EXHIBIT 10.5(g)
INTERCREDITOR AGREEMENT
This Intercreditor Agreement is dated as of this 31st day of March, 1999 by
and among BANK ONE, OKLAHOMA, N.A. and its successors and assigns ("Bank One"),
CORAL RESERVES, INC., an Oklahoma corporation ("Coral Reserves"), CORAL RESERVES
ENERGY CORP., an Oklahoma corporation ("Coral Energy"), CORAL RESERVES GROUP,
LTD., an Oklahoma corporation ("Coral Ltd.") (collectively, Coral Reserves,
Coral Energy, Coral Ltd. and/or CORAL RESERVES ENERGY INCOME FUND 1996 LIMITED
PARTNERSHIP and CORAL RESERVES 1996 INSTITUTIONAL LIMITED PARTNERSHIP thereof
are referred to herein as the "Coral Group"), and INDIAN OIL COMPANY, an
Oklahoma corporation (the "Borrower").
RECITALS:
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WHEREAS, on December 17, 1997, Borrower and Bank One entered into that
certain Credit Agreement (the "Bank One Loan Agreement") which such Bank One
Loan Agreement has been amended from time to time thereafter and revolving
promissory note in the principal amount of $50,000,000.00 (the "Bank One Note")
and such other documents executed in conjunction with the Bank One Loan
Agreement (the "Bank One Loan Documents").
WHEREAS, on February 15, 1999, the Coral Group and Borrower entered into
that certain Agreement and Plan of Merger ("Merger Agreement");
WHEREAS, pursuant to the Merger Agreement, the Coral Group invested or
shall invest $6,000,000.00 in Borrower in exchange for, among other things, an
unsecured "Contingent Production Payment" ("CPP").
WHEREAS, Borrower prepaid $6,000,000.00 against the MidFirst Debt.
WHEREAS, in return for the $6,000,000.00 payment from the Coral Group
referenced above, Borrower promised to make a production payment to the Coral
Group from proceeds received from Borrower's interests in oil and gas properties
in the amount of $56,250.00 per month (the "Contingent Production Payment");
WHEREAS, the Merger Agreement contemplates and sets forth the priority in
which Borrower's debts shall be repaid. This Intercreditor Agreement further
describes that procedure;
WHEREAS, all indebtedness evidenced by the Bank One Loan Agreement, the
Bank One Note and the Bank One Loan Documents is referred to herein as the "Bank
One Debt."
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NOW, THEREFORE, in consideration of the mutual promises herein contained
and such other good and valuable consideration the sufficiency of which is
hereby acknowledged, the parties hereby agree as follows:
I. REPRESENTATIONS AND WARRANTIES. The Coral Group and Borrower
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represent and warrant to Bank One that:
(a) The Contingent Production Payment. As of the date hereof, the
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total indebtedness owing by Borrower to The Coral Group is evidenced by the
Contingent Production Payment.
(b) Default. There is no default in the indebtedness from Borrower to
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The Coral Group or under any other agreements between Borrower and third
parties.
II. JUNIOR PRIORITY OF CONTINGENT PRODUCTION PAYMENT. In order to induce
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Bank One to extend a loan to Borrower, it is agreed as follows:
(a) Junior Priority. The Coral Group agrees that the Contingent
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Production Payment shall be and hereby are inferior and junior to the Bank One
Debt, unless otherwise agreed to in writing by Bank One, and the Coral Group
shall be entitled to no payments pursuant to the Contingent Production Payment
until the full cash payment of any and all indebtedness (including all interest
after the date of filing of a petition by or against Borrower under any
bankruptcy act) of any nature whatsoever now due to Bank One from Borrower
pursuant to the Bank One Loan, as same may be amended from time to time
hereafter. Provided, however, notwithstanding the above, the Coral Group shall
be entitled to the monthly Contingent Production Payment so long as Borrower is
not in default of the Bank One Loan Agreement. Upon the occurrence of an Event
of Default under the Bank One Loan Agreement, the Contingent Production Payment
shall be suspended and not made until such Event of Default has been cured to
Bank One's satisfaction.
