EXHIBITY 10.2
LOAN AGREEMENT
$18,500,000
DATED AS OF
FEBRUARY 27, 2007
by and between
ISRAMCO, INC.
A DELAWARE CORPORATION,
as the "Borrower",
and
NAPHTHA ISRAEL PETROLEUM CORP., LTD.
As the "Lender"
LOAN AGREEMENT
--------------
THIS LOAN AGREEMENT, dated as of February 27, 2007 is made and entered
into by and between ISRAMCO, INC., a Delaware corporation (the "Borrower") and
NAPHTHA ISRAEL PETROLEUM CORP., LTD. (the "Lender").
WITNESSETH:
WHEREAS, ISRAMCO ENERGY, L.L.C., a Texas limited liability company
("Isramco Energy"), is a wholly owned subsidiary of the Borrower;
WHEREAS, Isramco Energy has entered into a Purchase and Sale Agreement
with Five States Energy Company, L.L.C. and its related entities (the "PSA")
pursuant to which Borrower is to acquire interests in certain oil and gas
properties located in the States of Texas and New Mexico (the "Acquisition");
WHEREAS, on or about December 14, 2006, Borrower entered into a Loan
Agreement with IOC-Israel Oil Company, Ltd. ("IOC") pursuant to which IOC loaned
Borrower the principal amount of Seventeen Million Dollars ($17,000,000) (the
"IOC Loan") for the purposes of making an equity contribution to Isramco Energy;
WHEREAS, the IOC Loan has been assigned to and assumed by Lender;
WHEREAS, the Borrower desires to obtain additional financing in the
amount of One Million Five Hundred Thousand Dollars ($1,500,000) ("Additional
Financing") from the Lender for purposes of contribution to the equity of
Isramco Energy for the Acquisition, working capital, capital expenditures, to
finance acquisitions of oil and gas properties and other assets related to the
exploration, production and development of oil and gas properties, and for other
lawful corporate purposes and to consolidate the Additional Financing with the
IOC Loan;
WHEREAS, to induce Lender to extend the Additional Financing to Borrower
and to consolidate the Additional Financing with the IOC Loan, Xxx Petroleum,
L.L.C. ("Xxx") has agreed to unconditionally guarantee the indebtedness of
Borrower to Lender and to pledge its oil and gas interests to secure the
obligations guaranteed; and
WHEREAS, the Lender is willing to extend the Additional Financing to
Borrower and to consolidate the IOC Loan with the Additional Financing upon the
terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, receipt of which is
acknowledged by the parties hereto, the parties agree, as follows:
ARTICLE I
CERTAIN DEFINITIONS
When used herein, the following terms shall have the following meanings:
1.1 BUSINESS DAY shall mean a day other than a Saturday, Sunday or a
day upon which banks in the State of Texas are closed to business generally;
provided that when used in connection with a Libor Loan, the term shall also
exclude any day on which banks are not open for dealings in dollar deposits in
the London interbank market.
1.2 DEFAULT RATE shall mean the Stated Rate plus 12 percentage
points (12%) per annum.
1.3 EFFECTIVE DATE shall mean February 27, 2007.
1.4 EVENT OF DEFAULT shall mean any of the events specified in
Section 7.1 of this Agreement, and Default shall mean any event, which together
with any lapse of time or giving of any notice, or both, would constitute an
Event of Default.
1.5 GOVERNMENTAL AUTHORITY shall include the country, the state,
county, city and political subdivisions in which any Person or such Person's
property is located or which exercises valid jurisdiction over any such Person
or such Person's property, and any Tribunal of any of them, including monetary
authorities, which exercises valid jurisdiction over any such Person or such
Person's property. Unless otherwise specified, all references to Governmental
Authority herein shall mean a Governmental Authority having jurisdiction over,
where applicable, Borrower, any of its Subsidiaries, any of Borrower's
properties or the Lender.
1.6 GOVERNMENTAL REQUIREMENT shall mean any Law, or other directive
or requirement (whether or not having the force of law), including, without
limitation, environmental laws, energy regulations and occupational, safety and
health standards or controls, of any Governmental Authority.
1.7 HEREBY, HEREIN, HEREOF, HEREUNDER and similar such terms shall
mean and refer to this Agreement as a whole and not merely to the specific
section, paragraph or clause in which the respective word appears.
1.8 HIGHEST LAWFUL RATE shall mean on any day, the maximum
nonusurious rate of interest permitted for that day by whichever of applicable
federal or Texas laws permits the higher interest rate, stated as a rate per
annum. On each day, if any, that the Texas Finance Code establishes the "Ceiling
Rate", the Ceiling Rate shall be the "weekly ceiling" (as defined in the Texas
Finance Code) for that day. Lender may, from time to time, as to current and
future balances, implement any other ceiling under the Texas Finance Code by
notice to Borrower, if and to the extent permitted by the Texas Finance Code.
Without notice to Borrower or any other person or entity, the Ceiling Rate shall
automatically fluctuate upward and downward as and in the amount by which such
maximum nonusurious rate of interest permitted by applicable law fluctuates.
