Subsidiary, shall not be subject to any
restrictions or conditions with respect to the transfer, voting or capital of
any Pledged Equity.
Section 3.3. Negative Covenants. Unless Pledgee shall otherwise consent
in writing, Pledgor will at all times comply with the covenants contained in
this Section 3.3 from the date hereof and so long as any part of the Obligations
or the Commitments is outstanding.
(a) Transfer or Encumbrance. Pledgor will not sell, assign (by
operation of law or otherwise), transfer, exchange, lease or otherwise dispose
of any of the Collateral, nor will Pledgor grant a Lien upon or execute, file or
record any financing statement or other registration with respect to the
Collateral (other than the security interests created by this Agreement), nor
will Pledgor allow any such Lien, financing statement, or other registration to
exist or deliver actual or constructive possession of the Collateral to any
other Person other than Liens in favor of Pledgee.
(b) Financing Statement Filings. Pledgor recognizes that financing
statements pertaining to the Collateral have been or may be filed where Pledgor
maintains any Collateral, has its records concerning any Collateral, has its
chief executive office or chief place of business, or has its principal place of
residence. Without limitation of any other covenant herein, Pledgor will not
cause or permit any change to be made in its name, identity or corporate
structure, or any change to be made to a jurisdiction other than as represented
in Section 3.1 in (i) the location of any records concerning any Collateral, or
(ii) in the location of its chief executive office, chief place of business or
principal place of residence, unless Pledgor shall have notified Pledgee of such
change at least thirty (30) days prior to the effective date of such change, and
shall have first taken all action required by Pledgee for the purpose of further
perfecting or protecting the security interest in favor of Pledgee in the
Collateral. In any notice furnished pursuant to this subsection, Pledgor will
expressly state that the notice is required by this Agreement and contains facts
that may require additional filings of financing statements or other notices for
the purposes of continuing perfection of Pledgee's security interest in the
Collateral.
(c) Impairment of Security Interest. Pledgor will not take or fail to
take any action which would in any manner impair the enforceability of Pledgee's
security interest in any Collateral.
(d) Restrictions on Pledged Equity. Except for the bylaws or other
charter or organizational documents of each Subsidiary, Pledgor will not enter
into any agreement creating, or otherwise permit to exist, any restriction or
condition upon the transfer, voting or control of any Pledged Equity.
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ARTICLE IV.
Remedies, Powers and Authorizations
Section 4.1. Provisions Concerning the Collateral.
(a) Additional Financing Statement Filings. Pledgor hereby authorizes
Pledgee to file, without the signature of Pledgor where permitted by law, one
(1) or more financing or continuation statements, and amendments thereto,
relating to the Collateral. Pledgor further agrees that a carbon, photographic
or other reproduction of this Agreement or any financing statement describing
any Collateral is sufficient as a financing statement and may be filed in any
jurisdiction Pledgee may deem appropriate.
(b) Power of Attorney. Pledgor hereby irrevocably appoints Pledgee as
Pledgor's attorney-in-fact and proxy, with full authority in the place and stead
of Pledgor and in the name of Pledgor or otherwise, from time to time in
Pledgee's discretion, to take any action (except for the exercise of any voting
rights pertaining to the Pledged Equity or any part thereof) and to execute any
instrument, certificate or notice which Pledgee may deem necessary or advisable
to accomplish the purposes of this Agreement including: (i) to request or
instruct Pledgor or any Subsidiary (and each registrar, transfer agent, or
similar Person acting on behalf of Pledgor or any Subsidiary) to register the
pledge or transfer of the Collateral to Pledgee; (ii) to otherwise give
notification to Pledgor, any Subsidiary, registrar, transfer agent, financial
intermediary, or other Person of Pledgee's security interests hereunder; (iii)
to ask, demand, collect, sue for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect of
any of the Collateral; (iv) to receive, indorse and collect any drafts or other
instruments, documents and chattel paper; and (v) to file any claims or take any
action or institute any proceedings which Pledgee may deem necessary or
desirable for the collection of any of the Collateral or otherwise to enforce
the rights of Pledgee with respect to any of the Collateral.
(c) Performance by Pledgee. If Pledgor fails to perform any agreement
or obligation contained herein, Pledgee may itself perform, or cause performance
of, such agreement or obligation, and the expenses of Pledgee incurred in
connection therewith shall be payable by Pledgor under Section 4.4.
(d) Collection Rights. Pledgee shall have the right at any time, upon
the occurrence and during the continuance of a Default or an Event of Default,
to notify any or all obligors (including the Subsidiaries) under any accounts or
general intangibles included among the Collateral of the assignment thereof to
Pledgee and to direct such obligors to make payment of all amounts due or to
become due to Pledgor thereunder directly to Pledgee and, upon such notification
and at the expense of Pledgor or Borrowers and to the extent permitted by law,
to enforce collection thereof and to adjust, settle or compromise the amount or
payment thereof, in the same manner and to the same extent as Pledgor could have
done. After Pledgor receives notice that Pledgee has given any notice
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referred to above in this subsection, (i) all amounts and proceeds (including
instruments and writings) received by Pledgor in respect of such accounts or
general intangibles shall be received in trust for the benefit of Pledgee
hereunder, shall be segregated from other funds of Pledgor and shall be
forthwith paid over to Pledgee in the same form as so received (with any
necessary indorsement) to be held as cash collateral and (A) released to Pledgor
upon the remedy of all Defaults or Events of Default, or (B) if any Event of
Default shall have occurred and be continuing, applied as specified in Section
4.3; and (ii) Pledgor will not adjust, settle or compromise the amount or
payment of any such account or general intangible or release wholly or partly
any account debtor or obligor thereof (including Borrowers) or allow any credit
or discount thereon.
Section 4.2. Event of Default Remedies. If an Event of Default shall
have occurred and be continuing, Pledgee may from time to time in its
discretion, without limitation and without notice except as expressly provided
below:
(a) exercise in respect of the Collateral, in addition to other rights
and remedies provided for herein, under the other Obligation Documents or
otherwise available to it, all the rights and remedies of a secured party on
default under the Code (whether or not the Code applies to the affected
Collateral);
(b) require Pledgor to, and Pledgor hereby agrees that it will upon
request of Pledgee forthwith, assemble all or part of the Collateral as directed
by Pledgee and make it available to Pledgee at a place to be designated by
Pledgee which is reasonably convenient to both parties;
(c) reduce its claim to judgment against Pledgor or foreclose or
otherwise enforce, in whole or in part, the security interest created hereby by
any available judicial procedure;
(d) dispose of, at its office, on the premises of Pledgor or elsewhere,
all or any part of the Collateral, as a unit or in parcels, by public or private
proceedings, and by way of one or more contracts (it being agreed that the sale
of any part of the Collateral shall not exhaust Pledgee's power of sale, but
sales may be made from time to time, and at any time, until all of the
Collateral has been sold or until the Obligations have been paid and performed
in full), and at any such sale it shall not be necessary to exhibit any of the
Collateral;
(e) buy (or allow any Bank to buy) the Collateral, or any part thereof,
at any public sale;
(f) buy (or allow any Bank to buy) the Collateral, or any part thereof,
at any private sale if the Collateral is of a type customarily sold in a
recognized market or is of a type which is the subject of widely distributed
standard price quotations; and
(g) apply by appropriate judicial proceedings for appointment of a
receiver for the Collateral, or any part thereof, and Pledgor hereby consents to
any such appointment.
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Pledgor agrees that, to the extent notice of sale shall be required by law, at
least ten (10) days' notice to Pledgor of the time and place of any public sale
or the time after which any private sale is to be made shall constitute
reasonable notification. Pledgee shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. Pledgee may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned.
Section 4.3. Application of Proceeds. If any Event of Default shall
have occurred and be continuing, Pledgee may in its discretion apply any cash
held by Pledgee as Collateral, and any cash proceeds received by Pledgee in
respect of any sale of, collection from, or other realization upon all or any
part of the Collateral, in the order and manner contemplated by Section 4.2 of
the Credit Agreement.
Section 4.4. Release and Expenses. In addition to, and not in
qualification of, any similar obligations under other Obligation Documents:
(a) Pledgor agrees to release and forever discharge Pledgee and each
Bank from and against any and all claims, losses and liabilities growing out of
or resulting from this Agreement (including enforcement of this Agreement). The
foregoing release and discharge shall apply whether or not such claims, losses
and liabilities are in any way or to any extent owed, in whole or in part, under
any claim or theory of strict liability or are, to any extent caused, in whole
or in part, by any negligent act or omission of any kind by Pledgee or any Bank.
(b) Borrowers or Pledgor will upon demand pay to Pledgee the amount of
any and all costs and expenses, including the reasonable fees and disbursements
of Pledgee's counsel and of any experts and agents, which Pledgee may incur in
connection with (i) the transactions which give rise to this Agreement; (ii) the
preparation of this Agreement and the perfection and preservation of the
security interest created under this Agreement; (iii) the administration of this
Agreement; (iv) the custody, preservation, use or operation of, or the sale of,
collection from, or other realization upon, any Collateral; (v) the exercise or
enforcement of any of the rights of Pledgee hereunder; or (vi) the failure by
Pledgor to perform or observe any of the provisions hereof, except expenses
resulting from Pledgee's gross negligence or willful misconduct.
Section 4.5. Non-Judicial Remedies. In granting to Pledgee the power to
enforce its rights hereunder without prior judicial process or judicial hearing,
Pledgor expressly waives, renounces and knowingly relinquishes any legal right
which might otherwise require Pledgee to enforce its rights by judicial process.
In so providing for non-judicial remedies, Pledgor recognizes and concedes that
such remedies are consistent with the usage of trade, are responsive to
commercial necessity, and are the result of a bargain at arm's length. Nothing
herein is intended to prevent Pledgee or Pledgor from resorting to judicial
process at either party's option.
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Section 4.6. Other Recourse. Pledgor waives any right to require
Pledgee or Banks to proceed against any other Person, exhaust any Collateral or
other security for the Obligations, or to have any Other Liable Party joined
with Pledgor in any suit arising out of the Obligations or this Agreement, or
pursue any other remedy in Pledgee's power. Pledgor further waives any and all
notice of acceptance of this Agreement and of the creation, modification,
rearrangement, renewal or extension for any period of any of the Obligations
from time to time. Pledgor further waives any defense arising by reason of any
disability or other defense of any Other Liable Party or by reason of the
cessation from any cause whatsoever of the liability of any Other Liable Party.
Until all of the Obligations shall have been paid in full, Pledgor shall have no
right to subrogation and Pledgor waives the right to enforce any remedy which
Pledgee or any Bank has or may hereafter have against any Other Liable Party,
and waives any benefit of and any right to participate in any other security
whatsoever now or hereafter held by Pledgee. Pledgor authorizes Pledgee and each
Bank, without notice or demand and without any reservation of rights against
Pledgor and without affecting Pledgor's liability hereunder or on the
Obligations, from time to time to (a) take or hold any other property of any
type from any other Person as security for the Obligations, and exchange,
enforce, waive and release any or all of such other property; (b) renew, extend
for any period, accelerate, modify, compromise, settle or release any of the
obligations of any Other Liable Party in respect to any or all of the
Obligations or other security for the Obligations; (c) waive, enforce, modify,
amend or supplement any of the provisions of any Obligation Document with any
Person other than Pledgor; and (d) release or substitute any Other Liable Party.
Section 4.7. Voting Rights, Dividends Etc. in Respect of Pledged
Equity.
(a) So long as no Default or Event of Default shall have occurred and
be continuing Pledgor may receive and retain any and all dividends,
distributions or interest paid in respect of the Pledged Equity; provided,
however, that any and all
(i) dividends, distributions and interest paid or payable
other than in cash in respect of, and instruments and other property
received, receivable or otherwise distributed in respect of or in
exchange for, any Pledged Equity,
(ii) dividends and other distributions paid or payable in cash
in respect of any Pledged Equity in connection with a partial or total
liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in surplus, and
(iii) cash paid, payable or otherwise distributed in
redemption of, or in exchange for, any Pledged Equity,
shall be, and shall forthwith be delivered to Pledgee to hold as, Pledged Equity
and shall, if received by Pledgor, be received in trust for the benefit of
Pledgee, be segregated from the other property or funds of Pledgor, and be
forthwith delivered to Pledgee in the exact form received with any
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necessary indorsement or appropriate stock powers duly executed in blank, to be
held by Pledgee as Collateral.
(b) Upon the occurrence and during the continuance of a Default or an
Event of Default:
(i) all rights of Pledgor to receive and retain the dividends,
distributions and interest payments which Pledgor would otherwise be
authorized to receive and retain pursuant to subsection (a) of this
Section 4.7 shall automatically cease, and all such rights shall
thereupon become vested in Pledgee which shall thereupon have the right
to receive and hold as Pledged Equity such dividends, distributions and
interest payments;
(ii) without limiting the generality of the foregoing, Pledgee
may at its option exercise any and all rights of conversion, exchange,
subscription or any other rights, privileges or options pertaining to
any of the Pledged Equity (except voting rights) as if it were the
absolute owner thereof, including the right to exchange, in its
discretion, any and all of the Pledged Equity upon the merger,
consolidation, reorganization, recapitalization or other adjustment of
Pledgor or any Subsidiary, or upon the exercise by Pledgor or any
Subsidiary of any right, privilege or option pertaining to any Pledged
Equity, and, in connection therewith, to deposit and deliver any and
all of the Pledged Equity with any committee, depository, transfer,
agent, registrar or other designated agent upon such terms and
conditions as it may determine; and
(iii) all dividends and interest payments which are received
by Pledgor contrary to the provisions of subsection (b) (i) of this
Section 4.7 shall be received in trust for the benefit of Pledgee,
shall be segregated from other funds of Pledgor, and shall be forthwith
paid over to Pledgee as Pledged Equity in the exact form received, to
be held by Pledgee as Collateral.
Anything herein to the contrary notwithstanding, Pledgee may not exercise any
voting rights pertaining to the Pledged Equity, and Pledgor may at all times
exercise any and all voting rights pertaining to the Pledged Equity or any part
thereof for any purpose not inconsistent with the terms of this Agreement or any
other Obligation Document; provided, however, upon the occurrence and during the
continuance of a Default or an Event of Default, Pledgor will not exercise or
refrain from exercising any such right, as the case may be, if Pledgee gives
notice that, in Pledgee's judgment, such action would result in a Material
Adverse Change with respect to the value of the Pledged Equity or the benefits
to Pledgee of its security interest hereunder.
Section 4.8. Private Sale of Pledged Equity. Pledgor recognizes that
Pledgee may deem it impracticable to effect a public sale of all or any part of
the Pledged Equity and that Pledgee may, therefore, determine to make one or
more private sales of any such securities to a restricted group of purchasers
who will be obligated to agree, among other things, to acquire such securities
for their own account, for investment and not with a view to the distribution or
resale thereof. Pledgor
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acknowledges that any such private sale may be at prices and on terms less
favorable to the seller than the prices and other terms which might have been
obtained at a public sale and, notwithstanding the foregoing, agrees that such
private sales shall be deemed to have been made in a commercially reasonable
manner and that Pledgee shall have no obligation to delay the sale of any such
securities for the period of time necessary to permit Pledgor or the
Subsidiaries to register such securities (with no obligation of either Pledgor
or any Subsidiary to accomplish such registration) for public sale under the
Securities Act of 1933, as amended (the "Securities Act"). Pledgor further
acknowledges and agrees that any offer to sell such securities which has been
(a) publicly advertised on a bona fide basis in a newspaper or other publication
of general circulation in the financial communities of Dallas, Texas, or Boston,
Massachusetts (to the extent that such an offer may be so advertised without
prior registration under the Securities Act), or (b) made privately in the
manner described above to not less than fifteen (15) bona fide offerees shall be
deemed to involve a "public sale" for the purposes of Section 9.504(c) of the
Code (or any successor or similar, applicable statutory provision) as then in
effect in the State of Texas, notwithstanding that such sale may not constitute
a "public offering" under the Securities Act, and that Pledgee may, in such
event, bid for the purchase of such securities.