(b) No Action by the Coral Group. The Coral Group will not, without
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Bank One's prior written consent, accelerate, assert, collect, enforce or
release the Contingent Production Payment or any part thereof and/or otherwise
exercise its remedies pursuant to the Contingent Production Payment and the
Merger Agreement until the Bank One Debt has been paid in full.
(c) No Amendment. The Coral Group shall not amend or permit amendment
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of the terms of any instrument or agreement evidencing the Contingent Production
Payment without the prior written consent of Bank One.
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(d) Payments Held in Trust. In the event that any payment of
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principal or interest or other payment or distribution of assets of Borrower
shall be received by any holder of the Contingent Production Payment,
notwithstanding the foregoing, in violation of the provisions hereof, and before
payment in full of the Bank One Debt, such payment or distribution shall be held
by such holder of the Contingent Production Payment in trust for the holder of
the Bank One Debt by such holder of the Contingent Production Payment to the
extent necessary to make payment of any unpaid Bank One Debt.
(e) Permissive Payments. Borrower agrees with Bank One that after the
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execution hereof, it will make no payments to the Coral Group on the Contingent
Production Payment; provided, however, Bank One agrees that Borrower shall be
allowed to make monthly payments to the Coral Group on the Contingent Production
Payment, as long as such payment does not cause the Borrower to violate Section
7.2 of the Bank One Loan Agreement (the "Debt Service Coverage Ratio") and so
long as no "Event of Default" has occurred or is continuing under the Bank One
Loan Agreement. In the event that making the monthly Contingent Production
Payment due to the Coral Group would cause the Borrower to violate the Debt
Service Coverage Ratio, and as a result anything less than the full Contingent
Production Payment is made, Bank One agrees that such payments may be made up at
such point in time and to the extent that no violation of the Debt Service
Coverage Ratio would result.
(f) Bank One Modifications. With respect to the Bank One Debt, the
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Coral Group agrees that Bank One may grant extensions of the time of payment or
performance, make compromises, including releases of collateral and settlements
with Borrower, or otherwise modify the Bank One Debt without affecting the
agreements of the Coral Group or Borrower hereunder.
(g) Discontinuance of Bank One Debt. If, at any time hereafter, Bank
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One shall, in its own judgment determine to discontinue the extension of credit
to Borrower, Bank One may do so. This Agreement shall continue in full force
and effect until Borrower shall have satisfied all obligations and Bank One
shall have been paid in full on all indebtedness, of any nature whatsoever that
may be due on the Bank One Loan Agreement or any amendments thereto to Bank One
from Borrower.
III MISCELLANEOUS
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(a) Insolvency. In the event of any liquidation, dissolution or
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winding up of the Borrower, or any execution sale, receivership, insolvency,
bankruptcy, liquidation, readjustment, reorganization or other similar
proceeding relative to the Borrower or its property, all principal, interest and
other amounts owing on the Bank One Debt shall first be paid in full in cash
before any payment is made upon the Contingent Production Payment; and in any
such event, and in the event of any payment in violation of this Intercreditor
Agreement,
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any payment or distribution of any kind or character, whether in cash, property
or securities which shall be made upon or in respect of the Contingent
Production Payment shall be paid over to Bank One for application in payment
thereof unless and until the Bank One Debt shall have been paid or satisfied in
full in cash.
(b) Proof and Vote of Claims. The Coral Group hereby appoints, which
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appointment is irrevocable and coupled with an interest, Bank One, its
successors and assigns, as The Coral Group's true and lawful attorney, with full
power of substitution, in the name of the Coral Group, Bank One or otherwise.
Such appointment shall be for the sole use and benefit of Bank One, to the
extent permitted by law, to prove and vote all claims relating to the Contingent
Production Payment, and to receive and collect all distributions and payments to
which the Coral Group would be otherwise entitled on any liquidation of Borrower
or in any proceeding affecting Borrower or its property under any bankruptcy or
insolvency laws or any laws or proceedings relating to the relief of the
Borrower, readjustment, composition or extension of indebtedness or
reorganization.