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1.9 INDEBTEDNESS shall mean any and all: (i) indebtedness,
obligations and liabilities of the Borrower to the Lender incurred or which may
be incurred hereafter pursuant to the terms of this Agreement or any of the
other Loan Documents, and any extensions, renewals, substitutions, amendments
and increases in amount thereof, including such amounts as may be evidenced by
the Note and all lawful interest thereon and other charges, and all reasonable
costs and expenses incurred by the Lender in connection with the preparation,
filing and recording of the Loan Documents, including attorneys fees; (ii) all
reasonable costs and expenses, including attorneys' fees, paid or incurred by
the Lender in enforcing or attempting to enforce collection of any Indebtedness
and in enforcing or realizing upon or attempting to enforce or realize upon any
collateral or security for any Indebtedness and in protecting and preserving the
Lender's interest in the Indebtedness or any collateral or security for any
Indebtedness in any bankruptcy or reorganization proceeding, including interest
on all sums so expended by the Lender accruing from the date upon which such
expenditures are made until paid, at an annual rate equal to the Default Rate;
and (iii) sums expended by the Lender in curing any Event of Default or Default
of the Borrower under the terms of this Agreement, the other Loan Documents or
any other security agreement or other writing evidencing or securing the payment
of the Indebtedness described herein, including the Note.
1.10 INTEREST PERIOD shall mean shall mean the period commencing on
the Effective Date and ending on the numerically corresponding day each six (6)
calendar months thereafter, except that each Interest Period which commences on
the last Business Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of the appropriate subsequent calendar month.
1.11 LAW(S) shall mean all statutes, laws, ordinances, regulations,
orders, rules, codes, permits, franchises, licenses, certificates, writs,
injunctions, or decrees of the United States, any state or commonwealth, any
municipality, any foreign country, any territory or possession, or any Tribunal.
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1.12 LIBOR shall mean, at any time of determination, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on
Dow Xxxxx Market Service 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) 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" shall mean the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen
LIBOR Page as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two (2) 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 LIBOR
Page, the applicable rate shall be the arithmetic mean of all such rates. In the
event that such rate does not appear on either Dow Xxxxx Market Service Page
3750 or Reuters Screen LIBOR Page, "LIBOR" shall be the rate per annum at which
deposits in Dollars are offered by leading reference banks in the London
interbank market to Xxxxx Fargo Bank, N.A. at approximately 11:00 a.m. (London
time) two (2) Business Days prior to the first day of the applicable Interest
Period for a period equal to such Interest Period and in an amount substantially
equal to the amount of this Loan.
1.13 LIEN shall mean any mortgage, deed of trust, pledge, security
interest, encumbrance, lien or charge of any kind (including any agreement to
give any of the foregoing, any conditional sale or other title retention
agreement, any lease in the nature thereof, and the filing of or agreement to
give any financing statement or other similar form of public notice under the
Laws of any jurisdiction).
1.14 LOAN shall mean the funds loaned to the Borrower by the Lender
pursuant to this Agreement.
1.15 LOAN DOCUMENTS means, on any date, this Agreement, the Note and
all other agreements relating to this Agreement entered into from time to time
between Borrower and the Lender and all other documents and certificates
executed and delivered to the Lender by the Borrower in connection with any of
the foregoing, as from time to time amended, supplemented, amended and restated,
or otherwise modified and in effect on such date.
1.16 MATERIAL ADVERSE EFFECT shall mean any material and adverse
effect on (i) the assets, liabilities, financial condition, business,
operations, prospects or affairs of the Borrower and its Subsidiaries taken as a
whole or (ii) the ability of the Borrower and its Subsidiaries, taken as a
whole, to carry out their business on and after the Effective Date or as
proposed as of the Effective Date to be conducted or meet its obligations under
the Loan Documents on a timely basis.
1.17 MATURITY DATE shall mean, unless the Note is sooner accelerated
pursuant to this Agreement, February 26, 2014.
1.18 MAXIMUM RATE shall mean at any particular in question, the
maximum rate of interest which under applicable law may then be charged. If such
maximum rate changes after the date hereof, the Maximum Rate shall be
automatically increased or decreased, as the case
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may be, without notice to Borrower from time to time as the effective date of
each change in such maximum rate period.
1.19 NOTE shall mean the Note as described and defined in Article II
of this Agreement, together with each and every extension, renewal,
modification, replacement, substitution and change in form thereof which may be
from time to time and for any term or terms effected.
1.20 PERSON shall mean and include an individual, a partnership, a
limited partnership, a limited liability company, a joint venture, a
corporation, a trust, an unincorporated organization, and a government or any
department, agency or political subdivision thereof.
1.21 RESPONSIBLE OFFICER shall mean the chief executive officer,
chief operating officer, chief financial officer, president or managing director
of the Borrower.
1.22 SUBSIDIARY shall mean (i) any corporation, at least 50% of the
total combined voting power of all classes of Voting Stock of which shall, at
the time as of which any determination is being made, be owned by the Borrower
either directly or through Subsidiaries, and (ii) any partnership, joint venture
or similar entity if at least a 50% interest in the profits or capital thereof
is owned by the Borrower, either directly or through Subsidiaries.
1.23 STATED RATE shall mean a rate per annum equal to LIBOR plus five
and one - half percent (5 1/2%), not to exceed eleven percent (11%); provided,
however, that if the Stated Rate ever exceeds the Highest Lawful Rate, the
Stated Rate shall then and thereafter be fixed at a rate per annum equal to the
Highest Lawful Rate then and from time to time thereafter in effect until the
total amount of interest accrued at the Stated Rate on the unpaid balance of
this Note equals the total amount of interest which would have accrued at the
Highest Lawful Rate from time to time in effect.
1.24 TAXES shall mean all taxes, assessments, fees, or other charges
or levies from time to time or at any time imposed by any Laws or by any
Tribunal as hereafter defined.
1.25 TRIBUNAL shall mean any municipal, state, commonwealth, Federal,
foreign, territorial or other sovereign, governmental entity, governmental
department, court, commission, board, bureau, agency or instrumentality.