ARTICLE V
Miscellaneous
Section 5.1. Notices. Any notice or communication required or permitted
hereunder shall be given in writing, sent by personal delivery, by telecopy, by
delivery service with proof of delivery, or by registered or certified United
States mail, postage prepaid, addressed to the appropriate party as follows:
To Pledgor: Prize Energy Corp.
3500 William D. Tate, Suite 200
Grapevine, Texas 76051
Attn: Lon C. Kile
Fax No.: (817) 416-4206
To Pledgee: BankBoston, N.A., as Administrative Agent for Banks
100 Federal Street, Mail Stop 010804
Boston, Massachusetts 02110
Attn: Ken Pulido
Fax No.: (617) 434-7233
or to such other address or to the attention of such other individual as
hereafter shall be designated in writing by the applicable party sent in
accordance herewith. 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
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date of first attempted delivery at the address or 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.
Section 5.2. Amendments. No amendment of any provision of this
Agreement shall be effective unless it is in writing and signed by Pledgor,
Pledgee and Required Banks (or all Banks if required pursuant to the terms of
the Credit Agreement), and no waiver of any provision of this Agreement, and no
consent to any departure by Pledgor therefrom, shall be effective unless it is
in writing and signed by Pledgee and Required Banks (or all Banks if required
pursuant to the terms of the Credit Agreement), and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given and to the extent specified in such writing.
Section 5.3. Preservation of Rights. No failure on the part of Pledgee
or any Bank to exercise, and no delay in exercising, any right hereunder or
under any other Obligation Document shall operate as a waiver thereof; nor shall
any single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. Neither the execution nor
the delivery of this Agreement shall in any manner impair or affect any other
security for the Obligations. The rights and remedies of Pledgee and Banks
provided herein and in the other Obligation Documents are cumulative of and are
in addition to, and not exclusive of, any rights or remedies provided by law.
The rights of Pledgee and Banks under any Obligation Document against any party
thereto are not conditional or contingent on any attempt by Pledgee or Banks to
exercise any of its or their rights under any other Obligation Document against
such party or against any other Person.
Section 5.4. Unenforceability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or invalidity without
invalidating the remaining portions hereof or thereof or affecting the validity
or enforceability of such provision in any other jurisdiction.
Section 5.5. Survival of Agreements. All representations and warranties
of Pledgor herein, and all covenants and agreements herein shall survive the
execution and delivery of this Agreement, the execution and delivery of any
other Obligation Documents and the creation of the Obligations.
Section 5.6. Other Liable Party. Neither this Agreement nor the
exercise by Pledgee or any Bank or the failure of Pledgee or any Bank to
exercise any right, power or remedy conferred herein or by law shall be
construed as relieving any Other Liable Party from liability on the Obligations
or any deficiency thereon. This Agreement shall continue irrespective of the
fact that the liability of any Other Liable Party may have ceased or
irrespective of the validity or enforceability of any other Obligation Document
to which Pledgor or any Other Liable Party may be a party, and notwithstanding
the reorganization, death, incapacity or bankruptcy of any Other Liable Party,
and notwithstanding the reorganization or bankruptcy or other event or
proceeding affecting any Other Liable Party.
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Section 5.7. Binding Effect and Assignment. This Agreement creates a
continuing security interest in the Collateral and (a) shall be binding on
Pledgor and its successors and permitted assigns, and (b) shall inure, together
with all rights and remedies of Pledgee hereunder, to the benefit of Pledgee and
Banks and their respective successors, transferees and assigns. Without limiting
the generality of the foregoing, Pledgee and Banks may pledge, assign or
otherwise transfer any or all of their respective rights under any or all of the
Obligation Documents to any other Person, and such other Person shall thereupon
become vested with all of the benefits in respect thereof granted herein or
otherwise. None of the rights or duties of Pledgor hereunder may be assigned or
otherwise transferred without the prior written consent of Pledgee and Required
Banks (or all Banks if required pursuant to the terms of the Credit Agreement).
Section 5.8. Termination. It is contemplated by the parties hereto that
there may be times when no Obligations are outstanding, but notwithstanding such
occurrences, this Agreement shall remain valid and shall be in full force and
effect as to subsequent outstanding Obligations. Upon the satisfaction in full
of the Obligations, upon the termination or expiration of the Credit Agreement
and any other Commitment of Banks to extend credit to Borrowers, and upon
written request for the termination hereof delivered by Pledgor to Pledgee and
Banks, this Agreement and the security interest created hereby shall terminate
and all rights to the Collateral shall revert to Pledgor. Pledgee will, upon
Pledgor's request and at Pledgor's expense, (a) return to Pledgor such of the
Collateral as shall not have been sold or otherwise disposed of or applied
pursuant to the terms hereof, and (b) execute and deliver to Pledgor such
documents as Pledgor shall reasonably request to evidence such termination.
SECTION 5.9. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND THE LAWS
OF THE UNITED STATES OF AMERICA.
Section 5.10. Counterparts. This Agreement may be separately executed
in any number of counterparts, all of which when so executed shall be deemed to
constitute one and the same Agreement.
Section 5.11. Loan Paper. This Agreement is a "Loan Paper", as defined
in the Credit Agreement, and, except as expressly provided herein to the
contrary, this Agreement is subject to all provisions of the Credit Agreement
governing the Loan Papers.
[Signature Pages to Follow]
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IN WITNESS WHEREOF, Pledgor has executed and delivered this Agreement,
as of the date first above written.
PRIZE ENERGY CORP.,
a Delaware corporation
By:
----------------------------------------
Name:
----------------------------------------
Title:
----------------------------------------
BANKBOSTON, N.A.,
as Administrative Agent
By:
----------------------------------------
Name:
----------------------------------------
Title:
----------------------------------------
Each Subsidiary hereby acknowledges and consents to the pledge of the
Collateral and hereby agrees to observe and perform each and every provision of
this Agreement applicable to such Subsidiary.
----------------------------------------
a
---------------------------------------
By:
----------------------------------------
Name:
----------------------------------------
Title:
----------------------------------------
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EXHIBIT F
FORM OF SUBSIDIARY PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Agreement") is made as of __________________,
200___, by [Name of Subsidiary], a __________________ (herein called "Pledgor"),
in favor of BankBoston, N.A., as Administrative Agent for the ratable benefit of
Banks (as defined below) (herein called "Pledgee").
W I T N E S S E T H:
WHEREAS, Prize Energy Resources, L.P., a Delaware limited partnership
("Prize LP"), Vista Resources Partners, L.P., a Texas limited partnership
("Vista LP"), Midland Resources, Inc., a Texas corporation ("Midland" and,
collectively with Prize LP and Vista LP, "Borrowers" and each individually, a
"Borrower"), Prize Energy Corp., a Delaware corporation, as Parent Guarantor,
BankBoston, N.A., as Administrative Agent, First Union National Bank, as
Syndication Agent, CIBC Inc., as Documentation Agent, Bank One, Texas, N.A., as
Lead Manager and Banks are parties to that certain Amended and Restated Credit
Agreement (as may be amended from time to time, the "Credit Agreement") dated as
of February 8, 2000, pursuant to which Banks have agreed to make loans and other
extensions of credit to Borrowers for the purposes set forth therein; and
WHEREAS, it is a condition precedent to such extension of credit by
Banks pursuant to the Credit Agreement that, among other things, Pledgor shall
have executed and delivered to Pledgee a pledge agreement granting to Pledgee,
for the benefit of Banks, a security interest in the Collateral (as defined
herein); and
WHEREAS, the board of directors of Pledgor has determined that
Pledgor's execution, delivery and performance of this Agreement may reasonably
be expected to benefit Pledgor, directly or indirectly, and are in the best
interests of Pledgor.
NOW, THEREFORE, in consideration of the premises and in order to induce
Banks to extend credit under the Credit Agreement, Pledgor hereby agrees with
Pledgee as follows:
ARTICLE I
Definitions and References
Section 1.1. General Definitions. As used herein, the terms defined
above shall have the meanings indicated above, and the following terms shall
have the following meanings:
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"Bank" means any financial institution reflected on Schedule 1 to the
Credit Agreement and its successors and assigns, and "Banks" shall mean all
Banks.
"Code" means the Uniform Commercial Code in effect in the State of
Oklahoma on the date hereof.
"Collateral" means all property of whatever type, in which Pledgee at
any time has a security interest pursuant to Section 2.1.
"Commitment" means the agreement or commitment by Banks to make loans
or otherwise extend credit to Borrowers under the Credit Agreement, and any
other agreement, commitment, statement of terms or other document contemplating
the making of loans or advances or other extension of credit by Banks to or for
the account of Borrowers which is now or at any time hereafter intended to be
secured by the Collateral under this Agreement.
"Equity" means shares of capital stock or a partnership, profits,
capital or member interest, or options, warrants or any other right to
substitute for or otherwise acquire the capital stock or a partnership, profits,
capital or member interest of any Subsidiary (as defined in Section 2.1(a)).
"Obligation Documents" means the Credit Agreement, the Notes, the Loan
Papers, and all other documents and instruments under, by reason of which, or
pursuant to which, any or all of the Obligations are evidenced, governed,
secured, or otherwise dealt with, and all other agreements, certificates, and
other documents, instruments and writings heretofore or hereafter delivered in
connection herewith or therewith.
"Obligations" means all present and future indebtedness, obligations
and liabilities of whatever type which are or shall be secured pursuant to
Section 2.2.
"Other Liable Party" means any Person, other than Pledgor, but
including Borrowers and each Subsidiary, who may now or may at any time
hereafter be primarily or secondarily liable for any of the Obligations or who
may now or may at any time hereafter have granted to Pledgee or Banks a Lien
upon any property as security for the Obligations.
"Pledged Equity" has the meaning given it in Section 2.1(a).
Section 1.2. Other Definitions. Reference is hereby made to the Credit
Agreement for a statement of the terms thereof. All capitalized terms used in
this Agreement which are defined in the Credit Agreement and not otherwise
defined herein shall have the same meanings herein as set forth therein. All
terms used in this Agreement which are defined in the Code and not otherwise
defined herein or in the Credit Agreement shall have the same meanings herein as
set forth in the Code, except where the context otherwise requires.
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Section 1.3. Exhibits. All exhibits attached to this Agreement are a
part hereof for all purposes.
Section 1.4. Amendment of Defined Instruments. Unless the context
otherwise requires or unless otherwise provided herein, references in this
Agreement to a particular agreement, instrument or document also refer to and
include all renewals, extensions, amendments, modifications, supplements or
restatements of any such agreement, instrument or document, provided that
nothing contained in this Section 1.4 shall be construed to authorize any Person
to execute or enter into any such renewal, extension, amendment, modification,
supplement or restatement.
Section 1.5. References and Titles. All references in this Agreement to
Exhibits, Articles, Sections, subsections, and other subdivisions refer to the
Exhibits, Articles, Sections, subsections and other subdivisions of this
Agreement unless expressly provided otherwise. Titles appearing at the beginning
of any subdivision are for convenience only and do not constitute any part of
any such subdivision and shall be disregarded in construing the language
contained in this Agreement. The words "this Agreement," "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 the phrase occurs. The word "or" is
not exclusive, and the word "including" (in all of its forms) means "including
without limitation". Pronouns in masculine, feminine and neuter gender 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.
ARTICLE II
Security Interest
Section 2.1. Grant of Security Interest. As collateral security for all
of the Obligations, Pledgor hereby pledges and assigns to Pledgee and grants to
Pledgee a continuing first priority security interest for the benefit of Banks
in and to all of the following rights, interests and property:
(a) all of the issued and outstanding Equity of _______________, a
__________, and _______________, a __________ (collectively referred to herein
as the "Subsidiaries" and individually as a "Subsidiary") now owned or hereafter
acquired by Pledgor, including, without limitation, the Equity of each
Subsidiary owned by Pledgor on the date hereof (all of the foregoing being
herein sometimes called the "Pledged Equity");
(b) any and all proceeds or other sums arising from or by virtue of,
and all dividends and distributions (cash or otherwise) payable and/or
distributable with respect to, all or any of the Pledged Equity; and
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(c) all cash, securities, dividends and other property at any time and
from time to time receivable or otherwise distributed in respect of or in
exchange for any or all of the Pledged Equity and any other property substituted
or exchanged therefor.
Section 2.2. Obligations Secured. The security interest created hereby
in the Collateral constitutes continuing collateral security for all of the
following obligations, indebtedness and liabilities, whether now existing or
hereafter incurred:
(a) Credit Agreement Indebtedness. The payment by Borrowers, as and
when due and payable, of all amounts from time to time owing by Borrowers under
or in respect of the Credit Agreement, the Notes or any of the other Obligation
Documents.
(b) Renewals. All renewals, extensions, amendments, modifications,
supplements, or restatements of, or substitutions for, any of the foregoing.
(c) Performance. The due performance and observance by Borrowers of all
of their other obligations from time to time existing under or in respect of any
of the Obligation Documents.
(d) Hedge Transactions. The payment and performance of any and all
present or future obligations of any Credit Party according to the terms of any
present or future Hedge Transaction, including, without limitation, any present
or future swap agreements, cap, floor, collar, exchange, transaction, forward
agreement or other exchange or protection agreements relating to crude oil,
natural gas or other Hydrocarbons, or any option with respect to any such
transaction now existing or hereafter entered into between and/or among any
Credit Party, Pledgee, any Bank or any affiliate of any of the foregoing.
ARTICLE III
Representations, Warranties and Covenants
Section 3.1. Representations and Warranties. Pledgor represents and
warrants as follows:
(a) Ownership and Liens. Pledgor has good and marketable title to the
Collateral free and clear of all Liens, encumbrances or adverse claims, except
for the security interest created by this Agreement. No effective financing
statement or other instrument similar in effect covering all or any part of the
Collateral is on file in any recording office except such as have been filed in
favor of Pledgee relating to this Agreement.
(b) No Conflicts or Consents. Neither the ownership or the intended use
of the Collateral by Pledgor, nor the grant of the security interest by Pledgor
to Pledgee herein, nor the exercise by Pledgee of its rights or remedies
hereunder, will (i) conflict with any provision of (a) any domestic
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or foreign law, statute, rule or regulation, (b) the certificate of
incorporation, articles of incorporation, charter, bylaws, certificate of
limited partnership, articles of organization, or other organizational documents
of any Subsidiary, or (c) any agreement, judgment, license, order or permit
applicable to or binding upon Pledgor or any Subsidiary; or (ii) result in or
require the creation of any Lien, charge or encumbrance upon any assets or
properties of Pledgor except as expressly contemplated in the Obligation
Documents. Except as expressly contemplated in the Obligation Documents, no
consent, approval, authorization or order of, and no notice to or filing with,
any court, Governmental Authority, any Subsidiary, or third party is required in
connection with the grant by Pledgor of the security interest herein, or the
exercise by Pledgee of its rights and remedies hereunder.
(c) Security Interest. Pledgor has and will have at all times full
right, power and authority to grant a security interest in the Collateral to
Pledgee in the manner provided herein, free and clear of any Lien, adverse
claim, or encumbrance. This Agreement creates a valid and binding security
interest in favor of Pledgee in the Collateral securing the Obligations. The
taking possession by Pledgee (for the ratable benefit of Banks) of all
certificates, instruments and cash constituting Collateral from time to time and
the filing of the financing statements delivered concurrently herewith by
Pledgor to Pledgee will perfect, and establish the first priority of, Pledgee's
security interest hereunder in the Collateral securing the Obligations. No
further or subsequent filing, recording, registration, other public notice or
other action is necessary or desirable to perfect or otherwise continue,
preserve or protect such security interest except for continuation statements or
filings as contemplated in Section 3.3(b).