(c) Administrative Proceedings. The Coral Group agrees that it will
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not commence, prosecute or participate in any administrative, legal, or
equitable action against Borrower or in any administrative, legal or equitable
action arising out of Borrower's failure to make the Contingent Production
Payment that might adversely affect Borrower or its interest, without Bank One's
prior written consent.
(d) No Interference. The Coral Group agrees that it will not take any
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action that will impede, interfere with or restrict or restrain the exercise by
Bank One of its rights and remedies under the Bank One Loan Documents and, upon
the commencement of any bankruptcy of the Borrower, will take such actions as
may be reasonably necessary or appropriate to effectuate the subordination
provided hereby. In furtherance thereof, the Coral Group hereby agrees not to
oppose any motion filed or supported by Bank One for relief from the automatic
stay, for adequate protection in respect of the Bank One Debt, and/or for the
Borrower's use of cash collateral or post-petition borrowing from Bank One.
(e) Collection Actions. If the Coral Group, in violation of this
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Agreement, shall commence, prosecute or participate in any suit, action or
proceeding against Borrower, Borrower may interpose as a defense or plea the
making of this Agreement and Bank One may intervene and interpose such defense
or plea in Bank One's name or in the name of Borrower. If the Coral Group shall
attempt to enforce any security agreements, real estate mortgages or any lien
instrument or other encumbrances, Bank One or Borrower may by virtue of this
Agreement restrain the enforcement thereof in Bank One's name or in the name of
Borrower. If the Coral Group obtains any assets of the Borrower as a result of
any administrative, legal, or equitable action, or otherwise, the Coral Group
agrees to forthwith pay, deliver, and assign to Bank One any such assets for
application upon the amount now or hereafter owing to Bank One by Borrower.
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(f) The Coral Group Rights. Nothing contained in this Agreement is
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intended to or shall impair, as between Borrower and the holder of the
Contingent Production Payment, the obligation of Borrower, which is absolute and
unconditional, to pay to the holder of the Contingent Production Payment such
indebtedness.
(g) Limitation Assignments. The Coral Group shall not sell, assign or
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transfer any of the Contingent Production Payment, unless the buyer, assignee or
transferee thereof shall agree in writing to become bound by the provisions of
this Agreement and the holders of the Bank One Debt shall have been furnished
with the original copies of such agreement.
(h) Borrower Agreement. Borrower agrees, for the benefit of the
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holder of the Bank One Debt, that, in the event the or any Contingent Production
Payment is declared due and payable before its expressed maturity, Borrower will
give prompt notice in writing of such happening to the holder of the Bank One
Debt. Borrower further agrees and covenants not to make any distribution or
payment to the Coral Group in violation of the terms hereof.
(i) Governing Law. This Agreement and the obligations which it
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secures and all rights and liabilities of the parties shall be governed as to
validity, interpretation, enforcement and effect by the laws of the State of
Oklahoma.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of this ____ day of March, 1999.
BORROWER:
INDIAN OIL COMPANY
__________________________________________
By: Xxxxx X. Xxxxxx
Title: President
CORAL GROUP:
CORAL RESERVES, INC.:
__________________________________________
By: Xxx X. Xxxxxxx
Title: President
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CORAL RESERVES ENERGY CORP.,
__________________________________________
By: Xxx X. Xxxxxxx
Title: President
CORAL RESERVES GROUP, LTD.,
__________________________________________
By: Xxx X. Xxxxxxx
Title: President
CORAL RESERVES 1996 INSTITUTIONAL
LIMITED PARTNERSHIP, an Oklahoma limited
partnership
By: Coral Reserves, Inc., general partner
By: ________________________
Xxx X. Xxxxxxx, President
CORAL RESERVES ENERGY INCOME
FUND 1996 LIMITED PARTNERSHIP,
an Oklahoma limited partnership
By: Coral Reserves Energy Corp.,
General Partner
By: _________________________
Xxx X. Xxxxxxx, President
BANK ONE:
BANK ONE, OKLAHOMA, N.A.
__________________________________________
By: Xxxx X. Xxxx, Xx.
Title: Sr. Vice President
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