1.26 OTHER DEFINITIONAL PROVISIONS. References to Sections,
subsections, Exhibits and Schedules shall be to Sections, subsections, Exhibits
and Schedules, respectively, of this Agreement unless otherwise specifically
provided. Any of the terms defined in Article I may, unless the content
otherwise requires, be used in the singular or the plural depending on the
reference. In this Agreement, words importing any gender include the other
genders; the words including, includes and include shall be deemed to be
followed by the words without limitation; references to agreements and other
contractual instruments shall be deemed to include subsequent amendments,
assignments, and other modifications thereto, but only to the extent such
amendments, assignments and other modifications are not prohibited by the terms
of this Agreement or any other Loan Document; references to Persons include
their respective permitted successors and assigns or, in the case of
governmental Persons, Persons succeeding to the relevant functions of such
Persons; and all references to statutes and related regulations shall include
any amendments of same and any successor statutes and regulations.
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ARTICLE II
LOAN
2.1 LOAN AND CANCELLATION OF IOC LOAN. Upon the terms and subject to
the conditions hereinafter set forth, the Lender agrees to loan to Borrower the
sum of Eighteen Million Five Hundred Thousand and NO/100 U.S. Dollars (US$
18,500,000.00) (the "Loan"), representing the IOC Loan and the Additional
Financing. The Additional Financing will be funded on or before the Effective
Date. The unpaid principal balance and all accrued interest of the Loan is due
and payable on the Maturity Date. Upon the Effective Date, the IOC Loan and all
obligations of Borrower related thereto shall be wholly cancelled, terminated
and discharged for all purposes.
2.2 PAYMENTS BY LENDER. The Lender shall fund the Loan to Borrower,
as requested by Borrower, by wire transfer of immediately available funds by
11:00 a.m. Houston, Texas time to the account of the Borrower as designated by
the Borrower for such purpose by written notice to the Lender.
2.3 NOTE. The Borrower shall execute and deliver to the order of the
Lender a promissory note in the original principal amount the Loan, the form of
which is annexed hereto as EXHIBIT A and hereby made a part hereof (hereinafter
referred to as the "Note"). The Note shall be dated as of the Effective Date,
and shall provide for six (6) annual payments of interest only on each
anniversary of the Effective Date hereof until the Maturity Date. The unpaid and
outstanding principal balance of the Note, together with accrued but unpaid
interest thereon, shall be due and payable in full at the Maturity Date. The
Note shall bear interest on the unpaid balance of principal from time to time
outstanding and on any past due interest at an annual interest rate determined
pursuant to Section 2.6 hereof, but in no event at a rate greater than permitted
by applicable Law. All payments received shall be applied first to accrued
interest and then to the outstanding principal amount owing on the Note. All
payments and prepayments shall be made in lawful money of the United States of
America. After maturity (whether by acceleration or otherwise) the Note shall
bear interest at the Default Rate, payable on demand. Interest shall be
calculated on the basis of a year of 365 days, but assessed for the actual
number of days elapsed in each Interest Period.
2.4 PROCEEDS OF LOAN. Proceeds of the Loan shall be used only for
the purposes of (i) Borrower's equity contribution to Isramco Energy; (ii)
working capital and general corporate purposes; and (iii) refinancing of
existing debt.
2.5 RESPONSIBLE OFFICER. A Responsible Officer may, from time to
time, notify the Lender in writing of a change in the Responsible Officers. From
and after the Lender's receipt of such written notice, the Lender may rely on
any such request or certificate purportedly signed by any individual who has
been so designated as a Responsible Officer pursuant to this Agreement unless or
until it receives written notice from a Responsible Officer of the deletion of a
Responsible Officer.
2.6 INTEREST RATES.
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(a) INTEREST PRIOR TO MATURITY. Subject to the provisions
and limitations hereof, the outstanding principal balance of the Loan hereunder
shall accrue interest at the Stated Rate.
(b) INTEREST AFTER MATURITY. After the outstanding principal
amount of the Loan shall have become past due (by acceleration or past the
stated maturity date), such Loans shall bear interest for each day until paid
(before and after judgment) at the Default Rate.
2.7 PREPAYMENTS. Borrower shall have the right at its option, from
time to time, to prepay the Loan in whole or part without premium or penalty at
any time.
2.8 PAYMENTS FROM BORROWER. All payments shall be payable to the
Lender on the day when due without presentment, demand, protest or notice of any
kind, all of which are hereby expressly waived, and an action therefor shall
immediately accrue if not timely paid within applicable grace or curative
periods herein specified. Such payments shall be made to the Lender at such
location as Lender may from time to time designate in writing in U.S. Dollars in
funds immediately available at such office without set off, counterclaim or
other deduction of any nature. To the extent permitted by law, after there shall
have become due (by acceleration or otherwise) interest or any other amounts due
from the Borrower hereunder or under the Note (excluding overdue principal,
which shall bear interest as described in Section 2.6(b) hereof), such amounts
shall bear interest for each day until paid (before and after judgment), payable
on demand, at the Default Rate.
2.9 FULL PAYMENT. All outstanding principal and accrued but unpaid
interest on the Note shall be due and payable at the Maturity Date.
ARTICLE III
CONDITIONS PRECEDENT TO LOANS
3.1 CONDITIONS PRECEDENT TO FUNDING. The effectiveness of this
Agreement and the obligation of the Lender to make the Loan are subject to the
satisfaction of all of the following conditions on or prior to the Effective
Date (in addition to the other terms and conditions set forth herein):
(a) REPRESENTATIONS AND WARRANTIES. The covenants,
representations and warranties set forth herein and in the other Loan Documents
shall be true and correct in all material respects on and as of the Effective
Date, with the same effect as though made on and as of the Effective Date.