(d) Pledged Equity. (i) Pledgor is the legal and beneficial owner of
the Pledged Equity; (ii) the Pledged Equity is duly authorized and issued, fully
paid and non-assessable (as applicable), and all documentary, stamp or other
Taxes or fees owing in connection with the issuance, transfer and/or pledge
thereof hereunder have been paid; (iii) no dispute, right of setoff,
counterclaim or defense exists with respect to all or any part of the Pledged
Equity; (iv) the Pledged Equity is free and clear of all Liens, options,
warrants, puts, calls or other rights of third Persons, and restrictions, other
than (a) those Liens arising under this Agreement or any other of the Loan
Papers and Liens for Taxes not yet due and payable, (b) restrictions on
transferability imposed by applicable state and federal securities Laws, and (c)
restrictions under the organizational documents of the Subsidiaries; (v) Pledgor
has full right and authority to pledge the Pledged Equity for the purposes and
upon the terms set out herein; (vi) certificates (as applicable) representing
the Pledged Equity have been delivered to Pledgee, together with a duly executed
blank stock power for each certificate; and (vii) no Subsidiary has issued, and
there are not outstanding, any options, warrants or other rights to acquire
Equity of any Subsidiary.
Section 3.2. Affirmative Covenants. Unless Pledgee shall otherwise
consent in writing, Pledgor will at all times comply with the covenants
contained in this Section 3.2 from the date hereof and so long as any part of
the Obligations or Commitments is outstanding.
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(a) Ownership and Liens. Pledgor will maintain good and marketable
title to all Collateral free and clear of all Liens, encumbrances or adverse
claims, except for (i) the first priority security interest created by this
Agreement, and (ii) the security interests and other encumbrances expressly
permitted by the Credit Agreement. Pledgor will cause to be terminated any
financing statement or other registration with respect to the Collateral, except
such as may exist or as may have been filed in favor of Pledgee. Pledgor will
defend Pledgee's right, title and special property and security interest in and
to the Collateral against the claims of any Person.
(b) Further Assurances. Pledgor will at any time and from time to time
promptly execute and deliver all further instruments and documents and take all
further action that may be necessary or desirable or that Pledgee may request in
order (i) to perfect and protect the security interest created or purported to
be created hereby and the first priority of such security interest; (ii) to
enable Pledgee to exercise and enforce its rights and remedies hereunder in
respect of the Collateral; or (iii) to otherwise effect the purposes of this
Agreement, including: (A) executing and filing such financing or continuation
statements, or amendments thereto, as may be necessary or desirable or that
Pledgee may request in order to perfect and preserve the security interest
created or purported to be created hereby, and (B) furnishing to Pledgee from
time to time statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as Pledgee
may reasonably request, all in reasonable detail.
(c) Delivery of Pledged Equity. All certificates, instruments and
writings evidencing the Pledged Equity shall be delivered to Pledgee on or prior
to the execution and delivery of this Agreement. All certificates, instruments
and writings hereafter evidencing or constituting Pledged Equity shall be
delivered to Pledgee promptly upon the receipt thereof by or on behalf of
Pledgor. All Pledged Equity shall be held by or on behalf of Pledgee pursuant
hereto and shall be delivered in the same manner and with the same effect as
described in Section 2.1 and Section 3.1. Upon delivery, such Equity shall
thereupon constitute "Pledged Equity" and shall be subject to the Liens herein
created, for the purposes and upon the terms and conditions set forth in this
Agreement and the other Loan Papers.
(d) Proceeds of Pledged Equity. If Pledgor shall receive, by virtue of
its being or having been an owner of any Pledged Equity, any (i) Equity
(including any certificate representing any Equity or distribution in connection
with any increase or reduction of capital, reorganization, reclassification,
merger, consolidation, sale of assets, or spinoff or split-off), promissory note
or other instrument or writing; (ii) option or right, whether as an addition to,
substitution for, or in exchange for, any Pledged Equity or otherwise; (iii)
dividends or other distributions payable in cash (except such dividends or other
distributions permitted to be retained by Pledgor pursuant to Section 4.7) or in
securities or other property; or (iv) dividends or other distributions in
connection with a partial or total liquidation or dissolution or in connection
with a reduction of capital, capital surplus or paid-in surplus, Pledgor shall
receive the same in trust for the benefit of Pledgee, shall segregate it from
Pledgor's other property, and shall promptly deliver it to Pledgee in the exact
form received,
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with any necessary endorsement or appropriate stock powers duly executed in
blank, to be held by Pledgee as Collateral.
(e) Status of Pledged Equity. The certificates evidencing the Pledged
Equity (as applicable) shall at all times be valid and genuine and shall not be
altered. The Pledged Equity at all times shall be duly authorized, validly
issued, fully paid, and non-assessable (as applicable), shall not be issued in
violation of the pre-emptive rights of any Person or of any agreement by which
Pledgor or any Subsidiary is bound, and, except for the bylaws or other
organizational documents of each Subsidiary, shall not be subject to any
restrictions or conditions with respect to the transfer, voting or capital of
any Pledged Equity.
Section 3.3. Negative Covenants. Unless Pledgee shall otherwise consent
in writing, Pledgor will at all times comply with the covenants contained in
this Section 3.3 from the date hereof and so long as any part of the Obligations
or the Commitments is outstanding.
(a) Transfer or Encumbrance. Pledgor will not sell, assign (by
operation of law or otherwise), transfer, exchange, lease or otherwise dispose
of any of the Collateral, nor will Pledgor grant a Lien upon or execute, file or
record any financing statement or other registration with respect to the
Collateral (other than the security interests created by this Agreement), nor
will Pledgor allow any such Lien, financing statement, or other registration to
exist or deliver actual or constructive possession of the Collateral to any
other Person other than Liens in favor of Pledgee.
(b) Financing Statement Filings. Pledgor recognizes that financing
statements pertaining to the Collateral have been or may be filed where Pledgor
maintains any Collateral, has its records concerning any Collateral, has its
chief executive office or chief place of business, or has its principal place of
residence. Without limitation of any other covenant herein, Pledgor will not
cause or permit any change to be made in its name, identity or corporate
structure, or any change to be made to a jurisdiction other than as represented
in Section 3.1 in (i) the location of any records concerning any Collateral, or
(ii) in the location of its chief executive office, chief place of business or
principal place of residence, unless Pledgor shall have notified Pledgee of such
change at least thirty (30) days prior to the effective date of such change, and
shall have first taken all action required by Pledgee for the purpose of further
perfecting or protecting the security interest in favor of Pledgee in the
Collateral. In any notice furnished pursuant to this subsection, Pledgor will
expressly state that the notice is required by this Agreement and contains facts
that may require additional filings of financing statements or other notices for
the purposes of continuing perfection of Pledgee's security interest in the
Collateral.
(c) Impairment of Security Interest. Pledgor will not take or fail to
take any action which would in any manner impair the enforceability of Pledgee's
security interest in any Collateral.
(d) Restrictions on Pledged Equity. Except for the bylaws or other
charter or organizational documents of each Subsidiary, Pledgor will not enter
into any agreement creating,
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or otherwise permit to exist, any restriction or condition upon the transfer,
voting or control of any Pledged Equity.
ARTICLE IV.
Remedies, Powers and Authorizations
Section 4.1. Provisions Concerning the Collateral.
(a) Additional Financing Statement Filings. Pledgor hereby authorizes
Pledgee to file, without the signature of Pledgor where permitted by law, one
(1) or more financing or continuation statements, and amendments thereto,
relating to the Collateral. Pledgor further agrees that a carbon, photographic
or other reproduction of this Agreement or any financing statement describing
any Collateral is sufficient as a financing statement and may be filed in any
jurisdiction Pledgee may deem appropriate.
(b) Power of Attorney. Pledgor hereby irrevocably appoints Pledgee as
Pledgor's attorney-in-fact and proxy, with full authority in the place and stead
of Pledgor and in the name of Pledgor or otherwise, from time to time in
Pledgee's discretion, to take any action (except for the exercise of any voting
rights pertaining to the Pledged Equity or any part thereof) and to execute any
instrument, certificate or notice which Pledgee may deem necessary or advisable
to accomplish the purposes of this Agreement including: (i) to request or
instruct Pledgor or any Subsidiary (and each registrar, transfer agent, or
similar Person acting on behalf of Pledgor or any Subsidiary) to register the
pledge or transfer of the Collateral to Pledgee; (ii) to otherwise give
notification to Pledgor, any Subsidiary, registrar, transfer agent, financial
intermediary, or other Person of Pledgee's security interests hereunder; (iii)
to ask, demand, collect, sue for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect of
any of the Collateral; (iv) to receive, indorse and collect any drafts or other
instruments, documents and chattel paper; and (v) to file any claims or take any
action or institute any proceedings which Pledgee may deem necessary or
desirable for the collection of any of the Collateral or otherwise to enforce
the rights of Pledgee with respect to any of the Collateral.
(c) Performance by Pledgee. If Pledgor fails to perform any agreement
or obligation contained herein, Pledgee may itself perform, or cause performance
of, such agreement or obligation, and the expenses of Pledgee incurred in
connection therewith shall be payable by Pledgor under Section 4.4.
(d) Collection Rights. Pledgee shall have the right at any time, upon
the occurrence and during the continuance of a Default or an Event of Default,
to notify any or all obligors (including the Subsidiaries) under any accounts or
general intangibles included among the Collateral of the assignment thereof to
Pledgee and to direct such obligors to make payment of all amounts due or to
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become due to Pledgor thereunder directly to Pledgee and, upon such notification
and at the expense of Pledgor or Borrowers and to the extent permitted by law,
to enforce collection thereof and to adjust, settle or compromise the amount or
payment thereof, in the same manner and to the same extent as Pledgor could have
done. After Pledgor receives notice that Pledgee has given any notice referred
to above in this subsection, (i) all amounts and proceeds (including instruments
and writings) received by Pledgor in respect of such accounts or general
intangibles shall be received in trust for the benefit of Pledgee hereunder,
shall be segregated from other funds of Pledgor and shall be forthwith paid over
to Pledgee in the same form as so received (with any necessary indorsement) to
be held as cash collateral and (A) released to Pledgor upon the remedy of all
Defaults or Events of Default, or (B) if any Event of Default shall have
occurred and be continuing, applied as specified in Section 4.3; and (ii)
Pledgor will not adjust, settle or compromise the amount or payment of any such
account or general intangible or release wholly or partly any account debtor or
obligor thereof (including Borrowers) or allow any credit or discount thereon.
Section 4.2. Event of Default Remedies. If an Event of Default shall
have occurred and be continuing, Pledgee may from time to time in its
discretion, without limitation and without notice except as expressly provided
below:
(a) exercise in respect of the Collateral, in addition to other rights
and remedies provided for herein, under the other Obligation Documents or
otherwise available to it, all the rights and remedies of a secured party on
default under the Code (whether or not the Code applies to the affected
Collateral);
(b) require Pledgor to, and Pledgor hereby agrees that it will upon
request of Pledgee forthwith, assemble all or part of the Collateral as directed
by Pledgee and make it available to Pledgee at a place to be designated by
Pledgee which is reasonably convenient to both parties;
(c) reduce its claim to judgment against Pledgor or foreclose or
otherwise enforce, in whole or in part, the security interest created hereby by
any available judicial procedure;
(d) dispose of, at its office, on the premises of Pledgor or elsewhere,
all or any part of the Collateral, as a unit or in parcels, by public or private
proceedings, and by way of one or more contracts (it being agreed that the sale
of any part of the Collateral shall not exhaust Pledgee's power of sale, but
sales may be made from time to time, and at any time, until all of the
Collateral has been sold or until the Obligations have been paid and performed
in full), and at any such sale it shall not be necessary to exhibit any of the
Collateral;
(e) buy (or allow any Bank to buy) the Collateral, or any part thereof,
at any public sale;
(f) buy (or allow any Bank to buy) the Collateral, or any part thereof,
at any private sale if the Collateral is of a type customarily sold in a
recognized market or is of a type which is the subject of widely distributed
standard price quotations; and
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(g) apply by appropriate judicial proceedings for appointment of a
receiver for the Collateral, or any part thereof, and Pledgor hereby consents to
any such appointment.
Pledgor agrees that, to the extent notice of sale shall be required by law, at
least ten (10) days' notice to Pledgor of the time and place of any public sale
or the time after which any private sale is to be made shall constitute
reasonable notification. Pledgee shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. Pledgee may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned.
Section 4.3. Application of Proceeds. If any Event of Default shall
have occurred and be continuing, Pledgee may in its discretion apply any cash
held by Pledgee as Collateral, and any cash proceeds received by Pledgee in
respect of any sale of, collection from, or other realization upon all or any
part of the Collateral, in the order and manner contemplated by Section 4.2 of
the Credit Agreement.
Section 4.4. Release and Expenses. In addition to, and not in
qualification of, any similar obligations under other Obligation Documents:
(a) Pledgor agrees to release and forever discharge Pledgee and each
Bank from and against any and all claims, losses and liabilities growing out of
or resulting from this Agreement (including enforcement of this Agreement). The
foregoing release and discharge shall apply whether or not such claims, losses
and liabilities are in any way or to any extent owed, in whole or in part, under
any claim or theory of strict liability or are, to any extent caused, in whole
or in part, by any negligent act or omission of any kind by Pledgee or any Bank.
(b) Borrowers or Pledgor will upon demand pay to Pledgee the amount of
any and all costs and expenses, including the reasonable fees and disbursements
of Pledgee's counsel and of any experts and agents, which Pledgee may incur in
connection with (i) the transactions which give rise to this Agreement; (ii) the
preparation of this Agreement and the perfection and preservation of the
security interest created under this Agreement; (iii) the administration of this
Agreement; (iv) the custody, preservation, use or operation of, or the sale of,
collection from, or other realization upon, any Collateral; (v) the exercise or
enforcement of any of the rights of Pledgee hereunder; or (vi) the failure by
Pledgor to perform or observe any of the provisions hereof, except expenses
resulting from Pledgee's gross negligence or willful misconduct.
Section 4.5. Non-Judicial Remedies. In granting to Pledgee the power to
enforce its rights hereunder without prior judicial process or judicial hearing,
Pledgor expressly waives, renounces and knowingly relinquishes any legal right
which might otherwise require Pledgee to enforce its rights by judicial process.
In so providing for non-judicial remedies, Pledgor recognizes and concedes that
such remedies are consistent with the usage of trade, are responsive to
commercial necessity, and
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are the result of a bargain at arm's length. Nothing herein is intended to
prevent Pledgee or Pledgor from resorting to judicial process at either party's
option.
Section 4.6. Other Recourse. Pledgor waives any right to require
Pledgee or Banks to proceed against any other Person, exhaust any Collateral or
other security for the Obligations, or to have any Other Liable Party joined
with Pledgor in any suit arising out of the Obligations or this Agreement, or
pursue any other remedy in Pledgee's power. Pledgor further waives any and all
notice of acceptance of this Agreement and of the creation, modification,
rearrangement, renewal or extension for any period of any of the Obligations
from time to time. Pledgor further waives any defense arising by reason of any
disability or other defense of any Other Liable Party or by reason of the
cessation from any cause whatsoever of the liability of any Other Liable Party.
Until all of the Obligations shall have been paid in full, Pledgor shall have no
right to subrogation and Pledgor waives the right to enforce any remedy which
Pledgee or any Bank has or may hereafter have against any Other Liable Party,
and waives any benefit of and any right to participate in any other security
whatsoever now or hereafter held by Pledgee. Pledgor authorizes Pledgee and each
Bank, without notice or demand and without any reservation of rights against
Pledgor and without affecting Pledgor's liability hereunder or on the
Obligations, from time to time to (a) take or hold any other property of any
type from any other Person as security for the Obligations, and exchange,
enforce, waive and release any or all of such other property; (b) renew, extend
for any period, accelerate, modify, compromise, settle or release any of the
obligations of any Other Liable Party in respect to any or all of the
Obligations or other security for the Obligations; (c) waive, enforce, modify,
amend or supplement any of the provisions of any Obligation Document with any
Person other than Pledgor; and (d) release or substitute any Other Liable Party.
Section 4.7. Voting Rights, Dividends Etc. in Respect of Pledged
Equity.
(a) So long as no Default or Event of Default shall have occurred and
be continuing Pledgor may receive and retain any and all dividends,
distributions or interest paid in respect of the Pledged Equity; provided,
however, that any and all
(i) dividends, distributions and interest paid or payable
other than in cash in respect of, and instruments and other property
received, receivable or otherwise distributed in respect of or in
exchange for, any Pledged Equity,
(ii) dividends and other distributions paid or payable in cash
in respect of any Pledged Equity in connection with a partial or total
liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in surplus, and
(iii) cash paid, payable or otherwise distributed in
redemption of, or in exchange for, any Pledged Equity,
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shall be, and shall forthwith be delivered to Pledgee to hold as, Pledged Equity
and shall, if received by Pledgor, be received in trust for the benefit of
Pledgee, be segregated from the other property or funds of Pledgor, and be
forthwith delivered to Pledgee in the exact form received with any necessary
indorsement or appropriate stock powers duly executed in blank, to be held by
Pledgee as Collateral.
(b) Upon the occurrence and during the continuance of a Default or an
Event of Default:
(i) all rights of Pledgor to receive and retain the dividends,
distributions and interest payments which Pledgor would otherwise be
authorized to receive and retain pursuant to subsection (a) of this
Section 4.7 shall automatically cease, and all such rights shall
thereupon become vested in Pledgee which shall thereupon have the right
to receive and hold as Pledged Equity such dividends, distributions and
interest payments;
(ii) without limiting the generality of the foregoing, Pledgee
may at its option exercise any and all rights of conversion, exchange,
subscription or any other rights, privileges or options pertaining to
any of the Pledged Equity (except voting rights) as if it were the
absolute owner thereof, including the right to exchange, in its
discretion, any and all of the Pledged Equity upon the merger,
consolidation, reorganization, recapitalization or other adjustment of
Pledgor or any Subsidiary, or upon the exercise by Pledgor or any
Subsidiary of any right, privilege or option pertaining to any Pledged
Equity, and, in connection therewith, to deposit and deliver any and
all of the Pledged Equity with any committee, depository, transfer,
agent, registrar or other designated agent upon such terms and
conditions as it may determine; and
(iii) all dividends and interest payments which are received
by Pledgor contrary to the provisions of subsection (b) (i) of this
Section 4.7 shall be received in trust for the benefit of Pledgee,
shall be segregated from other funds of Pledgor, and shall be forthwith
paid over to Pledgee as Pledged Equity in the exact form received, to
be held by Pledgee as Collateral.
Anything herein to the contrary notwithstanding, Pledgee may not exercise any
voting rights pertaining to the Pledged Equity, and Pledgor may at all times
exercise any and all voting rights pertaining to the Pledged Equity or any part
thereof for any purpose not inconsistent with the terms of this Agreement or any
other Obligation Document; provided, however, upon the occurrence and during the
continuance of a Default or an Event of Default, Pledgor will not exercise or
refrain from exercising any such right, as the case may be, if Pledgee gives
notice that, in Pledgee's judgment, such action would result in a Material
Adverse Change with respect to the value of the Pledged Equity or the benefits
to Pledgee of its security interest hereunder.
Section 4.8. Private Sale of Pledged Equity. Pledgor recognizes that
Pledgee may deem it impracticable to effect a public sale of all or any part of
the Pledged Equity and that Pledgee may,
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therefore, determine to make one or more private sales of any such securities to
a restricted group of purchasers who will be obligated to agree, among other
things, to acquire such securities for their own account, for investment and not
with a view to the distribution or resale thereof. Pledgor acknowledges that any
such private sale may be at prices and on terms less favorable to the seller
than the prices and other terms which might have been obtained at a public sale
and, notwithstanding the foregoing, agrees that such private sales shall be
deemed to have been made in a commercially reasonable manner and that Pledgee
shall have no obligation to delay the sale of any such securities for the period
of time necessary to permit Pledgor or the Subsidiaries to register such
securities (with no obligation of either Pledgor or any Subsidiary to accomplish
such registration) for public sale under the Securities Act of 1933, as amended
(the "Securities Act"). Pledgor further acknowledges and agrees that any offer
to sell such securities which has been (a) publicly advertised on a bona fide
basis in a newspaper or other publication of general circulation in the
financial communities of Dallas, Texas, or Boston, Massachusetts (to the extent
that such an offer may be so advertised without prior registration under the
Securities Act), or (b) made privately in the manner described above to not less
than fifteen (15) bona fide offerees shall be deemed to involve a "public sale"
for the purposes of Section 9.504(c) of the Code (or any successor or similar,
applicable statutory provision) as then in effect in the State of Texas,
notwithstanding that such sale may not constitute a "public offering" under the
Securities Act, and that Pledgee may, in such event, bid for the purchase of
such securities.
ARTICLE V
Miscellaneous
Section 5.1. Notices. Any notice or communication required or permitted
hereunder shall be given in writing, sent by personal delivery, by telecopy, by
delivery service with proof of delivery, or by registered or certified United
States mail, postage prepaid, addressed to the appropriate party as follows:
To Pledgor:
-----------------------------------------
3500 William D. Tate, Suite 200
Grapevine, Texas 76051
Attn: Lon C. Kile
Fax No.: (817) 416-4206
To Pledgee: BankBoston, N.A., as Administrative Agent for Banks
100 Federal Street, Mail Stop 010804
Boston, Massachusetts 02110
Attn: Ken Pulido
Fax No.: (617) 434-7233
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or to such other address or to the attention of such other individual as
hereafter shall be designated in writing by the applicable party sent in
accordance herewith. 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 or 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.
Section 5.2. Amendments. No amendment of any provision of this
Agreement shall be effective unless it is in writing and signed by Pledgor,
Pledgee and Required Banks (or all Banks if required pursuant to the terms of
the Credit Agreement), and no waiver of any provision of this Agreement, and no
consent to any departure by Pledgor therefrom, shall be effective unless it is
in writing and signed by Pledgee and Required Banks (or all Banks if required
pursuant to the terms of the Credit Agreement), and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given and to the extent specified in such writing.
Section 5.3. Preservation of Rights. No failure on the part of Pledgee
or any Bank to exercise, and no delay in exercising, any right hereunder or
under any other Obligation Document shall operate as a waiver thereof; nor shall
any single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. Neither the execution nor
the delivery of this Agreement shall in any manner impair or affect any other
security for the Obligations. The rights and remedies of Pledgee and Banks
provided herein and in the other Obligation Documents are cumulative of and are
in addition to, and not exclusive of, any rights or remedies provided by law.
The rights of Pledgee and Banks under any Obligation Document against any party
thereto are not conditional or contingent on any attempt by Pledgee or Banks to
exercise any of its or their rights under any other Obligation Document against
such party or against any other Person.
Section 5.4. Unenforceability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or invalidity without
invalidating the remaining portions hereof or thereof or affecting the validity
or enforceability of such provision in any other jurisdiction.
Section 5.5. Survival of Agreements. All representations and warranties
of Pledgor herein, and all covenants and agreements herein shall survive the
execution and delivery of this Agreement, the execution and delivery of any
other Obligation Documents and the creation of the Obligations.
Section 5.6. Other Liable Party. Neither this Agreement nor the
exercise by Pledgee or any Bank or the failure of Pledgee or any Bank to
exercise any right, power or remedy conferred herein or by law shall be
construed as relieving any Other Liable Party from liability on the Obligations
or any deficiency thereon. This Agreement shall continue irrespective of the
fact that the liability of any Other Liable Party may have ceased or
irrespective of the validity or enforceability of any other Obligation Document
to which Pledgor or any Other Liable Party may
F - 14
<PAGE> 173
be a party, and notwithstanding the reorganization, death, incapacity or
bankruptcy of any Other Liable Party, and notwithstanding the reorganization or
bankruptcy or other event or proceeding affecting any Other Liable Party.
Section 5.7. Binding Effect and Assignment. This Agreement creates a
continuing security interest in the Collateral and (a) shall be binding on
Pledgor and its successors and permitted assigns, and (b) shall inure, together
with all rights and remedies of Pledgee hereunder, to the benefit of Pledgee and
Banks and their respective successors, transferees and assigns. Without limiting
the generality of the foregoing, Pledgee and Banks may pledge, assign or
otherwise transfer any or all of their respective rights under any or all of the
Obligation Documents to any other Person, and such other Person shall thereupon
become vested with all of the benefits in respect thereof granted herein or
otherwise. None of the rights or duties of Pledgor hereunder may be assigned or
otherwise transferred without the prior written consent of Pledgee and Required
Banks (or all Banks if required pursuant to the terms of the Credit Agreement).
Section 5.8. Termination. It is contemplated by the parties hereto that
there may be times when no Obligations are outstanding, but notwithstanding such
occurrences, this Agreement shall remain valid and shall be in full force and
effect as to subsequent outstanding Obligations. Upon the satisfaction in full
of the Obligations, upon the termination or expiration of the Credit Agreement
and any other Commitment of Banks to extend credit to Borrowers, and upon
written request for the termination hereof delivered by Pledgor to Pledgee and
Banks, this Agreement and the security interest created hereby shall terminate
and all rights to the Collateral shall revert to Pledgor. Pledgee will, upon
Pledgor's request and at Pledgor's expense, (a) return to Pledgor such of the
Collateral as shall not have been sold or otherwise disposed of or applied
pursuant to the terms hereof, and (b) execute and deliver to Pledgor such
documents as Pledgor shall reasonably request to evidence such termination.
SECTION 5.9. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND THE LAWS
OF THE UNITED STATES OF AMERICA.
Section 5.10. Counterparts. This Agreement may be separately executed
in any number of counterparts, all of which when so executed shall be deemed to
constitute one and the same Agreement.
Section 5.11. Loan Paper. This Agreement is a "Loan Paper", as defined
in the Credit Agreement, and, except as expressly provided herein to the
contrary, this Agreement is subject to all provisions of the Credit Agreement
governing the Loan Papers.
[Signature Pages to Follow]
F - 15
<PAGE> 174
IN WITNESS WHEREOF, Pledgor has executed and delivered this Agreement,
as of the date first above written.
---------------------------------------,
a
-------------------------------
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
BANKBOSTON, N.A.,
as Administrative Agent
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Each Subsidiary hereby acknowledges and consents to the pledge of the
Collateral and hereby agrees to observe and perform each and every provision of
this Agreement applicable to such Subsidiary.
---------------------------------------,
a
-------------------------------
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
F - 16
<PAGE> 175
EXHIBIT G
FORM OF REQUEST FOR BORROWING
Reference is made to that certain Amended and Restated Credit Agreement
dated effective as of February 8, 2000 (as from time to time amended, the
"Agreement") by and among Prize Energy Resources, L.P., a Delaware limited
partnership ("Prize LP"), Vista Resources Partners, L.P., a Texas limited
partnership ("Vista LP"), Midland Resources, Inc., a Texas corporation
("Midland" and, collectively with Prize LP and Vista LP, "Borrowers" and each
individually, a "Borrower"), Prize Energy Corp. (formerly known as Vista Energy
Resources, Inc.), a Delaware corporation, as Parent Guarantor, BankBoston, N.A.,
as Administrative Agent, First Union National Bank, as Syndication Agent, CIBC
Inc., as Documentation Agent, Bank One, Texas, N.A., as Lead Manager and certain
Banks as named and defined therein. Terms which are defined in the Agreement and
which are used but not defined herein are used herein with the meanings given
them in the Agreement. Pursuant to the terms of the Agreement, one or more
Borrowers hereby request(s) a Borrowing in the amount of $_____________ to be
advanced on __________________, 200___.
The undersigned Borrower or Borrowers request that the Borrowing to be
made hereunder shall be an [ADJUSTED BASE RATE BORROWING] [EURODOLLAR BORROWING]
and shall have the Interest Periods all as set forth below:
<TABLE>
<CAPTION>
Type of Borrowing Aggregate Amount Interest Period
----------------- ---------------- ---------------
<S> <C> <C>
- ------------------------------- --------------------------------- -----------------------------
- ------------------------------- --------------------------------- -----------------------------
- ------------------------------- --------------------------------- -----------------------------
</TABLE>
The undersigned Borrower or Borrowers and the Authorized Officer of
such Borrower or Borrowers signing this instrument hereby certify that:
(a) Such officer is the duly elected, qualified and acting
officer of a Borrower (or the general partner of any applicable
Borrower) as indicated below such officer's signature hereto.
(b) The representations and warranties of each Credit Party
(as applicable thereto) set forth in the Agreement and the Loan Papers
delivered to Administrative Agent and Banks are true and correct on and
as of the date hereof, with the same effect as though such
G - 1
<PAGE> 176
representations and warranties had been made on and as of the date
hereof or, if such representations and warranties are expressly limited
to particular dates, as of such particular dates. No material changes
have occurred in the financial condition of any Credit Party since the
date of the last financial reports delivered to Banks pursuant to
Section 9.1 of the Agreement.
(c) There does not exist on the date hereof, any condition or
event which constitutes a Default or Event of Default, nor will any
such Default or Event of Default exist upon receipt and application of
the proceeds requested hereby by the requesting Borrower or Borrowers.
The requesting Borrower or Borrowers will use the proceeds hereby
requested in compliance with the applicable provisions of the
Agreement.
(d) Each Credit Party has performed and complied with all
agreements and conditions in the Agreement required to be performed or
complied with by such Credit Party on or prior to the date hereof, and
each of the conditions precedent to the Borrowing contained in the
Agreement remain satisfied in all material respects.
(e) After giving effect to the Borrowing requested hereby, the
Outstanding Credit will not be in excess of the Borrowing Base on the
date requested for the making of such Borrowing.
G - 2
<PAGE> 177
IN WITNESS WHEREOF, this instrument is executed as of
_________________, 200___.
PRIZE ENERGY RESOURCES, L.P.,
a Delaware limited partnership
By: Prize Operating Company,
a Delaware corporation,
its sole general partner
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
VISTA RESOURCES PARTNERS, L.P.,
a Texas limited partnership
By: Vista Resources I, Inc.,
a Texas corporation,
its sole general partner
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
MIDLAND RESOURCES, INC.,
a Texas corporation
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
G - 3
<PAGE> 178
EXHIBIT H
FORM OF REQUEST FOR LETTER OF CREDIT
Reference is made to that certain Amended and Restated Credit Agreement dated as
of February 8, 2000 (as from time to time amended, the "Agreement"), by and
among Prize Energy Resources, L.P., a Delaware limited partnership ("Prize LP"),
Vista Resources Partners, L.P., a Texas limited partnership ("Vista LP"),
Midland Resources, Inc., a Texas corporation ("Midland" and, collectively with
Prize LP and Vista LP, "Borrowers" and each individually, a "Borrower"), Prize
Energy Corp. (formerly known as Vista Energy Resources, Inc.), a Delaware
corporation, as Parent Guarantor, BankBoston, N.A., as Administrative Agent,
First Union National Bank, as Syndication Agent, CIBC Inc., as Documentation
Agent, Bank One, Texas, N.A., as Lead Manager and certain Banks as named and
defined therein. Terms which are defined in the Agreement and which are used but
not defined herein are used herein with the meanings given them in the
Agreement.
Pursuant to the terms of the Agreement, one or more Borrowers hereby
request(s) ___________________ ("Issuer") to issue a Letter of Credit for the
account of Borrowers, as follows:
<TABLE>
<CAPTION>
Type of Commitment:
- ------------------
<S> <C>
Requested Amount $
---------------------------------
Requested Date of Issuance
---------------------------------
Requested Expiration Date
---------------------------------
Summary of Terms
---------------------------------
(provide a brief description
of conditions under which the
drafts under such Letter of
Credit are to be available)
---------------------------------
Beneficiary (Name/Address)
---------------------------------
---------------------------------
---------------------------------
---------------------------------
</TABLE>
Such Letter of Credit is more particularly described in the Letter of
Credit Application and Agreement of Issuer which is attached hereto.
The undersigned Borrower or Borrowers and the Authorized Officer of
such Borrower or Borrowers signing this instrument hereby certify that:
H - 1
<PAGE> 179
(a) The officer signing this instrument is the duly elected,
qualified and acting officer of a Borrower (or the general partner of
any applicable Borrower) as indicated below such officer's signature
hereto.