(b) XXX GUARANTEE. Xxx shall have executed and delivered to
Lender an unconditional guarantee of the Indebtedness of Borrower to Lender, a
mortgage and deed of trust and security agreement pledging the oil and gas
properties of Xxx as security for the obligations guaranteed, and such other
documents as may be reasonably requested by Lender.
(c) NOTE. The Borrower shall have executed and delivered to
the Lender the Note payable to the order of the Lender.
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(d) OTHER INFORMATION. The Lender shall have received such
other information, documents and assurances as shall be reasonably requested by
the Lender.
ARTICLE IV
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees with the Lender that from the date
hereof and so long as this Agreement is in effect (by extension, amendment or
otherwise) and until payment in full of all Indebtedness and the performance of
all other obligations of the Borrower under this Agreement, unless the Lender
shall otherwise consent in writing:
4.1 PAYMENT OF TAXES AND CLAIMS. The Borrower will pay and discharge
or cause to be paid and discharged all Taxes imposed upon the income or profits
of the Borrower or upon the property, real, personal or mixed, or upon any part
thereof, belonging to Borrower before the same shall be in default, and all
lawful claims for labor, rentals, materials and supplies which, if unpaid, might
become a Lien upon its property or any part thereof; provided, however, that the
Borrower shall not be required to pay and discharge or cause to be paid or
discharged any such Tax, assessment or claim so long as the validity thereof
shall be contested in good faith by appropriate proceedings, and adequate book
reserves shall be established with respect thereto, and the Borrower shall pay
such Tax, charge or claim before any property subject thereto shall become
subject to levy of attachment or execution.
4.2 MAINTENANCE OF EXISTENCE. The Borrower will do or cause to be
done all things necessary to preserve and keep in full force and effect its
organizational existence, rights and franchises and good standing in the State
of Delaware and as a foreign corporation qualified in such other jurisdiction(s)
in which the failure to maintain such qualification would have a Material
Adverse Effect.
4.3 PRESERVATION OF PROPERTY. The Borrower will at all times
maintain, preserve and protect all of the Borrower's properties which are used
or useful in the conduct of the Borrower's businesses whether owned in fee or
otherwise, or leased, in good repair and operating condition and comply with all
material leases to which it is a party or under which it occupies property so as
to prevent any material loss or forfeiture thereunder.
4.4 PAYMENT OF INDEBTEDNESS/PERFORMANCE OF OBLIGATIONS. The Borrower
will pay the obligations under the Note according to the reading, tenor and
effect thereof and the Borrower hereby agrees to pay, when due and owing, all
Indebtedness, whether or not evidenced by the Note.
4.5 OPERATION OF PROPERTIES AND EQUIPMENT.
(a) The Borrower will maintain and operate, and will cause
each of its Affiliates (if any) to maintain and operate, their respective
properties in a good and workmanlike manner, except to the extent a failure to
so observe and comply is not reasonably expected to have a Material Adverse
Effect.
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(b) The Borrower will comply, and will cause each of its
Affiliates (if any) to comply, in all respects with all contracts and agreements
applicable to or relating to their respective properties, except to the extent a
failure to so comply is not reasonably expected to have a Material Adverse
Effect.
ARTICLE V
NEGATIVE COVENANTS
The Borrower covenants and agrees with the Lender that from the date
hereof and so long as this Agreement is in effect (by extension, amendment or
otherwise) and until payment in full of all Indebtedness, unless the Lender
shall otherwise consent in writing:
5.1 LIENS. Other than the first lien and security interest of Xxxxx
Fargo National Bank, N.A., upon properties of Isramco Energy, the existing liens
securing existing debt of its other Subsidiaries, and the liens and security
interests pledged to Lender by Xxx, the Borrower will not, and will not permit
any of its Subsidiaries (if any), to create, incur, assume, or suffer to exist
any lien upon or with respect to any of its properties, now owned or hereafter
acquired, except:
(a) Liens for taxes or assessments or other government
charges or levies if not yet due and payable or, if due and payable or, if they
are being contested in good faith by appropriate proceedings and for which
appropriate reserves are maintained;
(b) Liens imposed by law, such as mechanics', materialmen's,
landlords', warehousemen's, and carriers' Liens, and other similar Liens
securing obligations incurred in the ordinary course of business which are not
past due for more than thirty (30) days or which are being contested in good
faith by appropriate proceedings and for which appropriate reserves have been
established;
(c) Liens under workers' compensation, unemployment
insurance, Social Security or similar legislation;
(d) Liens, deposits, or pledges to secure the performance of
bids, tenders, contracts (other than contracts for the payment of money),
leases, public or statutory obligations, surety, stay, appeal, indemnity,
performance or other similar bonds, or other similar obligations arising in the
ordinary course of business;
(e) Judgment and other similar liens (in the aggregate
exceeding $100,000) arising in connection with court proceedings, provided the
execution or other enforcement of such Liens is effectively stayed and the
claims secured thereby are being actively contested in good faith and by
appropriate proceedings.
5.2 SALE OF ASSETS. The Borrower will not sell, lease, assign,
transfer, or otherwise dispose of, any of its now owned or hereafter acquired
assets (including, without limitation, shares of stock, receivables, and
leasehold interests) in excess of $150,000 in the aggregate during any twelve
(12) consecutive month period of time, except: (1) inventory disposed of or
leased in the ordinary course of business; (2) the sale or other disposition of
other assets no
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longer used or useful in the conduct of its business; and (3) as otherwise
expressly permitted pursuant to this Agreement.