(b) The representations and warranties of each Credit Party
(as applicable thereto) set forth in the Agreement and the other Loan
Papers delivered to Administrative Agent and Banks are true and correct
on and as of the date hereof, with the same effect as though such
representations and warranties had been made on and as of the date
hereof, or if such representations and warranties are expressly limited
to particular dates, as of such particular dates. No material changes
have occurred in the financial condition of any Credit Party since the
date of the last financial reports delivered to Banks pursuant to
Section 9.1 of the Agreement.
(c) There does not exist on the date hereof any condition or
event which constitutes a Default or Event of Default, nor will any
such Default or Event of Default exist upon the issuance of the Letter
of Credit requested hereby. The requesting Borrower or Borrowers will
use the Letter of Credit solely for purposes permitted by the
Agreement.
(d) Each Credit Party has performed and complied with all
agreements and conditions in the Agreement required to be performed or
complied with by such Credit Party on or prior to the date hereof, and
each of the conditions precedent to the issuance of the Letter of
Credit requested hereby remain satisfied in all material respects.
(e) After the issuance of the Letter of Credit requested
hereby, the Outstanding Credit will not be in excess of the Borrowing
Base.
H - 2
<PAGE> 180
IN WITNESS WHEREOF, this instrument is executed as of ________________,
200___.
PRIZE ENERGY RESOURCES, L.P.,
a Delaware limited partnership
By: Prize Operating Company,
a Delaware corporation,
its sole general partner
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
VISTA RESOURCES PARTNERS, L.P.,
a Texas limited partnership
By: Vista Resources I, Inc.,
a Texas corporation,
its sole general partner
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
MIDLAND RESOURCES, INC.,
a Texas corporation
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
H - 3
<PAGE> 181
EXHIBIT I
FORM OF ROLLOVER NOTICE
Reference is made to that certain Amended and Restated Credit Agreement
dated as of February 8, 2000 (as from time to time amended, the "Agreement"), by
and among Prize Energy Resources, L.P., a Delaware limited partnership ("Prize
LP"), Vista Resources Partners, L.P., a Texas limited partnership ("Vista LP"),
Midland Resources, Inc., a Texas corporation ("Midland" and, collectively with
Prize LP and Vista LP, "Borrowers" and each individually, a "Borrower"), Prize
Energy Corp. (formerly known as Vista Energy Resources, Inc.), a Delaware
corporation, as Parent Guarantor, BankBoston, N.A., as Administrative Agent,
First Union National Bank, as Syndication Agent, CIBC Inc., as Documentation
Agent, Bank One, Texas, N.A., as Lead Manager and certain Banks as named and
defined therein. Terms which are defined in the Agreement and which are used but
not defined herein are used herein with the meanings given them in the
Agreement.
[ ] Reference is hereby made to the existing Eurodollar Tranche
outstanding under the Loan in the amount of $________ which is
subject to an Interest Period expiring on _________________,
200___. Borrowers hereby request that on the expiration of
such Interest Period the portion of the principal of the Loan
which is subject to such Tranche be made the subject of [ ] an
Adjusted Base Rate Tranche or [ ] a Eurodollar Tranche having
an Interest Period of ____ months.
[ ] Borrowers hereby request that on __________________, 200___, a
portion of the principal of the Loan in the amount of $______
which is currently the subject of an Adjusted Base Rate
Tranche be made the subject of a Eurodollar Tranche having an
Interest Period of _____ months.
Borrowers and the Authorized Officer of each Borrower signing this
instrument hereby certify that:
(a) Such officer is the duly elected, qualified and acting
officer of such Borrower (or the general partner of any applicable
Borrower) as indicated below such officer's signature hereto;
(b) There does not exist on the date hereof any condition or
event which constitutes a Default or Event of Default; and
(c) The representations and warranties of Borrowers set forth
in the Agreement and the Loan Papers delivered to Administrative Agent
and Banks are true and correct on and as of the date hereof, with the
same effect as though such representations and warranties had
I - 1
<PAGE> 182
been made on and as of the date hereof or, if such representations and
warranties are expressly limited to particular dates, as of such
particular dates.
IN WITNESS WHEREOF, this instrument is executed as of ______________,
200___.
PRIZE ENERGY RESOURCES, L.P.,
a Delaware limited partnership
By: Prize Operating Company,
a Delaware corporation,
its sole general partner
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
VISTA RESOURCES PARTNERS, L.P.,
a Texas limited partnership
By: Vista Resources I, Inc.,
a Texas corporation,
its sole general partner
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
MIDLAND RESOURCES, INC.,
a Texas corporation
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
I - 2
<PAGE> 183
EXHIBIT J
FORM OF FINANCIAL OFFICER'S CERTIFICATE
The undersigned, the ____________ of Prize Energy Corp. (formerly known
as Vista Energy Resources, Inc.), a Delaware corporation ("Parent"), hereby (a)
delivers this Certificate pursuant to Section 9.1(c) of that certain Amended and
Restated Credit Agreement (as may be amended from time to time, the "Credit
Agreement") dated as of February 8, 2000, by and among Prize Energy Resources,
L.P., a Delaware limited partnership ("Prize LP"), Vista Resources Partners,
L.P., a Texas limited partnership ("Vista LP"), Midland Resources, Inc., a Texas
corporation ("Midland" and, collectively with Prize LP and Vista LP, "Borrowers"
and each individually, a "Borrower"), Parent, as Parent Guarantor, BankBoston,
N.A., as Administrative Agent, First Union National Bank, as Syndication Agent,
CIBC Inc., as Documentation Agent, Bank One, Texas, N.A., as Lead Manager and
certain Banks as named and defined therein, as Banks ("Banks"); and (b)
certifies to Banks, with the knowledge and intent that Banks may, without any
independent investigation, rely fully on the matters herein in connection with
the Credit Agreement, to the knowledge of the undersigned, as follows:
1. Attached hereto as Schedule I, and incorporated herein by reference
for all purposes, are the consolidated financial statements of [Parent and its
consolidated subsidiaries] [each of Parent and Prize Natural Resources, Inc.
("PNR"), only for the Fiscal Year ended December 31, 1999] as of and for the
Fiscal [ ]Year [ ]Quarter (check one) ended ____________, ____.
2. Such financial statements are true and correct, have been prepared
on a consistent basis in accordance with GAAP (except as otherwise noted
therein) and fairly present the financial condition of [Parent and its
consolidated subsidiaries] [each of Parent and PNR, only for the Fiscal Year
ended December 31, 1999] as of the date indicated therein and the results of
operations for the respective periods indicated therein.
3. Attached hereto as Schedule II, and incorporated herein by reference
for all purposes, are detailed calculations used by Parent to establish that
Parent was in compliance with the requirements of Article XI of the Credit
Agreement on the date of the financial statements attached as Schedule I hereto.
4. Unless otherwise disclosed on Schedule III attached hereto and
incorporated herein by reference for all purposes, neither a Default nor an
Event of Default has occurred which is in existence on the date hereof;
provided, that, for any Default or Event of Default disclosed on said Schedule
III attached hereto, Parent and/or Borrowers is/are taking or propose(s) to take
the action to cure such Default or Event of Default set forth on said Schedule
III.
5. On the date hereof (a) (check one) [ ] there is no Material Gas
Imbalance or [ ] the amount of the net gas imbalances under Gas Balancing
Agreements to which any Credit Party is a
J - 1
<PAGE> 184
party or by which any Mineral Interests owned by any Credit Party is bound is
____________________, and (b) the aggregate amount of all Advance Payments
received under Advance Payment Contracts to which any Credit Party is a party or
by which any Mineral Interest owned by any Credit Party is bound which have not
been satisfied by delivery of production, if any, is
_______________________________.
6. Attached hereto as Schedule IV, and incorporated herein for all
purposes, is a summary of the Hedge Transactions to which any Credit Party is a
party on the date hereof.
7. Unless otherwise described on Schedule V attached hereto, and
incorporated herein by reference for all purposes, the representations and
warranties of each Credit Party set forth in the Credit Agreement and the other
Loan Papers are true and correct on and as of the date hereof, with the same
effect as though such representations and warranties had been made on and as of
the date hereof, or if such representations and warranties are expressly limited
to particular dates, as of such particular dates.
Unless otherwise defined herein, all capitalized terms used herein
shall have the meaning given such terms in the Credit Agreement.
IN WITNESS WHEREOF, the undersigned has duly executed this Financial
Officer's Certificate as of ___________, 200___.
PRIZE ENERGY CORP.
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
J - 2
<PAGE> 185
Schedule I
Financial Statements
(to be attached)
J - 3
<PAGE> 186
Schedule II
Compliance Calculations
(to be attached)
J - 4
<PAGE> 187
Schedule III
Defaults/Remedial Action
(to be attached)
J - 5
<PAGE> 188
Schedule IV
Summary of Hedge Transactions
(to be attached)
J - 6
<PAGE> 189
Schedule V
Qualifications to Representations and Warranties
(to be attached)
J - 7
<PAGE> 190
EXHIBIT K
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement") is dated
_____________________, 200___, among __________________________ ("Assignor"),
______________________________ ("Assignee") and BankBoston, N.A., as
Administrative Agent for the Banks ("Administrative Agent").
BACKGROUND.
A. Reference is made to that certain Amended and Restated Credit
Agreement dated effective as of February 8, 2000 (as it may hereafter be amended
or otherwise modified from time to time, being referred to as the "Credit
Agreement"), among Prize Energy Resources, L.P., a Delaware limited partnership
("Prize LP"), Vista Resources Partners, L.P., a Texas limited partnership
("Vista LP"), Midland Resources, Inc., a Texas corporation ("Midland" and,
collectively with Prize LP and Vista LP, "Borrowers" and each individually, a
"Borrower"), Prize Energy Corp. (formerly known as Vista Energy Resources,
Inc.), a Delaware corporation, as Parent Guarantor, BankBoston, N.A., as
Administrative Agent, First Union National Bank, as Syndication Agent, CIBC
Inc., as Documentation Agent, Bank One, Texas, N.A., as Lead Manager, and
certain Banks as named and defined therein. Unless otherwise defined herein,
terms are used herein as defined in the Credit Agreement.
B. This Agreement is made with reference to the following facts:
(i) Assignor is a Bank under and as defined in the Credit
Agreement and, as such, presently holds a percentage of the rights and
obligations of Banks under the Credit Agreement.
(ii) As of the date hereof, the Total Commitment is
$__________, Assignor's Commitment is $______________, and Assignor's
Commitment Percentage is _______%.
(iii) As of the date hereof, Assignor's Commitment Percentage
of the outstanding principal balance of the Loan is $_______________.
(iv) On the terms and conditions set forth below, Assignor
desires to sell and assign to Assignee, and Assignee desires to
purchase and assume from Assignor, as of the Effective Date (as defined
below), ___________ percent (_______%) (the "Assigned Percentage") of
the Total Commitment (such Assigned Percentage constitutes ___ percent
(__%) of Assignor's Commitment).
K - 1
<PAGE> 191
AGREEMENT
NOW, THEREFORE, Assignor and Assignee hereby agree as follows:
1. By this Agreement, and effective as of _____________, 200___ (the
"Effective Date") (which, unless otherwise agreed to by Borrowers and
Administrative Agent, must be at least five (5) Domestic Business Days after the
execution and delivery of this Agreement to Borrowers and Administrative Agent
for acceptance), Assignor hereby sells and assigns to Assignee, without recourse
and, except as provided in paragraph 2 of this Agreement, without representation
and warranty, and Assignee hereby purchases and assumes from Assignor,
Assignor's rights and obligations under the Credit Agreement, to the extent of
the Assigned Percentage of the Loan, the Letter of Credit Exposure, and the
Commitment as in effect on the Effective Date.
2. Assignor (a) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (b) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit
Agreement, any other Loan Paper or any other instrument or document furnished
pursuant thereto, or with respect to the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit Agreement or any
other Loan Paper or any other instrument or document furnished pursuant thereto;
and (c) makes no representation or warranty and assumes no responsibility with
respect to the financial condition of any Borrower or any Person or the
performance or observance by any Borrower or any Person of any of its
obligations under the Loan Papers or any other instrument or document furnished
pursuant thereto.
3. Assignee (a) confirms that it has received a copy of the Credit
Agreement, together with copies of the most recent financial statements
delivered to Assignor pursuant to Section 9.1 of the Credit Agreement, and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Agreement; (b) agrees that it
will, independently and without reliance upon the Administrative Agent, Assignor
or any other Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Credit Agreement and the other Loan Papers; (c)
appoints and authorizes Administrative Agent to take such action as
administrative agent on its behalf and to exercise such powers under the Credit
Agreement and the other Loan Papers as are delegated to Administrative Agent by
the terms thereof, together with such powers as are reasonably incidental
thereto; (d) agrees that it will perform in accordance with their terms all of
the obligations which, by the terms of the Credit Agreement and the other Loan
Papers, are required to be performed by it as a Bank; (e) specifies, as its
address for notice and Domestic Lending Office and Eurodollar Lending Office,
the offices set forth beneath its name on the signature pages hereof, and (f) if
Assignee is not organized under the laws of the United States of America or one
of its states, (i) represents and warrants to Assignor, Administrative Agent and
Borrowers that (A) no
K - 2
<PAGE> 192
Taxes are required to be withheld by Administrative Agent or Borrowers with
respect to any payments to be made to Assignee in respect of the Obligations,
and (B) Assignee has furnished to Administrative Agent and Borrowers two (2)
duly completed copies of either U.S. Internal Revenue Service Form 4224, Form
1001, Form W-8, or other form acceptable to Administrative Agent that entitles
Assignee to exemption from U.S. federal withholding Tax on all interest payments
under the Loan Papers, (ii) covenants to (A) provide Administrative Agent and
Borrowers a new form 4224, Form 1001, Form W-8, or other form acceptable to
Administrative Agent upon the expiration or obsolescence of any previously
delivered form according to applicable laws and regulations, duly executed and
completed by Assignee, and (B) comply from time to time with all applicable laws
and regulations with regard to the withholding Tax exemption, and (iii) agrees
that if any of the foregoing is not true or the applicable forms are not
provided, then Borrowers and Administrative Agent (without duplication) may
deduct and withhold from interest payments under the Loan Papers any United
States federal income Tax at the maximum rate under the Code.
4. Each Borrower acknowledges its obligations under the Credit
Agreement, and agrees, within five (5) Domestic Business Days after receiving an
executed copy of this Agreement, to execute and deliver to Administrative Agent,
in exchange for the Note or Notes originally delivered to Assignor, new Notes to
the order of Assignor and Assignee in amounts equal to their respective amounts
of the Commitments.
5. As of the Effective Date, (a) Assignee shall be a party to the
Credit Agreement and, to the extent provided in this Agreement, have the rights
and obligations of a Bank thereunder, (b) Assignor shall, to the extent provided
in this Agreement, relinquish its rights and be released from its obligations
under the Credit Agreement and other Loan Papers, and (c) Assignor's Commitment
Percentage shall be ______%, and Assignee's Commitment Percentage shall be
_____%.
6. From and after the Effective Date, Administrative Agent shall make
all payments under the Credit Agreement in respect of the interest assigned
hereby (including, without limitation, all payments of principal, interest, fees
and other amounts with respect thereto) to Assignee. Assignor and Assignee shall
make all appropriate adjustments in payments under the Credit Agreement for
periods prior to the Effective Date directly between themselves.
7. This Agreement shall not become effective until, and shall become
effective as of the Effective Date when, the following conditions have been met:
(a) counterparts of this Agreement are executed and delivered by Assignor and
Assignee to Borrowers, Administrative Agent and each Bank, (b) Borrowers,
Administrative Agent and each Bank execute such counterparts, and (c)
Administrative Agent receives a processing fee of $3,000 from Assignor or
Assignee.
K - 3
<PAGE> 193
8. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York, without reference to principles of
conflict of laws.
ASSIGNOR:
--------------------------------------------
By:
-----------------------------------------
Its:
----------------------------------------
K - 4
<PAGE> 194
ASSIGNEE:
Address for Notice:
--------------------------------------------
- ------------------------------
- ------------------------------
- ------------------------------
Attn: By:
------------------------- -----------------------------------------
Tel: Its:
-------------------------- ----------------------------------------
Fax:
--------------------------
Domestic Lending Office:
- ------------------------------
- ------------------------------
- ------------------------------
- ------------------------------
Eurodollar Lending Office:
- ------------------------------
- ------------------------------
- ------------------------------
Attn:
-------------------------
Tel:
--------------------------
Fax:
--------------------------
ADMINISTRATIVE AGENT:
BANKBOSTON, N.A.,
as Administrative Agent
By:
-----------------------------------------
Its:
----------------------------------------
K - 5
<PAGE> 195
BORROWERS:
Accepted and approved this ____ day
of ________________________, 200___:
Prize Energy Resources, L.P.,
a Delaware limited partnership
By: Prize Operating Company,
a Delaware corporation,
its sole general partner
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
Vista Resources Partners, L.P.,
a Texas limited partnership
By: Vista Resources I, Inc.,
a Texas corporation,
its sole general partner
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
Midland Resources, Inc.,
a Texas corporation
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
K - 6
<PAGE> 1
EXHIBIT 10.2
VOTING AND SHAREHOLDERS AGREEMENT
This VOTING AND SHAREHOLDERS AGREEMENT (this "AGREEMENT"), is made and
entered into as of the 8th day of February, 2000, by and among Prize Energy
Corp. (formerly known as Vista Energy Resources, Inc.), a Delaware corporation
(the "COMPANY"); Prize Natural Resources, Inc. (formerly known as Prize Energy
Corp.), a Delaware corporation ("OLD PRIZE"); the individuals and trusts listed
as Management Owners on the execution pages hereof (the "MANAGEMENT OWNERS");
the individuals listed as Employee Owners on the execution pages hereof
(including any additional persons who are employed by the Company and
subsequently become parties to this Agreement, the "EMPLOYEE OWNERS"); the
individuals and trusts listed as Other Owners on the execution pages hereof (the
"OTHER OWNERS"); Natural Gas Partners II, L.P., a Delaware limited partnership
("NGP II"), Natural Gas Partners III, L.P., a Delaware limited partnership ("NGP
III"), and Natural Gas Partners V, L.P., a Delaware limited partnership ("NGP V"
and, together with NGP II and NGP III, "NGP"); and Pioneer Natural Resources
USA, Inc., a Delaware corporation ("PIONEER").
W I T N E S S E T H:
WHEREAS, Old Prize and certain of the Owners (as defined in Section 3
of this Agreement) entered into an Amended and Restated Voting and Shareholders
Agreement dated as of June 29, 1999 (the "PRIZE AGREEMENT"); and
WHEREAS, Old Prize, the Company and a newly-formed wholly-owned
subsidiary of the Company ("MERGER SUB") entered into an Agreement and Plan of
Merger dated as of October 8, 1999 (the "MERGER AGREEMENT"), under which, on the
date hereof, Merger Sub was merged with and into Old Prize and Old Prize became
a wholly-owned subsidiary of the Company; and
WHEREAS, under the terms of the Merger Agreement, upon consummation of
the Merger, the Prize Agreement is to be terminated and the parties hereto are
to enter into this Agreement; and
WHEREAS, certain terms are defined in Section 3 of this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual terms,
covenants and conditions contained herein, the parties hereto agree as follows:
Section 1. Voting Agreement.
(a) General Rights. From and after the date hereof and until the
provisions of this Section 1 shall terminate as provided in Section 1(b) below,
the Owners, NGP II and NGP III agree to vote all of their Owner Shares and any
other voting securities of the Company over which they have voting control, and
the Company will take all reasonable actions within its control, that may be
necessary in order to cause:
<PAGE> 2
(i) the nomination and election to the Board of one
representative designated by a majority in interest of the Management
Owners;
(ii) the nomination and election to the Board of (A) three
representatives designated by NGP before the Pioneer Board Reduction
Event, and (B) four representatives designated by NGP on and after the
Pioneer Board Reduction Event;
(iii) the nomination and election to the Board of (A) two
representatives designated by Pioneer before the Pioneer Board
Reduction Event, and (B) one representative designated by Pioneer on
and after the Pioneer Board Reduction Event;
(iv) the removal from the Board (with or without cause) of any
or all of the representatives designated by the Management Owners
hereunder at the written request of a majority in interest of the
Management Owners (but only upon such written request and under no
other circumstances);
(v) the removal from the Board (with or without cause) of any
or all of the representatives designated by NGP hereunder at the
written request of NGP (but only upon such written request and under no
other circumstances);
(vi) the removal from the Board (with or without cause) of any
or all of the representatives designated by Pioneer hereunder at the
written request of Pioneer (but only upon such written request and
under no other circumstances);
(vii) in the event that any representative designated by the
Management Owners hereunder for any reason ceases to serve as a member
of the Board during his term of office, the resulting vacancy on the
Board to be filled by a representative designated by a majority in
interest of the Management Owners;
(viii) in the event that any representative designated by NGP
hereunder for any reason ceases to serve as a member of the Board
during his term of office, the resulting vacancy on the Board to be
filled by a representative designated by an authorized representative
of NGP;
(ix) in the event that any representative designated by
Pioneer hereunder for any reason ceases to serve as a member of the
Board during his term of office, the resulting vacancy on the Board to
be filled by a representative designated by an authorized
representative of Pioneer; and
(x) the provisions of Section 3 of Article Four of the Amended
and Restated Bylaws (together with related definitions) to be preserved
and effective without amendment, elimination, or superseding (whether
directly, by charter amendment, or otherwise) from the form attached as
Exhibit A hereto unless Pioneer previously consents in writing to such
amendment, elimination, or superseding.
-2-
<PAGE> 3
(b) Termination.
(i) The provisions of this Section 1 shall terminate with
respect to any single Management Owner on the first to occur of the
following:
(A) the date such Management Owner's employment by
the Company shall have terminated;
(B) the date of the death of such Management Owner;
or
(C) the date of any Transfer or purported Transfer of
Owner Shares by such Management Owner in violation of the
terms of this Agreement.
(ii) The provisions of this Section 1 shall terminate as to
Pioneer on the first date on which Pioneer no longer owns shares of
Common Stock and Underlying Common Stock that constitute at least
14.03% of the total issued and outstanding shares of Common Stock
(Underlying Common Stock shall be deemed issued and outstanding for the
purpose of such computation) (whether such reduction of percentage
ownership occurs as a result of Pioneer's sale or transfer of such
shares, the Company's issuance of additional shares or the merger,
consolidation or other transaction involving the Company, or
otherwise). Upon the reduction of Pioneer's percentage ownership below
14.03%, as described in the preceding sentence, the provisions of this
Section 1 shall also terminate as to all other Owners, NGP II and NGP
III.
(iii) The provisions of this Section 1 shall terminate as to
all Owners, NGP II and NGP III on June 29, 2009, unless extended by the
parties hereto.
Section 2. Transfer Restrictions.
(a) General Rights. In addition to any restrictions on the Transfer of
Owner Shares that are imposed under the Securities Act or other applicable
securities laws, no Restricted Owner shall Transfer or Pledge all or any part of
such Restricted Owner's Owner Shares without the prior written consent of the
other Restricted Owners or in accordance with this Section 2.
(b) Pro-Rata Sale Rights after an IPO. No Restricted Owner shall have
the right to effect any Transfer of any of such Restricted Owner's Owner Shares
(other than as provided in Section 2(c) below) unless such Restricted Owner
proposing to Transfer such Owner Shares (a "SELLING OWNER") complies with the
tag-along requirements of clause (i) or (ii) below:
(i) Public Sales Through a Broker. If a proposed Transfer is
to be effectuated through an established brokerage firm and utilizing
the public securities markets (e.g., the New York Stock Exchange, the
American Stock Exchange or The Nasdaq Stock Market):
-3-
<PAGE> 4
(A) Such Selling Owner shall provide prior written
notice of the following (a "PUBLIC SALE NOTICE") to all other
Restricted Owners ("TAG-ALONG OWNER(S)"): (I) the number of
shares proposed to be made available for sale (the "INITIAL
SHARES"); (II) the pricing and other instructions pursuant to
which the selected broker will be operating; (III) the name,
address, telephone number and facsimile number of the selected
broker and the name of the selected registered representative
at the broker; and (IV) confirmation that the selected broker
and selected registered representative have been advised that
the Tag-Along Owners may desire to elect to participate in the
proposed Transfer.
(B) After receiving a Public Sale Notice, a Tag-Along
Owner shall be entitled to elect to participate, up to such
Tag-Along Owner's Proportionate Share, in the proposed
Transfer through the selected broker, subject to such
Tag-Along Owner's (I) meeting all of the broker's requirements
to establish a customer account and execute transactions for
such Tag-Along Owner, (II) meeting all of the requirements
imposed by applicable securities laws in order to execute such
transaction (including without limitation Rule 144 under the
Securities Act), and (III) responding in writing within three
business days after receipt of such Public Sale Notice to such
Selling Owner, to the Tag-Along Owners and to the selected
broker. If the designated broker is unable to sell an amount
at least equal to the number of Initial Shares, the aggregate
number of shares which the designated broker is able to sell
shall be allocated on a Proportionate Share basis among such
Selling Owner and all Tag-Along Owners electing to participate
in the proposed Transfer.
(ii) Non-Broker Transactions. In the case of a proposed
Transfer that does not fall within the provisions of clause (i) of this
Section 2(b), such Selling Owner shall cause the Person or group that
proposes to acquire Owner Shares from such Selling Owner (the "PROPOSED
PURCHASER") to offer in writing (the "PURCHASE OFFER") to the Tag-Along
Owners, to purchase a Proportionate Share of the Owner Shares of the
Tag-Along Owners. Any such purchase shall be made in accordance with
the following:
(A) the purchase from each Tag-Along Owner shall be
made at the highest price per share and on such other terms
and conditions as the Proposed Purchaser has offered to
purchase Owner Shares from such Selling Owner;
(B) each Tag-Along Owner shall have no more than 20
days from the receipt of the Purchase Offer in which to accept
such Purchase Offer, in whole or in part;
(C) to the extent that a Tag-Along Owner accepts such
Purchase Offer, the number of Owner Shares to be sold to the
Proposed Purchaser by such Selling Owner shall be
proportionately reduced to the extent necessary to comply with
this Section 2(b)(ii); and
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<PAGE> 5
(D) the closing of such purchase shall occur within
30 days after such acceptance or at such other time as such
Selling Owner, the Tag-Along Owners and the Proposed Purchaser
may agree.
(c) Excluded Transfers. The provisions of Section 2(b) above do not
apply to any Transfer by a Restricted Owner of such Restricted Owner's Owner
Shares in an Excluded Affiliate Transfer. The provisions of Section 2(b) above
do not apply to any Transfer by a Restricted Owner of such Restricted Owner's
Owner Shares pursuant to (i) a registration statement filed under the Securities
Act, or (ii) a sale effected through a national securities exchange or the
Nasdaq Stock Market.
(d) Termination. This Section 2 shall terminate upon the earlier to
occur of the following: (i) the first date on which the Restricted Owners
collectively do not own at least 20% of the outstanding common equity securities
of the Company or of any successor or assignee resulting from the consolidation,
merger or sale of all or substantially all of the assets of the Company; (ii)
the adjudication of the Company as a bankrupt, the execution by the Company of
an assignment for the benefit of creditors or the appointment of a receiver of
the Company; (iii) the voluntary or involuntary dissolution of the Company; (iv)
when there is otherwise only one surviving Restricted Owner as a party to this
Agreement; (v) June 29, 2009, unless extended by agreement of Restricted Owners
holding at least 80% of the Owner Shares held by Restricted Owners outstanding
on such date; or (vi) the written agreement of all the Restricted Owners. The
Company and the Restricted Owners each covenant and agree to enter into and to
use their best efforts to cause any successor or assignee of the Company
described in clause (i) of this Section 2(d) to enter into an agreement
substantially similar to this Agreement if the Restricted Owners collectively
own at least 20% of the equity interests in such successor or assignee.
Section 3. Definitions. As used in this Agreement, the following terms
shall have the meanings assigned to them in this Section 3:
"AGREEMENT" means this Voting and Shareholders Agreement, as the same
may be amended from time to time.
"BOARD" means the Board of Directors of the Company.
"COMMON STOCK" means the Company's common stock, par value $.01 per
share.
"COMPANY" has the meaning set forth in the introductory paragraph of
this Agreement.
"EMPLOYEE OWNERS" has the meaning set forth in the introductory
paragraph of this Agreement.
"EXCLUDED AFFILIATE TRANSFER" means (i) any transfer of Owner Shares by
a Restricted Owner, other than a Management Owner or an Employee Owner (whether
voluntarily or by operation of law) to a partner or other affiliate or a legal
successor of such Restricted Owner; (ii) any
-5-
<PAGE> 6
transfer of Owner Shares by a Restricted Owner who is an individual to a member
of such Restricted Owner's family or to a revocable trust for estate planning
purposes, but only if such Restricted Owner retains the right to vote such Owner
Shares following such transfer; (iii) any transfer upon the death of a
Restricted Owner who is an individual; and (iv) any transfer of Owner Shares by
a Restricted Owner which is a trust to the principal beneficiary of that trust;
provided that, in the case of any Transfer described in clause (i), (ii), (iii)
or (iv) above, such transferee agrees to be bound by the terms of this Agreement
and evidences same by executing a copy of this Agreement promptly upon receiving
the assignment of such Owner Shares.
"INITIAL SHARES" has the meaning set forth in Section 2(b)(i)(A)
hereof.
"MANAGEMENT OWNERS" has the meaning set forth in the introductory
paragraph of this Agreement.
"MERGER AGREEMENT" has the meaning set forth in the recitals to this
Agreement.
"MERGER SUB" has the meaning set forth in the recitals to this
Agreement.
"NGP," "NGP II," "NGP III" and "NGP V" have the meanings set forth in
the introductory paragraph of this Agreement.
"OLD PRIZE" has the meaning set forth in the introductory paragraph of
this Agreement.
"OTHER OWNERS" has the meaning set forth in the introductory paragraph
of this Agreement.
"OWNER(S)" means the Management Owners, the Employee Owners, the Other
Owners, NGP V and Pioneer.
"OWNER SHARES" means, with respect to any Owner, NGP II or NGP III: (i)
all shares of Common Stock or Series A Preferred currently held or held in the
future by such Person (including, without limitation, shares acquired upon the
exercise of any option, warrant or other right); provided that, in order to
participate in any Purchase Offer, such conversion must occur no later than the
deadline for acceptance of such offer as set forth in Section 2(b)(ii)(B)
hereof; (ii) any equity securities issued or issuable directly or indirectly to
such Person with respect to the Common Stock or Series A Preferred referred to
in clause (i) above by way of stock dividend or stock split or in connection
with a combination of shares, conversion, recapitalization, merger,
consolidation or other reorganization; and (iii) any other shares of any class
or series of voting security of the Company currently held or held in the future
by such Person. As to any particular shares constituting Owner Shares, such
shares will cease to be Owner Shares when they have been transferred to any
person who is not a current or future party to this Agreement, other than
pursuant to an Excluded Affiliate Transfer. In determining the percentage
ownership of any Person or Persons or their participation in a transaction, the
Series A Preferred shall be counted on an as-converted basis with the Common
Stock.
-6-
<PAGE> 7
"PERMITTED ASSIGN" means an assignee of Owner Shares who acquires such
shares in an Excluded Affiliate Transfer.
"PERSON" means any individual, corporation, partnership, limited
liability company, trust, unincorporated association, business, or other legal
entity, and any governmental agency or political subdivision thereof.
"PIONEER" has the meaning set forth in the introductory paragraph of
this Agreement.
"PIONEER BOARD REDUCTION EVENT" means the first date on which Pioneer
no longer owns Common Stock and Underlying Common Stock that constitutes at
least 25.2% of the total issued and outstanding shares of Common Stock (whether
as a result of Pioneer's sale or transfer of such shares, the Company's issuance
of additional shares, a merger, consolidation or other fundamental change
involving the Company, or otherwise).
"PLEDGE" means any pledge of an interest in, or other encumbrance
placed upon, Owner Shares as security for indebtedness or for other purposes.
"PRIZE AGREEMENT" has the meaning set forth in the recitals to this
Agreement.