5.3 USE OF LOAN PROCEEDS. The Borrower shall not use any proceeds of
the Loan for any purpose other than those expressly permitted and contemplated
by this Agreement, and in no event shall any loan proceeds be used for any
purpose that would create or cause a breach, violation or default or event of
default hereunder or under any of the other Loan Documents or violation of
Regulations T, U or X or any other regulation of the Board of Governors of the
Federal Reserve System or to violate Section 7 of the Securities Exchange Act of
1934 or any rule or regulation thereunder, in each case as now in effect or as
the same may hereinafter be in effect.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement and to make the Loan
to the Borrower under the provisions hereof, and in consideration thereof, the
Borrower represents, warrants and covenants as follows:
6.1 GOOD STANDING, AND DUE QUALIFICATION. The Borrower (a) is a
limited liability company duly formed, validly existing, and in good standing
under the laws of the State of Delaware; (b) has the power and authority to own
its assets and to transact the business in which it is now engaged or in which
it is proposed to be engaged; and (c) is duly qualified as a foreign corporation
and in good standing under the laws of each other jurisdiction in which such
qualification is required, except where the failure to so qualify could not
reasonably be expected to have a Material Adverse Effect. The initial
Responsible Officer of the Borrower has all necessary corporate power and
authority to execute and deliver this Agreement, the Note, and the other Loan
Documents to the Lender.
6.2 LITIGATION. There is no action, suit, investigation or
proceeding threatened or pending before any Tribunal against or affecting the
Borrower or any properties or rights of the Borrower, which, if adversely
determined, would result in any material adverse change in the business or
condition, financial or otherwise, of the Borrower, or otherwise materially
adversely affect the ability of the Borrower to perform its obligations under
this Agreement. The Borrower is not in default with respect to any judgment,
order, writ, injunction, decree, rule or regulation of any Tribunal.
6.3 CONFLICTING AGREEMENTS AND OTHER MATTERS. To the best of
Borrower's knowledge and belief, the Borrower is not in default in the
performance of any material obligation, covenant, or condition in any material
agreement to which it is a party or by which it is bound. Neither the execution
nor delivery of any of the Loan Documents, nor fulfillment of, nor compliance
with their respective terms and provisions will conflict with, or result in a
material breach of the terms, conditions or provisions of, or constitute a
default under, or result in any material violation of, or result in the creation
of any Lien (except those created by the Loan Documents) upon any of the
properties or assets of the Borrower pursuant to, or require any consent,
approval or other action by or any notice to or filing with any Tribunal (other
than
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routine filings after the Effective Date with the Securities and Exchange
Commission, any securities exchange and/or state blue sky authorities) pursuant
to any award of any arbitrator, or any agreement, instrument or Laws to which
the Borrower is subject.
6.4 TITLE TO PROPERTIES, AUTHORITY. The Borrower has full power,
authority and legal right to own and operate the properties which it now owns
and operates, and to carry on the lines of business in which it is now engaged,
and, to the knowledge of Borrower, has good and defensible title to all of its
assets. The Borrower has full power, authority and legal right to execute and
deliver and to perform and observe the provisions of this Agreement and the
other Loan Documents and the Loan Documents constitute the legal, valid and
binding obligations of the Borrower, enforceable against it in accordance with
their respective terms, subject only to applicable bankruptcy, insolvency or
similar laws and general principles of equity.
6.5 CORPORATE AUTHORIZATION. The Borrower has duly authorized the
execution and delivery of each of the Loan Documents and the performance of
their respective terms. No other authorizations, approvals, consents or actions
of any other Person are required as a prerequisite to the validity and
enforceability of the Loan Documents.
ARTICLE VII
EVENTS OF DEFAULT
7.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an Event of Default (whether such occurrence
shall be voluntary or involuntary or come about or be effected by operation of
Law or otherwise):
(a) Borrower shall fail to make any monthly or other payment
due on the Note, or fail to pay any other fee, charge or assessment within five
(5) days after the same shall become due and payable (whether by extension,
renewal, acceleration, maturity or otherwise); or
(b) Any representation, warranty or certification of the
Borrower made herein, or in any other writing furnished in connection with or
pursuant to any of the Loan Documents shall have been incorrect, false or
misleading in any material respect on the date when made; or
(c) The Borrower shall fail to duly observe, perform or
comply with any covenant, agreement or term (other than payment provisions which
are governed by subparagraph (a) hereof) contained in this Agreement or any of
the Loan Documents and such default or breach shall have not been cured or
remedied within thirty (30) days following the date the Lender first notifies
the Borrower in writing; or
(d) Any of the following: (i) the Borrower shall be unable
to pay its debts as they mature, or shall make an assignment for the benefit of
creditors or admit in writing its inability to pay its debts generally as they
become due or fail generally to pay its debts as they mature; or (ii) an order,
judgment or decree is entered adjudicating the Borrower insolvent or an order
for relief under the United States Bankruptcy Code is entered with respect to
the Borrower; or (iii) the Borrower shall petition or apply to any Tribunal for
the appointment of a trustee, receiver, custodian or liquidator of the Borrower
or of any substantial part of the assets of the Borrower or shall commence any
proceedings relating to the Borrower under any bankruptcy,
Loan Agreement
Page 11
reorganization, compromise, arrangement, insolvency, readjustment of debts,
dissolution, or liquidation Law of any jurisdiction, whether now or hereafter in
effect; or (iv) any such petition or application shall be filed, or any such
proceedings shall be commenced, against the Borrower and the Borrower by any act
shall indicate its approval thereof, consent thereto or acquiescence therein, or
an order, judgment or decree shall be entered appointing any such trustee,
receiver, custodian or liquidator, or approving the petition in any such
proceedings, and such order, judgment or decree shall remain unstayed and in
effect for more than thirty (30) days; or (v) the Borrower shall fail to make
timely payment or deposit of any amount of tax required to be withheld by such
Borrower and paid to or deposited to or to the credit of the United States of
America pursuant to the provisions of the Internal Revenue Code of 1986, as
amended, in respect of any and all wages and salaries paid to employees of the
Borrower; or
(e) Any default or event of default under any of the other
Loan Documents following the lapse of any applicable curative or grace period
provided therein; or
(f) the Lender's or Jay's criminal indictment or conviction
under any law pursuant to which such indictment or conviction could lead to a
forfeiture by the Lender or Xxx of any of the properties securing the Loan or
guaranty thereof.