"PROPORTIONATE SHARE" means:
(i) for purposes of Section 2(b)(i) hereof, the number of
Owner Shares equal to the product of (A) the Initial Shares, or such
lesser number of shares that the designated broker has been able to
sell pursuant Section 2(b)(i) hereof, times (B) the fraction which is
equal to the total number of Owner Shares which a Tag-Along Owner
electing to participate in a Transfer owns, over the aggregate number
of Owner Shares owned by the Selling Owner and all Tag-Along Owners
electing to participate in a Transfer; and
(ii) for purposes of Section 2(b)(ii) hereof, the number of
Owner Shares equal to the product of (A) the total number of Owner
Shares which a Proposed Purchaser has offered to purchase from the
Selling Owner, times (B) the fraction which is equal to the total
number of Owner Shares which a Tag-Along Owner owns, over the aggregate
number of Owner Shares owned by the Selling Owner and all Tag-Along
Owners who have elected participate in a Transfer.
"PROPOSED PURCHASER" has the meaning set forth in Section 2(b)(ii)
hereof.
"PUBLIC SALE NOTICE" has the meaning set forth in Section 2(b)(i)(A)
hereof.
"PURCHASE OFFER" has the meaning set forth in Section 2(b)(ii) hereof.
"RESTRICTED OWNER(S)" means the Management Owners, the Employee Owners
and NGP V and their successors and assigns.
-7-
<PAGE> 8
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLING OWNER" has the meaning set forth in Section 2(b) hereof.
"SERIES A PREFERRED" means the Company's Series A 6% convertible
preferred stock, par value $.01 per share.
"TAG-ALONG OWNER(S)" has the meaning set forth in Section 2(b)(i)(A)
hereof.
"TRANSFER" means any sale, assignment or other disposition of Owner
Shares, other than a Pledge.
"UNDERLYING COMMON STOCK" means at any time, with respect to any share
of Series A Preferred, the aggregate number of shares of Common Stock into which
such share is then convertible.
Section 4. Enforcement; Legends. No Owner Shares shall be transferred
on the books of the Company, nor shall any Transfer be effective, unless and
until the terms and provisions of this Agreement are first complied with and, in
case of violation of this Agreement by the attempted Transfer of Owner Shares
without compliance with the terms and provisions hereof, such Transfer shall be
invalid and of no effect. The Owners will cause the Company to imprint a legend
on any certificates evidencing Owner Shares which are subject to this Agreement
referring to the voting rights and the restrictions on Transfer of the Owner
Shares imposed hereunder. Any such legend shall be removed from the certificates
evidencing any shares which cease to be Owner Shares, as set forth in the
definition of such term in Section 3 hereof.
Section 5. Termination. This Agreement shall terminate upon the
termination of Section 1 and Section 2 hereof.
Section 6. Miscellaneous.
(a) Benefit. This Agreement will only bind and inure to the benefit of,
and will only be enforceable by and against, the original parties hereto and any
Permitted Assigns under this Agreement.
(b) Notices. Whenever in this Agreement, notice is required as
permitted to be given it shall be given in writing, and if such notice is given
by registered United States mail it shall be deemed to have been received on the
second business day after the date such notice is posted. All notices hereunder
to the Company shall be mailed to it at the address of its principal place of
business and all notices to the Owners shall be mailed to them at their last
known address as shown on the books and records of the Company. Any party may
change such party's mailing address by giving written notice of such change to
all other parties.
-8-
<PAGE> 9
(c) GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND DUTIES OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF DELAWARE.
(d) Number. Words in the singular shall be construed to include the
plural and vice versa, unless the context otherwise requires.
(e) Headings. The headings appearing in this Agreement are inserted
only for convenience of reference and in no way shall be construed to define,
limit or describe the scope or intent of any provision of this Agreement.
(f) Severability. Every provision in this Agreement is intended to be
severable. In the event that any provision in this Agreement shall be held
invalid, the same shall not affect in any respect whatsoever the validity of the
remaining provisions of this Agreement; provided, however, that if any such
provision may be made enforceable by limitation thereof, then such provision
shall be deemed to be so limited and shall be enforceable to the maximum extent
permitted by applicable law.
(g) Joinder. The spouse, if any, of each Management Owner and Employee
Owner who resides in a state subject to community property laws joins in the
execution and delivery of this Agreement for the express purpose of binding his
or her community property interests, if any, in the Owner Shares.
(h) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which shall
constitute but one and the same instrument.
(i) Entirety and Modification. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof and
supercedes all prior understandings and agreements regarding such matters,
including without limitation the Prize Agreement, which is hereby terminated.
This Agreement may not be modified, supplemented or amended in any respect
except by written instrument executed by all parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
Prize Energy Corp. Prize Natural Resources, Inc.
(formerly known as (formerly known as
Vista Energy Resources, Inc.) Prize Energy Corp.)
By: /s/ Philip B. Smith By: /s/ Lon C. Kile
--------------------------------- ----------------------------
Philip B. Smith, Chairman and Lon C. Kile
Chief Executive Officer President
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<PAGE> 10
MANAGEMENT OWNERS
Initial Number of
Owner Shares:
356,257 shares of /s/ Philip B. Smith
Common Stock --------------------------------------------------
Philip B. Smith, Trustee of The Philip B. Smith
Revocable Trust Dated July 25, 1994
Initial Number of
Owner Shares:
84,134 shares of /s/ Philip B. Smith
Common Stock --------------------------------------------------
Philip B. Smith, Trustee of The Scott C. Smith
Irrevocable Trust Dated January 15, 1996
Initial Number of
Owner Shares:
84,134 shares of /s/ Philip B. Smith
Common Stock --------------------------------------------------
Philip B. Smith, Trustee of The Laura E. Smith
Irrevocable Trust Dated January 15, 1996
Initial Number of
Owner Shares:
41,630 shares of /s/ Lon C. Kile
Common Stock --------------------------------------------------
Lon C. Kile
NGP
NATURAL GAS PARTNERS II, L.P.
By: G.F.W. Energy II, L.P., General Partner
By: GFW II, L.L.C., General Partner
Initial Number of
Owner Shares:
511,709 shares of By: /s/ Kenneth A. Hersh
Common Stock --------------------------------------------------
Kenneth A. Hersh, Authorized Member
NATURAL GAS PARTNERS III, L.P.
By: Rainwater Energy Investors, L.P.
General Partner
By: GFW III, L.L.C., General Partner
Initial Number of
Owner Shares:
699,390 shares of By: /s/ Kenneth A. Hersh
Common Stock --------------------------------------------------
Kenneth A. Hersh, Authorized Member
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<PAGE> 11
NATURAL GAS PARTNERS V, L.P.
By: G.F.W. Energy V, L.P., General Partner
By: GFW V, L.L.C., General Partner
Initial Number of
Owner Shares:
7,326,821 shares of By: /s/ Kenneth A. Hersh
Common Stock --------------------------------------------------
Kenneth A. Hersh, Authorized Member
PIONEER
PIONEER NATURAL RESOURCES USA,
INC.
Initial Number of
Owner Shares: By: /s/ Mark L. Withrow
3,984,197 shares of --------------------------------------------------
Series A Preferred Mark L. Withrow
Executive Vice President
EMPLOYEE OWNERS
Initial Number of
Owner Shares:
42,068 shares of /s/ Monica Griffin
Common Stock --------------------------------------------------
Monica Griffin
OTHER OWNERS
Initial Number of
Owner Shares:
356,257 shares of /s/ Kathlyn C. Smith
Common Stock --------------------------------------------------
Kathlyn C. Smith, Trustee of The Kathlyn C.
Smith Revocable Trust Dated July 25, 1994
-11-
<PAGE> 1
EXHIBIT 10.3
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement (this "AGREEMENT") is made and
entered into as of the 8th day of February, 2000, by and between Prize Energy
Corp. (formerly known as Vista Energy Resources, Inc.), a Delaware corporation
("NEW PRIZE"), and Prize Natural Resources, Inc. (formerly known as Prize Energy
Corp.), a Delaware corporation ("OLD PRIZE").
RECITALS
A. Old Prize and Pioneer Natural Resources USA, Inc., a Delaware
corporation ("PIONEER"), are parties to that certain Joint Participation
Agreement dated as of June 29, 1999, a copy of which is attached hereto (the
"JOINT PARTICIPATION AGREEMENT").
B. Old Prize, New Prize and PEC Acquisition Corp., a Delaware
corporation ("MERGER SUB"), are parties to that certain Agreement and Plan of
Merger dated as of October 8, 1999, pursuant to which, effective on the date
hereof, Merger Sub has been merged with and into Old Prize (the "MERGER"), such
that Old Prize has become a wholly-owned subsidiary of New Prize (the "MERGER
AGREEMENT").
C. As a result of the Merger, Pioneer's shares of the Preferred Stock
(as defined in the Joint Participation Agreement) have been converted into
shares of New Prize's Series A 6% Convertible Preferred Stock (the "NEW PRIZE
PREFERRED STOCK").
D. In connection with the Merger Agreement, the names of Old Prize and
New Prize were changed as set forth above.
E. Under Section 5.19 of the Merger Agreement, Old Prize is to assign
to New Prize all of the rights, and New Prize is to assume all of the
obligations, of Old Prize under the Joint Participation Agreement.
F. Old Prize and New Prize desire to enter into this Agreement in order
to effect such assignment and assumption.
NOW, THEREFORE, in consideration of the recitals and the mutual
covenants and agreements set forth in this Agreement, Old Prize and New Prize
hereby agree as follows:
1. ASSIGNMENT. Old Prize hereby transfers and assigns to New Prize all
of the right, title and interest of Old Prize, of every kind and character
whatsoever, in and to the Joint Participation Agreement.
2. ASSUMPTION. New Prize hereby accepts the above and foregoing
assignment and agrees to assume and discharge all liabilities and perform all
obligations of Old Prize under and pursuant to the Joint Participation
Agreement.
<PAGE> 2
3. AMENDMENT. Subject to the approval of Pioneer, clause (i) of Section
1 of the Joint Participation Agreement shall be amended such that the Preferred
Stock referred to therein is New Prize Preferred Stock and the reference to
Prize's common stock shall be deemed to be a reference to New Prize's common
stock.
4. GOVERNING LAW. This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State of
Delaware, regardless of any laws that might otherwise govern under applicable
principles of conflict of laws thereof.
5. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement.
IN WITNESS WHEREOF, Old Prize and New Prize have caused this Agreement
to be executed by their duly authorized representatives, as of the date first
above written.
"OLD PRIZE" "NEW PRIZE"
PRIZE NATURAL RESOURCES, INC. PRIZE ENERGY CORP.
By:/s/ Lon C. Kile By:/s/ Philip B. Smith
------------------- ------------------------------------
Lon C. Kile Philip B. Smith
President Chairman and Chief Executive Officer
CONSENT
Pioneer Natural Resources USA, Inc. hereby consents to the above and
foregoing assignment and assumption and to the amendment set forth in paragraph
3 above, all effective as of the date first set forth above.
PIONEER NATURAL RESOURCES
USA, INC.
By: /s/ Mark L. Withrow
------------------------------------
Mark L. Withrow
Executive Vice President
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<PAGE> 3
JOINT PARTICIPATION AGREEMENT
This Joint Participation Agreement (this "Agreement") is made and
entered into as of the 29th day of June, 1999, by and between Prize Energy
Corp., a Delaware corporation ("Prize"), and Pioneer Natural Resources USA,
Inc., a Delaware corporation ("Pioneer").
RECITALS:
A. Prize and Pioneer are parties to that certain Purchase and Sale
Agreement dated May 16, 1999, as amended, by and among Pioneer and Pioneer
Resources Producing, L.P., as sellers, and Prize, as purchaser (the "Purchase
Agreement").
B. The Purchase Agreement provides that the parties shall enter into an
agreement regarding the subject matter hereof upon the closing of the
transactions contemplated by the Purchase Agreement.
C. As part of the consideration payable under the Purchase Agreement,
Prize is to issue to Pioneer 2,307.693 shares of Prize's Series A 6% Convertible
Preferred Stock (the "Preferred Stock").
AGREEMENT:
In consideration of the premises and the mutual promises made herein,
the parties hereby agree as follows:
1. Joint Participation. Pioneer shall have the rights set forth in this
Section 1 during the period commencing on the first day following the date
hereof and ending on the first to occur of the following: (i) the first date on
which Pioneer no longer owns at least 80% of the shares of the Preferred Stock
initially issued to it (or the shares of Prize's common stock into which such
shares of Preferred Stock are convertible), or (ii) the date ten years from the
date hereof (the "Participation Period").
(a) During the Participation Period, Prize shall promptly
notify Pioneer of the following:
(i) Any opportunity that Prize acquires or develops
after the date hereof that pertains to an acquisition of, or
investment in, Oil and Gas Assets (as hereinafter defined) or
securities of a company (together with its affiliates) that is
engaged in the production of oil and natural gas and the
acquisition, exploitation, exploration and development of Oil
and Gas Assets if (A) such opportunity has been disclosed to
the Board of Directors of Prize for its consideration, and (B)
the aggregate consideration that Prize reasonably estimates is
likely to be required to make such acquisition or
<PAGE> 4
investment, pursuant to a single transaction or in a series of
related transactions, is at least $50 million (a "Significant
Acquisition Opportunity"); and
(ii) Any decision of the Board of Directors of Prize
to offer to sell to third parties not affiliated with Prize or
its shareholders, direct property interests in an Exploration
Project (as hereinafter defined) (whether through an
assignment, farm-in or other similar conveyance) or equity
ownership interests (such as a joint venture interest,
partnership interest, limited liability interest or other
shares of equity securities) in an entity owned or controlled
by Prize that owns such Exploration Project (a "Significant
Exploration Project"), in either case for the purpose of
financing all or a portion of such Exploration Project.
Each notice shall set forth in detail the circumstances of the
intended Significant Acquisition Opportunity or Significant Exploration
Project, the name and address of the proposed seller of the Significant
Acquisition Opportunity, the location and a description of the
Significant Acquisition Opportunity or Significant Exploration Project,
and the proposed consideration (if any) for (and, if the proposed
consideration is to be wholly or partly for consideration other than
cash, the amount of the monetary consideration, if any, plus the fair
market value of the other consideration) and terms of the Significant
Acquisition Opportunity or Significant Exploration Project.
Contemporaneously with the giving of the notice, Prize shall provide to
Pioneer a copy of all information then in the possession of, or
reasonably accessible to, Prize regarding the Significant Acquisition
Opportunity or Significant Exploration Project, including the forms of
definitive agreements (if any) required to be executed in connection
therewith.
For purposes hereof, "Oil and Gas Assets" means any rights,
estates, titles, or interests in and to oil or natural gas, or any
royalty interest therein and or any real and personal property
associated therewith
For purposes hereof, "Exploration Project" means a proposed
project to explore for oil or natural gas on an Oil and Gas Asset that
is acquired by Prize during the Participation Period and includes,
without limitation, the acquisition of leasehold interests and seismic
data, the drilling of exploratory wells and costs of related
completions, but excludes any developmental drilling of proved oil and
gas reserves.
(b) Upon the delivery by Prize of a notice pursuant to Section
1(a)(i) above, Prize shall be deemed to have offered to Pioneer the
prior and preferential right and opportunity to acquire, or otherwise
participate in, up to 50% of the Significant Acquisition Opportunity
described in such notice at the same price and upon the same terms and
conditions as Prize (adjusted proportionately to reflect the percentage
interest that Pioneer chooses to acquire), without reservation by Prize
of any carried interest, back-in or other promoted interest with
respect to Pioneer's interest.
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<PAGE> 5
(c) Upon the delivery by Prize of a notice pursuant to Section
1(a)(ii) above, Prize shall be deemed to have offered to Pioneer the
prior and preferential right and opportunity to participate in up to a
50% interest in the Significant Exploration Project described in such
notice, upon substantially the same price and the same terms and
conditions as that offered to third parties (adjusted proportionately
to reflect the percentage interest that Pioneer chooses to acquire),
but without reservation by Prize of any carried interest, back-in or
other promoted interest with respect to Pioneer's interest.