7.2 REMEDIES. Upon the occurrence of any Event of Default referred
to in Section 7.1, the Note and all other Indebtedness shall be immediately due
and payable, without notice of any kind. Upon the occurrence of any other Event
of Default, and without prejudice to any right or remedy of the Lender under
this Agreement or the Loan Documents or under applicable Law or under any other
instrument or document delivered in connection herewith, the Lender may declare
the Note and the Indebtedness, or any part thereof, to be forthwith due and
payable, whereupon the Note and the other Indebtedness, or such portion as is
designated by the Lender shall forthwith become due and payable, without
presentment, demand, notice or protest of any kind, all of which are hereby
expressly waived by the Borrower. No delay or omission on the part of the Lender
in exercising any power or right hereunder or under the Note, the Loan Documents
or under applicable law shall impair such right or power or be construed to be a
waiver of any default or any acquiescence therein, nor shall any single or
partial exercise by Lender of any such power or right preclude other or further
exercise thereof or the exercise of any other such power or right by such
Person. In the event that all or part of the Indebtedness becomes or is declared
to be forthwith due and payable as herein provided, Lender shall have the right
to set off the amount of all the Indebtedness of the Borrower owing to such
Person against, and shall have a lien upon and security interest in, all
property of the Borrower in such Person's possession at or subsequent to such
default, regardless of the capacity in which such property is held, including
but not limited to any balance or share of any deposit, demand, collection or
agency account. At any time after the occurrence of any Event of Default, the
Lender may, at its option, cause an audit of any and/or all of the books,
records and documents of the Borrower to be made by auditors satisfactory to the
Lender at the expense of the Borrower. The Lender also shall have, and may
exercise, each and every right and remedy granted to it for default under the
terms of the other Loan Documents.
7.3 APPLICATION OF PROCEEDS. After the exercise of remedies provided
for in Section 7.2 (or after the Indebtedness automatically becomes immediately
due and payable as set forth in
Loan Agreement
Page 12
Section 7.2), any amounts received on account of such Indebtedness shall be
applied in the following order:
FIRST: to payment of that portion of the Indebtedness constituting fees,
indemnities, expenses or other amounts (other than principal and
interest) payable to the Lender (including fees, charges and
disbursements of counsel);
SECOND: to payment of accrued and unpaid interest on the Indebtedness;
THIRD: to payment of unpaid principal of the Indebtedness;
and
LAST: the balance, if any, after all of the Indebtedness has been
indefeasibly paid in full, to Borrower or as otherwise required by
applicable Laws.
ARTICLE VIII
MISCELLANEOUS
8.1 NOTICES. Unless otherwise provided herein, all notices,
requests, consents and demands shall be in writing and shall be either
hand-delivered (by courier or otherwise), mailed by certified mail, postage
prepaid, or transmitted via telex or facsimile to the respective addresses
specified below, or, as to any party, to such other address as may be designated
by it in written notice to the other parties:
If to the Borrower, to:
Isramco, Inc.
00000 Xxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Telephone No.: (713) 621 -3882
Facsimile No.: (713) 621 - 3988
e - mail: xxxxxx@xxxxxx.xxx
With a copy to:
Xxxxxxxxx Xxxxxxxxxx PC
Attn.: Xx. Xxxxx X. Xxxxxxxxxx, III
0000 Xxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Phone: (713) 524 - 7300
e - mail: xxxxxxxxxxx@xxxxxxx.xxx
If to the Lender, to:
Naphtha - Israel Petroleum Corp., Ltd.
Loan Agreement
Page 13
8 Granit St.
P.O.B. 10188
Petach-Tikva 00000
Xxxxxx
Phone: 000-0-000-000-0
e-mail: xxxxxx@xxxxxxx.xxx
All notices, requests, consents and demands hereunder will be effective when
hand-delivered or transmitted by telecopier or sent, answer-back received,
respectively, by the Lender to the notice address of the Borrower, or two (2)
Business Days after the date when mailed by certified mail, postage prepaid, in
each case given or addressed as aforesaid by either party hereto.
8.2 PLACE OF PAYMENT. All sums payable hereunder shall be paid in
immediately available funds, at such location as may be designated from time to
time in writing by Lender. If any interest, principal or other payment falls due
on a date other than a Business Day, then (unless otherwise provided herein)
such due date shall be extended to the next succeeding Business Day, and such
extension of time will, in such case, be included in computing interest, if any,
in connection with such payment.
8.3 SURVIVAL OF AGREEMENTS. All covenants, agreements,
representations and warranties made herein shall survive the execution and the
delivery of Loan Documents.