(d) Pioneer shall have the right to accept an offer described
in Section 1(b) or 1(c) above (an "Offer") by notifying Prize of
Pioneer's acceptance within 10 business days after Pioneer's receipt of
the applicable notice. The acceptance by Pioneer shall specify the
portion of the Significant Acquisition Opportunity or Significant
Exploration Project which Pioneer elects to acquire. If Pioneer fails
to notify Prize of acceptance of an Offer within such 10 business day
period, that Offer shall terminate and Prize shall no longer be
obligated to afford or offer Pioneer the right or opportunity to
participate with Prize in that opportunity or project; provided,
however, that if the price or terms and conditions of the Significant
Acquisition Opportunity change after the date of the original notice to
Pioneer to be more favorable to Prize, or if the price or terms and
conditions of the Significant Exploration Opportunity change after the
date of the previous notice to Pioneer to be more favorable to third
parties, then Prize shall be required to re-offer that Significant
Acquisition Opportunity or Significant Exploration Opportunity to
Pioneer pursuant to a notice that complies with Section 1(a).
(e) Prize shall retain all rights to act as operator with
respect to all properties in connection with any Significant
Acquisition Opportunity or Significant Exploration Project offered to
Pioneer hereunder, unless Pioneer and Prize agree otherwise.
(f) With respect to any Significant Acquisition Opportunity or
Significant Exploration Project in which Pioneer elects to participate,
it will be a condition to Pioneer's participation that it enter into
all such acquisition agreements, joint operating agreements,
conveyances, assignments and other documents reasonably required to
evidence such participation.
2. Confidentiality. In the event Pioneer does not accept an Offer,
Pioneer agrees (i) to return to Prize any data, information and materials
obtained by Pioneer from Prize relating to the Offer, (ii) to hold all
information received by Pioneer from Prize relating to the Offer in confidence,
(iii) not to disclose such information unless judicial process obligates Pioneer
to do so, and (iv) not to make use of such information, directly or indirectly.
The term "information" as used in this Section 2 shall not include any
information which Pioneer can show: (i) to have been in its possession prior to
receipt thereof from Prize; (ii) to be now or to later become generally
available to the public through no fault of Pioneer; or (iii) to have been
received separately by Pioneer in an unrestricted manner from a person entitled
to disclose such information. The parties agree that Prize would not have
adequate remedies in damages and that Prize would be irreparably harmed in the
3
<PAGE> 6
event that any of the provisions of this Section 2 were not performed in
accordance with their terms. Accordingly, the parties agree that Prize shall be
entitled to injunctive relief to prevent a breach of this Section 2 and to
specifically enforce its terms in addition to any other remedy to which Prize
may be entitled in law or in equity.
3. Relationship of the Parties. The obligations and liabilities of the
parties hereto shall be several and not joint or collective. This Agreement
shall not be construed as creating a mining or other partnership or association,
or to render the parties liable as partners. This Agreement shall not obligate
Pioneer to offer Prize a participation in any project or opportunity of
Pioneer's. This Agreement shall not preclude Pioneer from pursuing,
participating in, or acquiring any project or opportunity known to it now or
hereafter or, notwithstanding Pioneer's previous decision not to participate and
notwithstanding Section 2, any Significant Acquisition Opportunity as to which
(i) Prize fails to sign an acquisition agreement or fails to close after such
signing, and (ii) Prize has ceased all efforts to acquire.
4. Investment Representation. Pioneer represents that any interest
acquired by Pioneer in any Significant Acquisition Opportunity or Significant
Exploration Project shall be acquired for investment purposes only and not with
a view to, or for resale in connection with, any distribution thereof.
5. Miscellaneous.
(a) Notices. All notices and communications required or
permitted under this Agreement shall be in writing and any such notice
or communication shall be deemed to have been duly given or made if
personally delivered, or if mailed by registered or certified mail,
postage and certification charges prepaid, or sent by a nationally
recognized commercial delivery service, charges prepaid, return receipt
requested, or by facsimile, addressed as follows:
If to Prize:
Prize Energy Corp.
Attention: Philip B. Smith
20 East 5th Street, Suite 1400
Tulsa, Oklahoma 74103
Facsimile No.: (918)582-1547
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<PAGE> 7
If to Pioneer:
Pioneer Natural Resources USA, Inc.
Attention: ________________________
1400 Williams Square West
5205 North O'Conner Blvd.
Irving, Texas 75039-3746
Facsimile No.: (972)969-3570
The effective date of notice shall be the date of actual receipt. Any
party may, by notice to the other hereunder, change the address or
facsimile number to which delivery shall thereafter be made.
(b) Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that this
Agreement may not be assigned in whole or in part by either party
without the prior written consent of the other party.
(c) Counterparts. This Agreement may be executed by the
parties hereto in any number of counterparts, each of which shall be
deemed an original instrument for all purposes and all of which
together shall constitute one agreement.
(d) Governing Law. This Agreement and the transactions
contemplated hereby shall be construed in accordance with, and governed
by, the laws of the State of Delaware.
(e) Other. This Agreement may not be amended nor any rights
hereunder be waived except by an instrument in writing signed by the
party to be charged with such amendment or waiver. The headings of the
sections of this Agreement are for convenience and shall not limit or
otherwise affect any of the provisions of this Agreement. This
Agreement constitutes the entire understanding between the parties with
respect to the subject matter hereof, superseding all negotiations,
prior discussions and prior agreements and understandings relating to
such subject matter. Except as otherwise expressly stated in this
Agreement, this Agreement is not for the benefit of any third person.
The parties acknowledge that they and their respective counsel have
negotiated and drafted this Agreement jointly and agree that the rule
of construction that ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation or
construction of this Agreement.
5
<PAGE> 8
EXECUTED as of the date first set forth above.
PRIZE ENERGY CORP.
By: /s/ Philip B. Smith
---------------------------------
Philip B. Smith
President
PIONEER NATURAL RESOURCES USA,
INC.
By: /s/ W. T. Howard
---------------------------------
W. T. Howard
Senior Vice President Land
6
<PAGE> 1
EXHIBIT 10.4
PRIZE ENERGY CORP.
AMENDED AND RESTATED OPTION PLAN
RECITALS
A. Effective as of January 25, 1999 (the "Effective Date"), the Board
of Directors of Prize Energy Corp., a Delaware corporation (the "Company"),
adopted an Option Plan (the "Initial Plan") for the benefit of the officers and
employees of the Company.
B. It was the purpose of the Initial Plan to promote the interests of
the Company and its shareholders by attracting, retaining and stimulating the
performance of selected employees and giving such employees the opportunity to
acquire a proprietary interest in the Company and an increased personal interest
in its continued success and progress, by granting to them options to acquire
additional shares of common stock of the Company, on the terms and subject to
the conditions described below.
C. The Board of Directors of the Company has authorized the issuance of
additional shares of its common stock and the issuance of shares of its Series A
6% Convertible Preferred Stock (the "Series A Preferred") which may be converted
into shares of the Company's common stock.
D. In connection with the issuance of such additional shares of equity
securities, the Board of Directors of the Company has determined that it is in
the best interests of the Company and its shareholders to amend and restate the
Initial Plan to increase the number of Option Shares which may be acquired
thereunder and to make certain other changes in the Initial Plan, in order to
further the purpose of the Initial Plan.
E. Effective as of June 29, 1999 (the "Amendment Date"), the Board of
Directors of the Company adopted an Amended and Restated Option Plan, for the
purpose of amending and restating the Initial Plan, as set forth herein (as so
amended and restated, this "Plan").
ARTICLE I
GENERAL
1.1 Definitions. Terms used in this Plan and not otherwise defined
shall have the respective meanings assigned to such terms in the Bylaws of the
Company (the "Bylaws"); and the following terms shall have the following
meanings:
"Board" means the Board of Directors of the Company.
"Change in Control" means and shall be deemed to have occurred if
(i) any single Person or group of related Persons, other than the
Company or any Related Party, purchases or otherwise acquires
"beneficial ownership" of securities of the Company representing 40
percent or more of the total voting power of all the then outstanding
Voting Securities,
<PAGE> 2
unless such purchase or acquisition has been approved by the
Board; (ii) the Company is a party to a merger, consolidation,
recapitalization, reorganization or other similar transaction and the
Persons who serve as directors of the Company immediately before
consummation of such transaction cease to constitute at least 40
percent of the total number of members of the Board of Directors of the
surviving entity immediately following completion of such transaction;
(iii) the stockholders approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of
all or substantially all of the Company's assets, other than any such
transaction which would result in a Related Party owning or acquiring
more than 50 percent of the assets owned by the Company immediately
prior to the transaction; or (iv) the Board adopts a resolution to the
effect that a Change in Control has occurred.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means the common stock, $.01 par value per share,
of the Company.
"Contribution Agreement" means, collectively, the Subscription and
Contribution Agreements between the Company and each of its
stockholders dated the Effective Date, the Amendment Date and
subsequent to the Amendment Date.
"Employee" means an individual (i) who is employed by the
Company and/or any of its subsidiaries and/or affiliates and whose
wages are subject to the withholding of federal income tax under
Section 3401 of the Code, (ii) who is an independent contractor or
consultant of the Company and/or any of its subsidiaries and/or
affiliates, and/or (iii) who is employed by an organization that is
retained under contract to provide services to the Company and/or any
of its subsidiaries and/or affiliates and is engaged in providing such
services.
"Expiration Date" means 6:00 P.M. Tulsa, Oklahoma, time, on June
29, 2004.
"Going Public Event" means the consummation of (i) an initial
public offering of any of the Company's securities, or (ii) any merger,
business combination or other transaction by which the Company is
combined with or becomes owned by a company which is a reporting
company under the Securities Exchange Act of 1934, as amended.
"Holder" means any Employee to whom an Option has been granted
under this Plan.
"Option" means any option granted to an Employee under this Plan.
"Options" means, collectively, all Options granted to Employees
under this Plan.
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<PAGE> 3
"Officer" means an individual elected or appointed by the Board or
chosen in such other manner as may be prescribed in the Bylaws of the
Company to serve as such.
"Person" (whether or not capitalized) means any natural person,
corporation, company, limited or general partnership, joint stock
company, joint venture, association, limited liability company, trust,
bank, trust company, business trust or other entity or organization,
whether or not a governmental authority.
"Related Party" means (i) any Person who is a stockholder of the
Company as of June 29, 1999, and any partner, owner, shareholder,
officer, director, employee or other affiliate of such Person, (ii) an
employee or group of employees of the Company, (iii) a trustee or other
fiduciary holding securities under an employee benefit plan of the
Company, or (iv) a corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportion as
their ownership of stock of the Company.
"Voting Securities" means any securities of the Company which
carry the right to vote generally in the election of directors.
ARTICLE II
ADMINISTRATION
This Plan shall be administered by the Board. The Board shall have full
authority, discretion and power to select the Employees who will receive Options
and, subject to the aggregate limitations set forth herein, to set the number of
shares of Common Stock to be covered by each Option granted to an Employee. The
decisions of the Board relating to such matters shall be final and binding upon
the Company and the Employees. The Board shall have no authority, discretion or
power to set the exercise price or the period within which the Options may be
exercised, or to alter any other terms or conditions specified herein.
Subject to the foregoing limitations, the Board shall have authority
and power to adopt such rules and regulations and to take such action as the
Board shall consider necessary or advisable for the administration of this Plan,
and to construe, interpret and administer this Plan. The Board shall incur no
liability by reason of any action or determination made in good faith with
respect to this Plan or any option agreement entered into pursuant to this Plan.
ARTICLE III
GRANT OF OPTIONS
3.1 Option Agreements. Each Option granted under this Plan to an
Employee shall be a non-qualified option for federal income tax purposes and
shall be evidenced by a written option agreement, which agreement shall be
entered into between the Company and the Employee to whom the Option is granted.
The agreement for each Option shall be in substantially the form of the Option
Agreement set forth in Exhibit A hereto (the "Option Agreement"), with
appropriate
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<PAGE> 4
insertions of the name of the optionee and the number of shares for which such
Option may be exercised.
3.2 Maximum Number of Shares Subject to Options. The Company is
authorized to grant Options hereunder to acquire up to a maximum of 1,285.922
shares of Common Stock (collectively, the "Option Shares"); provided, however,
that, if the number of shares of Common Stock issuable upon conversion of the
Series A Preferred shall ever be reduced to less than 2,307.693 shares (as such
number may be adjusted from time to time to take into account stock splits,
combinations, stock dividends and similar adjustments) after the date hereof as
a result of any redemption, payment, exchange, cancellation or other termination
of the Series A Preferred that does not result in the issuance of shares of
Common Stock (collectively, a "Share Reduction Event"), then the total number of
Option Shares which may be acquired upon exercise of all Options granted
hereunder shall be correspondingly reduced upon the occurrence of such Share
Reduction Event by an amount (rounded to the nearest one-hundredth of a whole
number) equal to (i) the amount of the decrease in the number of shares of
Common Stock issuable upon conversion of the Series A Preferred as a result of
such Share Reduction Event, divided by .85, less (ii) the amount of the decrease
in the number of shares of Common Stock issuable upon conversion of the Series A
Preferred as a result of such Share Reduction Event; provided, that in no event
shall the aggregate decrease in the number of Option Shares issuable hereunder
as a result of Share Reduction Events exceed 407.24 shares (as such number may
be adjusted from time to time to take into account future stock splits,
combinations, stock dividends and similar adjustments).
3.3 Initial Grant of Options. Options were granted as of the Effective
Date to Philip B. Smith to purchase 259.857 shares of Common Stock. Said Options
shall be surrendered in exchange for one or more Options for a like amount under
an Option Agreement with appropriate insertions so that the terms thereof are
equivalent to those of the Options so surrendered.
3.4 Additional Grants of Options. Options shall be granted as of the
Amendment Date to certain Employees, as determined by the Board, to purchase
additional shares of Common Stock. Such Options shall be evidenced by Option
Agreements dated the Amendment Date, with appropriate insertions.
3.5 Subsequent Grants of Options. After the initial and additional
grants of options pursuant to Sections 3.3 and 3.4 above, the Board may at any
time grant Options to purchase any of the remaining Option Shares authorized
under Section 3.2 above to any Person then serving as an Employee of the Company
and/or any of its subsidiaries and/or affiliates on the date of such grant;
provided, that, if Options to purchase the maximum number of Option Shares
permitted by Section 3.2 above shall have not been granted before the earlier of
(i) the termination of this Plan, (ii) a Change in Control or (iii) a Going
Public Event, then Options to purchase all remaining Option Shares shall be
deemed to have been granted to Employees then holding Options, pro rata to the
number of Option Shares represented by such Options, immediately before the
occurrence of such termination, Change or Event.
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<PAGE> 5
ARTICLE IV
GENERAL PROVISIONS
4.1 Termination of Plan. This Plan shall terminate on the earlier of
(i) the Expiration Date, (ii) the date the Board adopts a resolution terminating
this Plan, or (iii) the date of any event which accelerates the vesting of all
outstanding Options. After termination of this Plan, no Options shall be granted
under this Plan, but the Company shall continue to recognize Options previously
granted to the extent such Options shall not have expired or been exercised.
4.2 Amendment of Plan. The Board may from time to time amend, modify,
suspend or terminate this Plan. Nevertheless, no such amendment, modification,
suspension or termination shall impair any Options theretofore granted under
this Plan or deprive any Holder of any shares of Common Stock which such Holder
might have acquired through or as a result of this Plan.
4.3 Treatment of Proceeds. Proceeds from the sale of shares of Common
Stock pursuant to Options granted under this Plan shall constitute general funds
of the Company.
4.4 Effectiveness. This Plan became effective as of the Effective Date.
4.5 Paragraph Headings. The paragraph headings included herein are only
for convenience, and they shall have no effect on the interpretation of this
Plan.
CERTIFICATE
The foregoing is a true and correct copy of the Amended and Restated
Option Plan as authorized and approved by the Board of Directors of the Company
and effective as of June 29, 1999.
/s/ Philip B. Smith
------------------------------
Philip B. Smith
Chairman, President and
Chief Executive Officer
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