8.4 PARTIES IN INTEREST. All covenants, agreements and obligations
contained in this Agreement shall bind and inure to the benefit of the parties
hereto and the respective successors and permitted assigns of the parties
hereto, except that the Borrower may not assign any of its rights or obligations
hereunder or under the Note without the prior written consent of the Lender.
8.5 GOVERNING LAW. This Agreement and the Note shall be deemed to
have been made or incurred under the Laws of the State of Texas and shall be
construed and enforced in accordance with and governed by the Laws of Texas
except only where the applicable remedial or procedural laws of the other
jurisdictions are situated are applicable thereto. Tex. Rev. Civ. Stat. Xxx.
Art. 5069, Ch 15 (which regulates certain revolving credit loan accounts and
revolving tri-party accounts) shall not apply to this Agreement or the Note.
8.6 INTEREST. It is the intention of the parties hereto that the
Lender shall conform strictly to usury laws applicable to them. Accordingly, if
the transactions contemplated hereby would be usurious as to the Lender under
laws applicable to it (including the laws of the United States of America or any
other jurisdiction whose laws may be mandatorily applicable the Lender
notwithstanding the other provisions of this Agreement), then, in that event,
notwithstanding anything to the contrary in any of the Loan Documents, it is
agreed as follows: (i) the aggregate of all consideration which constitutes
interest under law applicable to the Lender that is contracted for, taken,
reserved, charged or received by the Lender under any of the Loan Documents or
agreements or otherwise in connection with the Note shall under no circumstances
exceed the Maximum Rate, and any excess shall be canceled automatically and if
theretofore paid shall be credited by such Lender on the principal amount of the
Indebtedness (or, to the extent that the principal amount of the Indebtedness
shall have been or would thereby be paid in full, refunded by any Lender to the
Borrower); and (ii) in the event that the maturity of
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Page 14
the Note is accelerated by reason of an election of the holder thereof resulting
from any Event of Default under this Agreement or otherwise, or in the event of
any required or permitted prepayment, then such consideration that constitutes
interest under law applicable to the Lender may never include interest greater
than the Maximum Rate, and excess interest, if any, provided for in this
Agreement or otherwise shall be canceled automatically as of the date of such
acceleration or prepayment and, if theretofore paid, shall be credited by the
Lender on the principal amount of the Indebtedness (or, to the extent that the
principal amount of the Indebtedness shall have been or would thereby be paid in
full, refunded by the Lender to the Borrower). All sums paid or agreed to be
paid to the Lender for the use, forbearance or detention of sums due hereunder
shall, to the extent permitted by law, be amortized, prorated, allocated and
spread throughout the full term of the Loans evidenced by the Note until payment
in full so that the rate or amount of interest on account of any Loans hereunder
does not exceed the Maximum Rate. If at any time and from time to time (i) the
amount of interest payable to the Lender on any date shall be computed at the
highest lawful rate applicable to the Lender pursuant to this Section 8.6; and
(ii) in respect of any subsequent interest computation period the amount of
interest otherwise payable to Lender would be less than the amount of interest
payable to the Lender computed at the highest lawful rate applicable to the
Lender, then the amount of interest payable to the Lender in respect of such
subsequent interest computation period shall continue to be computed at the
highest lawful rate applicable to the Lender until the total amount of interest
payable to the Lender shall equal the total amount of interest which would have
been payable to the Lender if the total amount of interest had been computed
without giving effect to this Section 8.6. To the extent that the Texas Credit
Title (V.T.C.A., Texas Finance Code xx.xx. 301.001 et seq.) is relevant to the
Lender for the purpose of determining the highest lawful rate, the Lender hereby
elects to determine the applicable ceiling rate under the Texas Credit Title by
the weekly ceiling from time to time in effect.
8.7 NO WAIVER, CUMULATIVE REMEDIES. No failure to exercise, and no
delay in exercising, on the part of the Lender, any right, power or privilege
hereunder or under any other Loan Document or applicable Law shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege of the Lender. The rights and remedies herein provided are cumulative
and not exclusive of any other rights or remedies provided by any other
instrument or by law. No notice to or demand on the Borrower in any case shall
entitle the Borrower to any other or further notice or demand in similar or
other circumstances.
8.8 COSTS. The Borrower agrees to pay to the Lender on demand all
recording fees and filing costs, all reasonable attorneys fees and reasonable
legal expenses incurred or accrued by the Lender in connection with and
preparation, negotiation, closing, administration, perfection, enforcement,
refinancing, renegotiation, restructuring, amendment, waiver or other
modifications of this Agreement and the Loan Documents or any amendment, waiver,
consent or modification to and of the Loan Documents. In any action to enforce
or construe the provisions of this Agreement or any of the Loan Documents, the
Lender shall be entitled to recover its reasonable attorneys' fees,
disbursements of counsel and all costs and expenses related thereto.
8.9 RIGHT OF SET - OFF. The Borrower hereby grants to the Lender a
lien, security interest and right of setoff as security for all Indebtedness and
obligations of the Borrower upon and against all deposits, credit, and property
of the Borrower, now or hereafter in the possession, custody, safekeeping or
control of such Person; and upon (a) the occurrence and during the
Loan Agreement
Page 15
continuance of any Event of Default; and (b) the decision by the Lender to
declare the Note due and payable pursuant to the provisions of Article VII, the
Lender is hereby authorized at any time and from time to time, to set off and
otherwise apply any and all deposits (general or special, time or demand,
provisional or final, other than trust funds) at any time held and other
indebtedness at any time owing by the Lender to or for the credit or the account
of the Borrower against any and all of the Indebtedness of the Borrower now or
hereafter existing under this Agreement and the Note, irrespective of whether
demand under this Agreement or the Note shall have been made and although such
Indebtedness may be unmatured. The Lender shall promptly notify the Borrower
after any such set off and application; PROVIDED, HOWEVER, that the failure to
give such notice shall not affect the validity of such setoff and application.
The rights of the Lender under this Section are in addition to other rights and
remedies (including, without limitation, other rights of set-off) that such
Persons may have at law, in equity or otherwise.
8.10 HEADINGS. The article and section headings of this Agreement are
for convenience of reference only and shall not constitute a part of the text
hereof nor alter or otherwise affect the meaning or interpretation of any
provision hereof.
8.11 SEVERABILITY. The unenforceability or invalidity as determined
by a Tribunal of competent jurisdiction, of any provision or provisions of this
Agreement shall not render unenforceable or invalid any other provision or
provisions hereof.
8.12 CONFIDENTIALITY. In the event that the Borrower provides to the
Lender written confidential information belonging to the Borrower, the Lender
shall thereafter maintain such information in confidence in accordance with the
standards of care and diligence that each utilizes in maintaining its own
confidential information. This obligation of confidence shall not apply to such
portions of the information which (i) are in the public domain; (ii) hereafter
become part of the public domain, without the Lender breaching its obligation of
confidence to the Borrower; (iii) are previously known by the Lender from some
source other than the Borrower; (iv) are hereafter developed by the Lender
without using the Borrower's information; (v) are hereafter obtained by the
Lender from a third party who owes no obligation of confidence to the Borrower
with respect to such information; (vi) are disclosed with the Borrower's
consent; (vii) must be disclosed either pursuant to any Governmental Requirement
or to Persons regulating the activities of the Lender; or (viii) as may be
required by law or regulation or order of any Governmental Authority in any
judicial, arbitration or governmental proceeding. Further, the Lender may
disclose any such information to consultants, any independent certified public
accountants or any legal counsel employed by such Persons in connection with
this Agreement, including without limitation, the enforcement or exercise of all
rights and remedies thereunder, or any assignee or participant (including
prospective assignees and participants) in the Loan; provided, however, that the
Lender imposes on the Person to whom such information is disclosed the same
obligation to maintain the confidentiality of such information as is imposed
upon it hereunder. Notwithstanding anything to the contrary provided herein,
this obligation of confidence shall cease two (2) years from the date the
information was furnished, unless the Borrower requests in writing at least
thirty (30) days prior to the expiration of such two (2) year period, to
maintain the confidentiality of such information for an additional two (2) year
period. The Lender agrees not to issue or cause to be issued any tombstone or
other publicly published announcement of the lending facilities established by
this Agreement without the Borrower's review and approval thereof, which such
approval will not be unreasonably withheld.
Loan Agreement
Page 16
8.13 SURVIVAL. To the extent that any payments on the Indebtedness
are subsequently invalidated, declared to be fraudulent or preferential, set
aside or required to be repaid to a trustee, debtor-in-possession, receiver or
other Person under any bankruptcy law, common law or equitable cause, then to
such extent, the Indebtedness so satisfied shall be revived and continue as if
such payment or proceeds had not been received and the Liens, security
interests, rights, powers and remedies under this Agreement shall continue in
full force and effect.
8.14 NO ORAL AGREEMENTS. THE LOAN DOCUMENTS EMBODY THE ENTIRE
AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES AND SUPERSEDE ALL OTHER
AGREEMENTS AND UNDERSTANDINGS BETWEEN SUCH PARTIES RELATING TO THE SUBJECT
MATTER HEREOF AND THEREOF THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
8.15 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart. Delivery of an executed counterpart of a signature page to
this Agreement by telecopier shall be as effective as delivery of a manually
executed counterpart of this Agreement.
8.16 AMENDMENTS. No amendment or waiver of any provision of this
Agreement, the Note, or any other Loan Document to which the Borrower is a
party, nor any consent to any departure by the Borrower therefrom, shall in any
event be effective unless the same shall be agreed or consented to by the Lender
and the Borrower, and each such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided, that
no amendment, waiver, or consent shall, unless in writing and signed by the
Lender and the Borrower, do any of the following: (a) reduce the principal of,
or interest on, the Note or any fees or other amounts payable hereunder; (b)
postpone any date fixed for any payment of principal of, or interest on, the
Note or any fees or other amounts payable hereunder; (c) change the percentage
of the Commitment or of the aggregate unpaid principal amount of the Note; or
(d) change any provision contained in this Section 8.16.
8.17 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns. The Borrower may not assign or transfer any of its rights or
obligations hereunder without the prior written consent of the Lender. The
Borrower and the Lender agree that the Lender may at any time assign to one or
more assignees all, or a proportionate part of all, of its rights and
obligations under this Agreement and the other Loan Documents.
IN WITNESS WHEREOF, the Borrower has caused this Agreement to be
executed and delivered to the Lender, effective as of the day and year first
above written by the undersigned duly authorized corporate officer of the
Borrower.
BORROWER:
Loan Agreement
Page 17
ISRAMCO, INC.
A Delaware corporation
By: /s/ Haim Tsuff
--------------
Haim Tsuff, Chief executive Officer
LENDER:
NAPHTHA - ISRAEL PETROLEUM CORP., LTD.
By: /s/ Xxxxxx Xxxxxx
-----------------
Xxxxxx Xxxxxx, Director
By: Noa Lendner
Noa Lendner, Authorized Representative
Loan Agreement
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